IF General Electric wasn’t busy selling its Hotpoint washing machines to the highest Asian bidder, it could easily be casting an eye over Johnson Matthey.

Set aside for a moment GE boss Jeffrey Immelt’s struggles to turn round his giant personal-finance and commercial-lending arms, which hammered first-quarter earnings and prompted him to consider cutting adrift the group’s low-margin toaster and fridge-making division.

High-tech Johnson Matthey, which supplies catalytic converters to one in three new cars globally, has all the attributes that drew GE to Smiths Group’s aerospace arm and Amersham, the medical-imaging firm, before it.

After years of investment in and around platinum, Johnson Matthey has found its niche, which is growing fast and has high barriers to entry. It is one of only a handful of companies in the FTSE 100 with a green hue that can actually benefit from a soaring oil price and prosper while the automotive industry is in the doldrums.

Chief executive Neil Carson reckons that higher pump prices are forcing car owners to embrace diesel quicker. Some 60% of new car sales in the UK are diesel, where converters must be fitted as standard.

There is more legislation in the pipeline. For example, the market for heavy-duty diesel catalysts is due to rise from £350m to £1.5 billion by 2014.

Johnson Matthey’s earnings growth is predicted to hit 14% in 2009, up from an 8%-10% average in recent history. The cut it makes on distributing platinum for its mining partner Anglo American is also washing through nicely to the bottom line. Prices have soared 60% in a year.

Perhaps the only drawback is the dividend yield, which is a skimpy 2% because Johnson Matthey pours so much cash into research and development.

And then there is the management’s slightly monastic outlook on life. Despite good results last week and a series of upgrades, it feels as though the company has had more coverage in the past six months for being the last money lender, before Northern Rock, to be bailed out by the Bank of England - the legacy of misadventure in the 1970s.

Trading at 20 times this year’s earnings, the shares are pricey compared to peers.

However, like buying a platinum wedding ring, quality doesn’t come cheap.

Buy, before Immelt regains his composure.

Home Retail Group

IT seemed that dealers couldn’t decide whether Home Retail Group (HRG) was oversold last week. Its shares headed the blue-chip risers last Thursday only to join the pack of losers by Friday.

Even though the owner of Homebase and Argos has slid by 27% so far this year, in these markets it is best to err on the side of caution.

HRG has already flagged that it expects lower profits in 2009 as the rapid deterioration in the DIY market takes its toll.

Homebase is caught in a nasty nexus of adverse weather conditions, which are reducing the demand for gardening equipment, and belt-tightening, which has led to fewer home-decorating projects.

Like-for-like sales are expected to be down as much as 11% when it gives details of current trading on Thursday.

At least Argos, representing 85% of group profits, shows a little more promise. For example, sales of televisions and video-game consoles have already led it to overtake Comet as the second-biggest consumer-electronics retailer in the country behind Currys. Its internet division is growing at 30% a year and now accounts for 21% of Argos sales.

There is no doubting HRG faces a tough period, however. It may be ejected from the FTSE 100 later this month based on Tuesday’s closing price.

With consumers feeling the pinch and the Bank of England resisting calls to cut rates, it is hard to see where the catalyst for a recovery will come from.

james.ashton@sunday-times.co.uk

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