LONDON (ShareCast) - The difficulty with AB Foods is that the stock is far from cheap. The conglomerate trades on a multiple of about 16 times earnings, far higher than the industry average.

That reflects optimism on future trading at discount retailer Primark but at an embedded PE ratio of 20 times for the retailer, investors could be getting ahead of themselves. Marks & Spencer trades at about nine times with Next closer to six. Shareholders who have enjoyed a good run would be best off taking profits. Sell says the Telegraph.

AB Foods interim numbers announced yesterday showed that the group had a good six months to the end of February, but discount chain Primark reported what some watchers said were disappointing margin numbers. It is probably better to look at groups that can offset the effects of an economic downturn on one of its businesses with strong performances elsewhere. Hold says the Independent.

Engineering group Melrose has paid the equivalent of 6.7 times Ebitda for FKI, which seems good value, and on expectations of a significant boost in earnings next year Melrose shares now trade on a forward multiple of around 10 times and yield a prospective 5%. Buy says the Teleraph.

Connaught's business of maintaining social housing and offering compliance services might not be the sexiest industry in the world, for investors it is about as good as it gets. Earnings per share are up 30% and are expected to grow by the same amount through to 2010. Buy says the Independent.

At 22 times current-year earnings, Connaught shares are not cheap and the dividend yield is negligible. However, the prospect of earnings upgrades later in the year makes yesterday’s dip to 374p a good time to buy says the Times

Character licensor Entertainment Rights shares trade at six to seven times expected earnings. The bad news is that few investors are willing to bet on a recovery at a time when consumer spending is fragile. A long slog to rebuild credibility lies ahead. Hold says the Times.

A commitment to maintain a progressive dividend policy and confirmation that current-year trading remains on track were not enough to prevent shares in Logica from drifting lower despite the new chief executive's rejuvenation plan. On ten times this year’s earnings, and with trading conditions likely to get tougher in the near term, there will be better times to buy.

Drug developer Skyepharma still has plenty of risks attached , most notably if Flutiform fails its final trials or does not get regulatory approval. But given the changes that have taken place in the structure of the company, it could be worth a gamble says the Telegraph. Cautious buy.

Moneysupermarket.com admits the credit crunch has "hindered growth", and the company is likely to find the immediate future difficult. As well as facing trouble from the credit crunch, the group will also face a hike in advertising costs. Cautious hold says the Independent.






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