The Questor column

The Questor column
Astrazeneca's bounceback needs the help of better luck
If bad things are supposed to happen in threes then Astrazeneca's chief, Sir Tom McKillop,[link widoczny dla zalogowanych], must hope that he's had his fair share for a while.
Shareholders certainly seem to think so,[link widoczny dla zalogowanych], since the pharmaceutical giant's share price has climbed back to from the rock bottom it hit earlier this month. The company was hit with what looked like extraordinary bad luck, when the US drug regulators failed to approve the blood-thinning drug Exanta and then the lung cancer drug Iressa was shown not to prolong patient survival.
When high-ranking officials began to raise safety concerns about Crestor,[link widoczny dla zalogowanych], the company's cholesterol-lowering hope for the future, Sir Tom must have wondered if he had done something terribly bad in a former life.
The City seems divided over whether the company is now a safe investment. A good set of figures and an upbeat statement from Sir Tom last week went some way toward reassuring the pessimists, but not everyone believes that Astrazeneca's run of bad luck has run out.
The big question mark is over Crestor. However, most analysts believe it is unlikely to be withdrawn over safety fears.
The other big problem - fears that Astrazeneca's management has become overly optimistic - ought to be helped somewhat by the review that is being undertaken by its strategy director, John Patterson,[link widoczny dla zalogowanych], although he described the task as endless as painting the Forth Bridge.
The company looks cheap after its fall,[link widoczny dla zalogowanych], with a forward price/earnings ratio of about 14 and a prospective dividend yield of 2.6pc. There are long-term risks associated with this industry,[link widoczny dla zalogowanych], with regulators becoming more paranoid about which drugs they approve, risk of litigation getting higher and insurance more expensive.
However, if you believe we'll still be taking the tablets in 10 years' time, and don't mind the risk, this could be just the prescription for your portfolio.
XP Power gets plugged in
Making the equipment that converts AC voltage into DC power supply may not sound fascinating,[link widoczny dla zalogowanych], but it is important - most electronic devices can't just be plugged into the wall.
XP Power specialises in power-supply equipment for various sectors, with the bulk of its business in the industrial market. It signed a deal in December with Premier Farnell,[link widoczny dla zalogowanych], putting its products in the company's catalogue and giving it access to new markets.
XP does not own any factories so is not saddled with high overheads, and contracts the manufacturing out to low-cost locations in the Far East.
This week's full-year results showed the company more than doubled pre-tax profits to It has managed to convert more customers into buying XP-branded products,[link widoczny dla zalogowanych], which give the company a higher margin than the third-party products it also supplies.
The mix is now 55pc in favour of its own products, up from 49pc a year ago, helping operating profit margins rise by two percentage points to 35.5pc. XP has ambitious targets of getting that up to 75pc of its own range with 40pc margins by 2007.
Full-year sales, which rose 12pc to were held back by the weak dollar as
XP does two-thirds of its business in the States.
The shares rose strongly to 467p after the results and trade at 15 times forecast earnings with a prospective yield of 3
The shares have had a good run over the past year but if the company can achieve its product mix and margin targets, the shares should be worth plugging into.
Success in bag for Mulberry
There is nothing like having an interesting name joining the share register to get a company's shares going. Just look at Mulberry, the luxury handbag maker, whose shares have leapt from 42 in May 2004 to 119 this week.
Much of this rise is because Kevin Stanford,[link widoczny dla zalogowanych], the co-founder of the Karen Millen fashion chain, has taken his stake up to 15pc in the past few weeks.
Mr Stanford,[link widoczny dla zalogowanych], as well has having stakes in various retailers,[link widoczny dla zalogowanych], owns a chunk of Baugur, the influential Icelandic investor that has been snapping up unloved British companies.
Could Mulberry be next? The company was for many years the ugly duckling of the British luxury goods scene,[link widoczny dla zalogowanych], making a pitiful profit (and more often a loss) under the leadership of its founder Roger Saul. However, it is a well-established name, associated with a classic Britishness - a trait shared with Burberry and Pringle, two other UK brands that have been successfully revitalised.
Mr Saul was ousted by the majority shareholders Ong Beng Seng and Christina Ong two years ago. Since then, costs have been cut and the Ongs have been busy.
Their distributors have launched a shop in Hong Kong and Mulberry bags are starting to be seen in fashionable New York department stores.
House broker Teather Greenwood is forecasting profits to climb from to this year. Despite this rapid recovery, the shares, which don't pay out a dividend,[link widoczny dla zalogowanych], are very pricey,[link widoczny dla zalogowanych], trading on a forward rating of about 25.
A bid is only an outside chance because any approach would need the approval of the Ongs. But the shares - for those who like risky punts - are worth a look.
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