Stockwatch

While attention is on Abbey National as the next focus for consolidation in banking, it would be unwise to ignore its great rival, Halifax.

Halifax is now worth less than Abbey, yet it has a higher share of the mortgage market and little in the way of Abbey's huge diversification away from personal finance.

For a prospective partner, therefore, Halifax is arguably a far cleaner deal than Abbey. Certainly it would make as much, if not more, sense as an alternative option for Bank of Scotland. Lloyds TSB would not face the extensive 'rape and pillage' scenario as it does with shedding Abbey's non-mortgage activities.

Remember, too, that Halifax once spurned a merger of equals with Barclays.

Under chief executive James Crosby, Halifax has so far shown no outward signs of wanting to give up its independence. Crosby has a strong following in the City but, after Abbey, expect it to be next to come under scrutiny. Already there are murmurs, for example, about the sense of Halifax going after current accounts in a big way when it could have merged with a clearer that had them in abundance.At 587p, the shares are a buy.



Creaky Croda


Last week's management buyout of Peter Black Holdings, the private label cosmet ics supplier, is another reminder that low valuations in unfashionable sectors mean a steady string of bids and that public-to-private deals are on the way.

One related firm that really could do with such a boost is Croda International, the skincare, cosmetics and speciality chemicals outfit.

At 226p, Croda shares have had a miserable time lately, and, trading at 12 times forecast earnings, are not especially cheap without bid action. But many of the likely buyers, Laporte or ICI for instance, have either shifted focus or are hamstrung by problems of their own.

Croda chairman Keith Hopkins has just delivered his other outfit, Ellis & Everard, up to a Dutch bid but Croda's top brass are thought not to be too keen to sell out. Broker Schroder Salomon Smith Barney has just downgraded its earnings forecasts for 2001 and 2002.

Avoid for the moment.



Hidden power


Take a look at Renold, the power transmission and machine tools group. At 85p, the shares are at rock-bottom, despite interim results last week well above analysts' expectations.

The present price means that Renold shares are trading at just 6.4 times current year earnings and are well below net asset value.

Broker UB Warburg, for one, believes the low valuation to be unwarranted and has just upgraded its investment stance to 'buy' from 'hold'. Orders, the broker points out, are buoyant and the management is confident of further growth in the second half of the year.

UBS Warburg is sticking with its 115p price target for the shares, which means it sees 35 per cent upside potential. Buy.



End of the line?


THE FIRM may well be running into the buffers, but don't give up on GB Railways just yet. Last week, the Aim-quoted minnow of the UK rail industry warned that slower, less frequent services following the Hatfield rail crash may well cause it cashflow problems in the new year.

It said it was in talks with the Shadow Strategic Rail Authority over the future of its East Anglian rail franchise, which runs until 2004.

Our industry moles tell us the firm is talking to potential bidders about an outright rescue or surrendering its UK franchise. The latter course would leave it with freight management expertise and a stake in Australia's Great Southern Railway.

At 49p, the shares are a speculative hold.