In Britain, its trains helicopter aircrews for the RAF, operates tugs for the Royal Navy, runs prisons and operates the Docklands Light Railway. Interim figures showed a 20 per cent rise in pre-tax profits to £67.3m and a 20.3 per cent increase in its dividend. Serco shares are not as cheap as at the beginning of the summer, but at 409.25p they still have plenty of potential. Buy.

Oxford Catalysts produces catalysts that create clean fuels from oil, gas, coal and green energy sources, such as waste.

Like many inventive companies, Oxford Catalysts is loss-making, but it has plenty of cash in the bank and licenses its technology to bigger partners, so it can focus on innovation. Shares are at 168.5p and have been stable for much of the year. Buying into small firms with clever ideas is risky, but this is one that could prove rewarding for investors ready to take a punt.



Sunday Telegraph

Biometric and radio-frequency identification (RFID) microchips developed by RCG Holdings are used in everything from container ships, where they aid the tracking of consignments, to hospital wristbands that help prevent the kidnap of babies.

Research suggests its markets are likely to grow at 20 per cent a year. China and Malaysia-based RCG has just reported a near doubling of profits to £23m.

The stock looks undervalued at 76p, partly because of issues surrounding the death of a major shareholder. So investors should exercise caution.

Investors fed up of waiting for the traditional pharma companies to deliver on their promises could do worse than with Dechra. It is Britain's third largest veterinary drugs and services company. It posted a healthy increase in profits after January's acquisition of VetXX which expanded its presence in Europe. But the main interest in the group has been its push into the United States, a market 10 times the size of Britain.

Analysts believe that could add as much as $25m to annual turnover over the next three years. Broker Dresdner upgraded its target price from 525p to 580p, compared with a current price of just 424.5p. With such significant upside, the stock looks attractive. Buy.