Tip of the month

My tip this month is Europe's third-largest electrical retail group, Kesa Electricals, which operates in 12 countries. US retail giant Best Buy, which partnered up with Carphone Warehouse, will continue its bargain-buying spree and could also scoop up Kesa, driving the share price to 300p this year. Kesa's pre-tax profits were £133m to January 31, 2008, excluding the furniture and electrical subsidiary BUT, which was sold in January.

The business has made substantial profits—sales rose from £3.91bn to £4.31bn, despite dire trading conditions. Numis Securities forecasts 2008/9 profits of £165m. While Kesa's French company, Darty, enjoyed sales up four per cent, its UK sister company, Comet, announced sales only slightly up with retail profit down four per cent. This leaves Kesa vulnerable to a bid. But demand is strong for high-tech equipment, especially flat-screen TVs and laptops, and Web-generated sales are booming. Kesa's share buy-back programme underpins the share price.

Buy Kesa Electricals at 227p with a 20 per cent trailing stop loss to protect you against any unexpected market fall backs.

Stockmarket and alternative investments can fall as well as rise in value. Readers should consult their own professional advisers.