One to Watch

SAGE'S name is synonymous with accountancy software. The group targets small to medium-sized firms that need accounting, payroll and human resource functions. Within the UK it is these customers who should benefit from the Budget decision to reduce rather than abolish capital allowances and to encourage small firms through a range of measures.

However, Sage is a truly international company and its customer base of 6.2 million is as widespread, encompassing virtually all industries.

Historically, Sage has faced criticism for being slow in introducing new technologies to its conservative client base. The firm lagged behind rival Intuit in moving on to more web-based platforms, known as software as a service (SaaS), rather than running software from PCs or servers. Sage's newest SaaS package, ERP X3, has had good reviews and we will monitor its success.

Interim results in May were good and an improved US outlook was forecast. The rating is undemanding for a company with sound cash flow, leading positions in many of its markets and an international presence.

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.

Centrica

299p +1.1p

Broker says BUY

AMBRIAN has raised its target price on Centrica – which owns Scottish Gas – from 361p to 384p. The broker added: "We believe we did not take enough note of the positive hints in Centrica's interim management statement on 10 May. The initial reworking of our numbers was too conservative."

Tesco

396.5p +3.5p

Broker says BUY

TESCO remains Collins Stewart's "top pick" among the food retailers, with a target price of 490p. The broker said: "We point to the rising returns of the group and international growth prospects, together with a step up in the UK opening programme from the second quarter onwards, which will help drive the sales performance of the UK division."