One to Watch: Fuelling demand

Published on Tuesday 1 December 2009 19:56

FMC Technologies $56.07 +$1.60 Scotsman says BUY

A SEEMINGLY insatiable appetite for raw materials, fuelled by an infrastructure spending boom, sent commodity prices soaring this year. Oil, in particular, recently tiptoed towards $80 per barrel, a considerable rebound from its December 2008-low.

It stands to reason, then, that companies with a vested interest in the health of the oil sector have experienced considerable gains. FMC Technologies, which provides technical services for the global energy industry, has been one of our best-performing stocks over 2009.

FMC designs, manufactures and maintains products such as subsea production and processing systems for the oil and gas industry. Demand for this type of technology allowed it to offset considerable weakness in the US market, as the energy services industry struggled to regain its feet in the wake of last year's financial crisis.

FMC also produces surface wellhead systems, high pressure fluid control equipment, measurement solutions and marine loading systems. It has a strong global presence, operating 19 manufacturing facilities across 14 countries.

FMC's share price received a turbo-boost in the third quarter after it posted surprise profit growth. In September, it raised its full-year profit forecast and Q3 earnings beat analysts' expectations in October.

At Swip, we try to focus on companies that have dominant industry positions and products or services that are difficult for competitors to duplicate. A slick operation like FMC fits the bill very well.

&#149 Nick Ford is investment director, global developed market equities at Scottish Widows Investment Partnership. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions. Past performance is not a guide to the future.

BT Group

142.4p +2.2p

Broker says BUY

COLLINS Stewart has a target price of 182p on BT shares after industry regulator Ofcom yesterday published its initial consultation on the way the telecom giant's pension costs are incorporated into regulated wholesale charges. Analysts said: "We suspect the likely outcome will be a net minor positive for BT."

Thomas Cook Group

211.7p -0.3p

Broker says HOLD

CHARLES Stanley is leaving its recommendation on the travel group at "hold", saying it prefers rival TUI for now. It follows results this week from the two holiday operators. The broker said Thomas Cook shares "look cheap" but added: "We have increasing concerns over whether earnings growth can be maintained."