One to watch: Chemring

As defence budgets in developed markets come under pressure as a consequence of government spending cuts, Chemring is in the almost unique position of being a UK defence company with significant organic growth opportunities.

In its counter-IED business, Chemring is well-placed to win sustainment business for the 200+ systems it has already sold to the US – who are also looking to upgrade to a new multi-sensor system. Naval countermeasures, which accounted for only 16 million in sales during 2010, are also likely to be boosted by Chemring's presence in the Centurion launcher hardware system.

Chemring's recent rights issue raised 100m to fund acquisitions, half of which was used to purchase a business which is highly complementary to its existing counter-IED operations.

The company has a relatively under-geared balance sheet, and we expect further earnings enhancing acquisitions to be made over the next year. Previous purchases have demonstrated management's ability to generate significant operating improvements. We feel that the market has failed to recognize the growth opportunities available.

Chemring

648.5p +11.5p

Scotsman says BUY

• This article is for information and discussion purposes and does not form a recommendation by the manager to invest or otherwise.

BROKER SNAPS

Fresnillo

1,368p +61p

Broker says BUY

Andrew Gibson, head of research at Galvan, said safe haven buying of precious metals in the wake of the Arab Spring and Japanese disaster ensures that demand for Fresnillo's output remains as strong as ever. "This coupled with the recent decline for the share price marks the stock out as a buy," he said.

Young's Brewery

654.25p -5.25p

Broker says BUY

Peel Hunt said Young's London-centred business means it occupies "the best market in the country". It added: "Young's has a higher appetite for risk than the market gives it credit for. Its retailing-based strategy has given it greater focus and positioned it well in an enviably strong market."