One to Watch: Alternative outlook

MP EVANS operates rubber plantations in Indonesia, beef-cattle operations in Australia and oil palm plantations and property developments in Malaysia. Overall, the company has 10,000 hectares of oil palm plantation in Sumatra and 3,750 hectares through six individual estates in Peninsular Malaysia.

MP Evans has seen some restructuring in the recent past, selling out of some assets in Malaysia to invest in palm oil plantations in Indonesia. Palm oil has a yield of seven tonnes a hectare, substantially more than competing products such as soya. In an ever more health-conscious world, palm oil's appeal is centred on the absence of fatty acids, which makes it more attractive than, for example, dairy-based products.

The firm is investing aggressively; some of its newer plantations in Indonesia will not come into production for at least three years. There are political risks in Indonesia, not least through the fact the company is effectively a tenant of the state, running its plantations on 30-year renewable leases. Although the current administration is pro-foreign investment, it should be remembered that president Sukarno nationalised overseas-owned plantations in the 1960s.

MP Evans is trying to sell its loss-making cattle business in Australia but, in the current drought environment, this may be no easy task. On the other hand, the group's 34.3 per cent stake in the cattle business looks attractive. The share price is closely aligned to that of the palm oil price itself and it is argued that this may firm as increasing living standards in India and China feed through to higher demand. MP Evans may worth monitoring in what may be regarded as an "alternative" commodity market.

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.

Bunzl

639.5p -1p

Broker says BUY

OUTSOURCING and distribution firm Bunzl offers "great growth potential for 2010", according to Accendo Markets.

Senior trader Charlie Menegatos picked the firm as "a dark horse for recovery", adding: "At 640p, Accendo Markets rate Bunzl shares a buy, with a four-week target of 709p."

Sage

235p +1p

Broker says OUTPERFORM

ANY growth at business software house Sage will come in the second half of the year as the economy continues to recover, according to RBC Capital Markets.

Upping its target price from 250p to 260p, the broker added: "We believe the shares are undervalued and retain our 'outperform' recommendation."