One to Watch: BPI's plastic fantastic

BRITISH Polythene Industries (BPI) recycles polythene film and supplies agricultural film products and packaging to protect food and other goods.

The group has three business segments. Films is engaged in the single process of extruded polythene reels. Converted is predominantly the two- or three-stage process of extrusion, print and conversion. Recycled involves converting scrap. Its core markets are the retail food chain, agriculture and horticultural, healthcare and waste services; its major customers include Tesco, Morrisons, the NHS, Coca-Cola, Britvic, Wolseley and Tarmac.

The recent trading statement from the company was encouraging, confirming a strong last quarter while also seeing the benefits of cost economies' achieved over the year; as a result, the annual outcome should be "at the top end of market expectations".

The company generates some 60 per cent of its revenue in the UK, with about a third from Europe and 5 per cent from North America. Its products are ubiquitous, involved in the wrapping of innumerable food products. On the agricultural side, the polytunnels that, one might argue, now blight the countryside – but which extend the soft fruit season substantially – are produced by BPI, while the equally attractive black silage rolls are often enveloped in the company's wares.

BPI's earnings per share fell sharply during 2008 to 7.3p as the recession took hold, but are forecast to recover to nearer 34p for the 2009 trading period. This would put the stock on a prospective p/e of about eight, offering a yield of some 4 per cent. The shares peaked at more than 670p in March 2006 and, while they have recovered over the past 12 months, there may still be plenty of potential.

The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt about the suitability of this company for your portfolio.

Carluccio's

92p +0.5p

Broker says SELL

SEYMOUR Pierce carries a "Sell" recommendation on Italian restaurant chain Carluccio's "despite the group's excellent brand".

The broker noted the "positive" tone of the group's trading update but said that the price-to- earnings ratio based on its numbers "looks too high for these conditions".

Bellway

733p -27.5p

Broker says SELL

BELLWAY is the "best of the bunch but still overvalued" according to KBC Peel Hunt.

The broker asked whether there could be enough earnings-per-share recovery to support the builder's price-to-earnings ratio, but added: "Bellway is trading profitably when many others in the sector are still in loss."