Market Report: Argos owner Home Retail Group's shares rise on takeover buzz

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Reports that bargain-hunters are sniffing around Home Retail Group have breathed life into the Argos owner’s wilting share price.

Private-equity firms are said to be circling the company, which also owns Homebase, with the stock halving in value this year to a three-yearlow. There are questions marks over its turnaround of both retailers.

Investec analyst Alistair Davies said: “Market sentiment (and external interest) is likely to wait until proof of delivery at Argos for confidence in its plans to build.”

Whether or not a bid is forthcoming, he thinks the shares, which jumped 7.1p, or 6.9%, today to 110.5p, are cheap compared with those of its rivals on a price-to-earnings ratio — the most common metric for valuing stock — of less than 10.

The pressure is now on to deliver on Black Friday this week, especially in the wake of the shock profit warning in October.

Stocks ended their five-day winning streak, with the FTSE 100 starting the week down 32.64 points to 6301.99.

Miners and oil firms were the culprits with Anglo American slipping 12.8p to 433.7p, Glencore sliding 1.91p to 90.42p, and BP 6.3p worse off at 375p.

The City’s eternal optimists continue to eat their words as oil and commodities prices plunged to new depths, with nickel and copper down 4% and 2% and Brent crude 85 cents cheaper at $43.78 a barrel. 

Investors stocked up on groceries delivery firm Ocado, 6.1p tastier at 357.9p, as UBS upgraded to buy and played down fears about the threat of Amazon Fresh in the UK.

The broker believes the company will find a partner to fuel its international growth.


Flying: Defence shares (Picture: PA/BAE Systems)

Reports of job cuts in the UAE nudged HSBC up 1.3p to 532.4p, while defence shares, including BAE Systems, up 6.4p at 498.4p, climbed ahead on news of an extra £12 billion for defence over the next decade.

IT consulting firm Kainos retreated 20.03p to 259.72p, having doubled since its stock-market debut in July. Its maiden half-year results showed a 29% rise in revenues to £37.2 million.

However £1.4 million in flotation fees dragged pre-tax profits down a touch to £5.2 million.

On AIM, emeralds and rubies group Gemfields sparkled at 43.29p, rising 1.29p, or 3%, on the back of record revenues of $19.2 million (£12.6 million).

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November 23, 2015 |
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