One to Watch

HALFORDS is a well-known name on Britain's high street and has developed from selling purely car accessories to exploiting the growing enthusiasm for cycling and other outdoor leisure pursuits. The company's Wefit service, an in-store fitting service of the three Bs – bulbs, blades and batteries – has grown strongly and enjoys very high margins.

Recent results were impressive and steady revenue growth plus significant margin expansion produced a 27 per cent increase in profit before tax with full year dividends raised by nearly 26 per cent, which exceeded expectations. Halfords is not immune from general trends in consumer spending which is expected to remain moderate for some time yet; however, the company is defensively positioned in terms of its product offering and continues to expand its UK store portfolio.

With a low level of debt, excellent cash flow and fragmented markets to consolidate, we also envisage more acquisitive growth opportunities in the future. Finally the shares generate an attractive level of income.

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.

Aggreko

1,440p +25p

Broker says HOLD

FOLLOWING a research trip to see Aggreko's work in Africa – which includes supplying generators to the World Cup – Collins Stewart has raised its target price to 1,450p. After the stock's recent share price strength, the broker said: "We would look for a better entry price and retain our 'hold'."

BT Group

138.4p +2.5p

Broker says SELL

EXECUTION Noble has reiterated its "sell" recommendation on BT Group, noting that revenues from the company's global services business are "under pressure". The broker said that BT "looks expensive on yield multiples", noting that the telecommunications giant trades at a "substantial premium to the big-cap telecom sector".