One to watch: Riding property wave

By The Newsroom
Published 19th Mar 2010, 20:26 BST
Updated 19th Mar 2010, 20:37 BST
LSL Property Services300p +6.5pScotsman says BUY

LSL Property Services provides residential property services to a range of mortgage lenders and private customers. It operates in two segments: the estate agency division, providing services related to housing transactions via a network of high street branches; and the surveying and valuation segment, providing a professional survey service of domestic properties to various lending corporations.

The recent trading statement from LSL was particularly welcome by confirming the company's return to the dividend list, having come back into profitability.

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The company said that although it was "cautious in the short term, its lower cost base, a larger lettings portfolio and larger surveying business mean it is well placed to grow profits more as the wider housing market recovers"; the group's pre-tax profit of 16.6 million compared with a loss of 6.2m in 2008.

LSL has come through an extremely difficult period, but has responded by using strong cash generation to reduce debt and establish a platform of less cyclical revenue streams, such as lettings. The surveying division has held up pretty well, the group's profile here being strengthened by the recent acquisition of Halifax Estate Agencies.

It would be a brave soul who forecasts the immediate revival of the UK housing market. However, recover it will, and LSL should be in the vanguard of any such upturn as it develops.

LSL's shares were first listed in late 2006 at around current levels, but plunged to below 40p as the bear market took hold and the recession enveloped the UK property scene. For those investors who believe the cycle is now on the turn, LSL could be well worth considering.

• 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.

GlaxoSmithKline

1,286.5p +14.5p

Broker says ACCUMULATE

CHARLES Stanley analyst Jeremy Batstone-Carr believes the reduction in the risk profile associated with GSK's top-selling product Advair has removed a "significant near-term uncertainty" from the drug giant's share price. On Thursday, Novartis handed back US rights to a drug widely believed to be a generic version of Advair.

Arriva

705.5p -2.5p

Broker says BUY

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