The Week in Review: Pause for thought on EMI shares

Silence, so the lyric goes, is golden. Shareholders awaiting the latest release from Messrs Eric Nicoli and Alain Levy, the duo in charge at EMI, have been happily disappointed to find no trading update accompanied the music group's financial year-end on 31 March. The lack of news means EMI must have met market forecasts for the year.

This seems to have stopped the downward momentum and gives investors a breathing space to consider the attractions of its bombed-out shares. Grammy-winning Norah Jones continues to sell and has a second album on the way. And EMI's recorded music division, headed by M. Levy, is making the promised progress on cutting costs.

It is impossible to recommend the shares to long-term buyers. The music industry has no clear response yet to the threat from internet downloads; global music sales continue to decline; and a £1bn debt burden keeps the pressure on EMI's dividend. But the stock is a short-term buy.

Mitchells & Butlers

Investors with a thirst for nostalgia will welcome next week's stock market debut of Mitchells & Butlers, the pub half of Six Continents, which is about to demerge. With more than 2,100 sites, M&B is the country's biggest managed pub and restaurant operator, owning a broad sweep of concepts spanning popular, if predictable, high street chains such as All Bar One and jazzed-up locals such as Ember Inns. The quality of M&B's estate should position it ahead of the crowd. A near-4 per cent yield should justify getting in a round.

InterContinental Hotels

When Six Continents checks out of the stock market for good on Tuesday, the question on everyone's lips will be whether its other protégé, InterContinental Hotels, will enjoy only a brief stay. Potential bidders are lining up, the shares are likely to price in hefty takeover premium from day one. That will make them expensive. Yet with the genie of Islamic terrorism out of the bottle, the travel industry will remain edgy. With better plays around, such as Hilton, these shares should be avoided.

Northern Rock

Northern Rock, the Newcastle-based mortgage bank, has had a storming run. It keeps its costs low (using only 46p to manage £100 of mortgage balances, compared to £1 or more at some major banks) and is good at holding on to customers (by offering all of its products to old and new customers). The bank has also performed well on bad debts. The one problem is that slowing house-price growth will probably mean fewer people wanting to remortgage to take advantage of the increased value of their properties. Hold.

Chorion

The media rights group is hoping to realise the unexploited potential for spin-offs from Enid Blyton's characters and stories, including the Secret Seven and the Famous Five. Already, although it took a long time to get commissioned, the Make Way for Noddy television programme on Five is a huge success. But there is disappointment that sales have fallen as Chorion finds broadcasters cutting programme commissions. The shares look high enough for now.

Intermediate Capital

In a climate of fear – when banks don't want to lend too much and private equity houses fret about how they can sell on any investments they make – Intermediate Capital can fill financial holes in a management buyout. ICP is a specialist in "mezzanine finance", which offers high-interest loans to MBO vehicles and also takes an option over a chunk of equity. It has been in demand over the past year, though buyout activity has been subdued, and the company is confident big opportunities are still floating around. Good value.

TeleCity

Hosting companies' computer kit and internet sites in warehouses is hardly the boom business it was in 2000. TeleCity has won new business but that has been offset by other customers disappearing. And while the "internet hotels" market might have stabilised, it is still not growing. The City gave up caring a long time ago and City analysts, including those at the company broker Goldman Sachs, have given up research and forecasts on TeleCity. Avoid.

Speedy Hire

Speedy Hire does what it says on the toolbox: it hires out ladders, drills, cement mixers, pumps, things that look like participants in Wacky Races (look at the website), spades, portaloos, saws, you name it. It is the biggest player in the fragmented tool-hire market, and it has big plans to expand from 250 depots across the UK to 400. This expansion comes on top of market share gains at its existing depots. Tool hire continues to be a growth business, as contractors prefer to borrow much of what they need to give them greater financial flexibility. Buy.

Canary Wharf

The developer of east London's Docklands shocked investors last month with the news that vacancy rates could rise a lot higher than expected because some big new tenants had clauses in their leases which allowed them to "put back" part of the space they had signed up for: 625,000sq ft, to be exact. That's a lot of floor-space. With the economy against it, investors should stay away from a company that has the capacity to spring such nasty surprises.

Chaucer

Chaucer underwrites marine, aviation and motor insuranceat Lloyd's of London, but has been among the more disappointing companies in the sector as far as equity investors have been concerned. The company has having a riskier, more highly-geared balance sheet than its bigger rivals, and its underwriting record in recent years has been poor. The track record, the lack of scale and the overhang of Brit Insurance's big shareholding will limit capital gains. This Chaucer's tale is not a good read.

The above is a selection of recommendations from this week's daily investment columns