One to Watch

SMITH & Nephew has three main divisions: orthopaedics (reconstruction, trauma and clinical therapies); advanced wound management (treatment of hard-to-heal wounds); and endoscopy (products for minimally invasive surgery).

Smith & Nephew, with its focus on younger patients, was adversely affected by the economic uncertainty as people cancelled or delayed hip or knee joint operations for reasons of cost or to avoid being off work. However, the first quarter results reminded investors of its attractions.

The company's share price is trading well below its average price-to-earnings ratio for the past five years. Assuming forecasts are met, I consider there is scope for the shares to be re-rated as a reward for delivering consistent double-digit earnings growth over a number of years.

The long-term investment case for Smith & Nephew is relatively straightforward in that it is well positioned to be benefit from the powerful long-term trends of the increasing age of the global population.

The value of your investments may fall and you may get back less than you invested. This does not constitute investment advice and you should take professional advice regarding the suitability of this company for your portfolio.

Drax

334.1p +4.4p

Broker says HOLD

AMBRIAN has a "hold" rating on power firm Drax. The broker said: "The shares have fallen 26 per cent since the beginning of the year. We would regard the shares as a 'trading buy', ripe for a bounce in the short term, although we keep our 'hold' recommendation for the longer term."

Vertu Motors

36.75p unch

Broker says HOLD

FOLLOWING last week's full-year results, Numis carries a "hold" recommendation on Vertu Motors, with a 39p target price. The broker said the Aim-listed car dealer "continues to offer value". Numis added: "We fully expect the group to continue its buy-and-build strategy, albeit with a lower freehold content as distressed opportunities recede."