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This year's Company Watch and Company Profile recommendations have maintained their form over the past month, with the average gain now standing at 44 per cent. However, with the market's recent mini-downturn, some of our recommendations have reached their stop-loss limits (classified as when the stock falls 20 per cent from its high point).

Falling back

Amongst them, nutrional supplements innovator Clover (which we advised investors to 'reduce' last month), fell back to its stop-loss limit on 7 October, while still 144 per cent up from our original recommendation price. However, results for the three months to September highlighted once more the excellent progress that this Australian company is making.

Profits hit A$916,000 (£381,000) during the quarter to September, up from A$136,000 in the same period last year. The company's cash pile swelled to a reassuring $16.1 million (£6.7 million). Turnover hit A$4.9 million, up from A$3.9 million last year. Overall, it is an impressive success story and the company clearly deserves its £34.2 million market value. But we would still advise investors to bank some profits, while holding on to a few shares for the long term.

Oil services conglomerate Hunting hasn't done quite as well though, having fallen back below our recommendation price and passed the automatic 98.75p stop loss price, after rising to 123.5p during the summer.

If you're still in, stay in. The interim results, although not spectacular, were in line with expectations. Turnover rose 39 per cent to £606 million and pre-tax profits advanced four per cent to £8.4 million. The market, it seems, didn't appreciate the decline in Hunting's already very thin margins.

But there was good news, namely that Hunting's two principle subsidiaries, Hunting Energy and Gibson Energy, are set for a better second half as activity in North America improves – in terms of both rig activity and production volumes.

The current price – which leaves the group valued at around one tenth of its sales and just over three times expected profits – is unjust. Hunting is profitable, cash rich and primed for improvements in its market.

Pursuit racing ahead

Pursuit Dynamics, the pumping hopeful highlighted as a 'high-risk buy' in August, is now trading at a 134 per cent premium to our recommendation price, having continued to strengthen in October. This begs a serious question of whether it is time to bank profits and move on. After all, the company, which is due to report final results soon, has yet to make anything in the way of revenues but is valued at a whopping £46 million by the market.

The signs are still good for Pursuit, as there are potential licence partners circling. In fact, Pursuit recently made the decision to reject an application for an exclusive licence for waste water applications from Sonico because of interest from other large corporates. In other sectors interest remains high. So there is no doubting the potential.

However, the valuation does seem to have got ahead of events, especially when one considers that existing forecasts have the company making only £1 million in sales for the year to September 2003. Top-slice.

ServicePower going strong

On the other hand, we would advise that investors keep holding workforce scheduling software provider ServicePower Technologies, despite the shares having tripled in value since our recommendation in March and some underwhelming interim figures covering the six months to June.

These results showed losses cut only marginally from £1.3 million to £1.1 million, on revenues totalling £996,000 – again, only slightly better than the first half of 2002. For a company that is apparently in a real growth phase, these results look slightly disappointing.

That said, the portents remain good. The second half is expected to be much better, partly due to seasonal purchasing cycles that see the bulk of the group's revenue come through in the second half. Indeed, Lorne Daniel of house broker Evolution Beeson Gregory says that he is happy with his forecasts made in April, anticipating a small pre-tax profit of £100,000 for 2003 as a whole, on £5.4 million of sales.

His confidence is principally due to the progress of ServicePower's relationship with GE, through which the US behemoth is pressing its service subcontractors to adopt ServicePower solutions, threatening them with the axe if they do not. With GE's commitment proven, other US corporates are starting to sniff around too, leading the company to state that it has 'an unprecedented number of sales opportunities' on hand.

On a £16 million market capitalisation, ServicePower's niche strength and prospects don't look overvalued, especially given the potential for corporate activity in the medium-term as software providers look to consolidate. Hold on.

Excellent performers

A series of buys from Peter Webb's Eaglet Investment Trust have pushed shares in IT services business ComputerLand UK up to record highs in recent weeks and close to double the price at which we recommended them in February.

In light of this progress, it is easy to see why Webb is eager to raise his exposure; June's full year figures were, as expected, solidly impressive. Turnover surged 46 per cent to £54.8 million, pre-tax profits rocketed from £610,000 to £1.5 million, and net cash increased from £4 million to £6.5 million. Moreover, the company's mantra of supplying 'essential IT services' such as helpdesks and network support to medium-sized firms appears to be paying off.

