One to Watch

SUMMERTIME and the living is easy. It certainly is for power producers anyway. As the United States heats up and the use of air-conditioning spirals upwards, demand for power becomes increasingly strong. Ultra Petroleum is one of the lowest-cost producers of gas.

The exploration record of Ultra has been exceptional over many years. The key to any natural resource investment is to invest in a company that gets the resource out of the ground as cheaply as possible. Against its peer group, Ultra has consistently been at the low end of the cost curve. This cost advantage has helped produce a strong return on capital.

The gas price has been weak i for a few months. We are now seeing some recovery helped by the warm summer and the demand for power. This is not just a seasonal trade. Gas demand will rise over time, due to its environmentally friendly nature in comparison with coal.

The economic recovery will also stimulate demand over the longer run, and we strongly believe Ultra will participate in this recovery.

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.

Drax

390p -3.9p

Broker says HOLD

AMBRIAN has removed its "trading buy" recommendation from Drax after shares in the power company rose by 20 per cent over the past month. Back in May, the broker had noted that the stock had fallen by 26 per cent since the start of the year and had been "ripe for a bounce in the short term".

Britvic

480p +5p

Broker says BUY

SOFT drinks producer Britvic is expected to "deliver on its growth guidance to 2013, with scope for out-performance in the earnings-before-interest-and-tax margin", according to RBS Equities. The broker added: "There are clear opportunities to add value to the recent French acquisition, which provides a platform for growth across Europe."