2003/04 forecasts predict more of the same. Evolution Beeson Gregory's Robin Hutchings is expecting a £300,000 rise in profits to £1.8 million, on sales up slightly at £55 million, rising to £2.1 million from £59.4 million 12 months on.

Trading on a prospective p/e of 15.6 and yielding around two per cent, the shares continue to look fair value. Hold.

Small cap broker Charles Stanley has been another excellent performer, and our decision to recommend its shares at the nadir of the bear market in early March now looks inspired — they are 150 per cent ahead.

Judging from current share volumes traded, commission levels and advisory fees should be buoyant at the conservatively-run outfit. The corporate finance division has also been active lately, while the group remains cash-rich and has used some of its resources to make small acquisitions, including the online broker nothing-ventured.com, which was bought from rival Durlacher for £1 million.

Interims to the end of September are imminent and should show a strong recovery from last year's levels, when turnover was flat at £27 million. For the year as a whole, pre-tax profits are forecast to recover to £5 million, producing earnings of 7.95p and facilitating a dividend payout of 4.5p. On this basis the shares trade on a hefty forward p/e of 28.6. Top-slice.

Hold Capcon

Private investigation and stocktaking play Capcon, a July recommendation at 63.5p, has been quiet over recent months and the shares have slipped back from our recommendation price. But the company remains attractive.

Founded by chairman and 15 per cent shareholder Ken Dulieu, Capcon has wrapped up two acquisitions since floating in May 2001, taking it into new areas like insurance and banking. Results for the six months to March showed the effects of these, with turnover rocketing up 61 per cent to £3.3 million but pre-tax profits falling from £154,000 to £33,700, after a higher interest charge reflecting higher borrowings.

Tania Wild of house broker Williams de Broe is going for profits of £380,000 pre-tax and goodwill for the full year to September, giving earnings per share of 3.82p. This should rise to £700,000, providing earnings per share of 6.13p, by 2004. Keep holding.

Meanwhile, recruitment consultant Quantica, which we tipped last month at 34p, has traded up to a year high of 43p. During the half to May, the company reorganised its technology recruitment arm, closing an unprofitable Hemel Hempstead office and causing £600,000 worth of exceptional costs that reduced profits to virtually nothing. However, for the full year, broker Credit Lyonnais expects a £1.6 million pre-tax profit, delivering earnings of 3p per share and putting the company on a forward rating of 14.3 times.

This is not a demanding rating given the prospects for a recruitment upturn. Hold on.

Likewise, we advise investors to keep holding nightclubs group Luminar and software provider GB Group.

Luminar has been conducting a strategic review but is still highly profitable. Analysts are expecting around £65 million in pre-tax profits this year and earnings per share of 59p. Referring to a prospective p/e of only 7.7, Altium Capital's Greg Feehely says that 'the current valuation factors in both further trading downside risk and disposal dilution risk' (the latter relating to the company's apparent plans to sell off a portion of its estate). Hold, but keep an eye out for the upcoming interim announcement.

Meanwhile, GB, up a couple of pence to 22.5p, looks good to go further, even though pre-tax profits are expected to be static this year at £1.3 million. The company had £6.6 million in the coffers at the time of its AGM statement in July and overall progress looks assured.

Celsis – still good value

Shares in Celsis International, the developer of contamination tests that diagnose the presence of microbes, reached a new year high of 37.25p after it unfurled a 22 per cent rise in interim pre-tax profits to $2.1 million on turnover up six per cent to $13.5 million. This means the shares sit 26 per cent above the 29.5p price at which £1.6 million was raised via a small institutional placing in August and 59 per cent above our recommendation price in June.

Demand is strong for Celsis's rapid tests that screen consumer products, producing results within 24 hours. The group has received worldwide approval from Coca-Cola to test beverages but, at present, most focus is on testing dairy products and pharmaceutical/ personal care items, such as toothpaste and shampoos. Chief executive Jay LeCoque is confident of continued progress in the second half and also has an eye on buying up 'undervalued business opportunities'. At the moment, the shares trade on a historic p/e of 12.9. If this rate of growth continues as expected in the second half, then the group should remain on a single figure prospective p/e. Existing investors should hold on. Others might consider buying