Two months after it was issued, January's profit warning from Hochschild Mining might appear something of an irrelevance.

Shares in the £1.2 billion group - floated in London in late 2006 - fell 23 per cent after it cautioned that gold grades at its Ares and Selene mines in Peru were lower than expected, meaning that gold production this year would be lower than in 2007. It also said that the cost of accelerating the development of its newer silver mines in Peru and Argentina would put pressure on margins, all the more so given that it has minority partners in these projects, meaning their incremental contribution to profits will be less from its older mines, which Hochschild owns outright.

Yet since January the gold price has risen 17 per cent and silver at more than twice that pace - about 35 per cent - which is helpful, given that the Ares and Selene setbacks mean that silver will account for two thirds of this year's production, instead of the half that it contributed in 2007. After the expiry of gold and silver hedging arrangements last summer, Hochschild will feel the full benefit of those moves.

Given previous disappointments, it was a relief that Hochschild, the world's fourth-biggest silver producer, used yesterday's full-year results to reaffirm its target of producing 26 million ounces of the metal in 2008.

There were two other comforts. No doubt conscious of its need to assuage investors, the company declared a final dividend of 7.2 cents, making 9.2 cents for the year - a fourfold increase on 2007. Elsewhere, Hochschild confirmed the average cost per tonne of extracting ore from its five mines would be “at or below 2007 levels”, impressive given its sector's strong cost inflation and US dollar weakness.

That Hochschild's shares - still 10 per cent below their pre-warning level - have not fully priced in this year's precious metals rally is a measure of the City's shaken confidence in Hochschild's forecasting abilities. They are also hampered by illiquidity: the free float is only 32 per cent, with the Hochschild family retaining a 59 per cent stake.

But the company, which has a 97-year pedigree in Latin America, must be given credit for its ability to prosper in Peru: a country in which rival miners have been hindered by labour unrest and land rights protests. Its interests in Mexico - its San Felipe mine is due to begin production late next year - and, more recently, Canada, promise long-term output growth, while

$300 million of cash and a $200 million acquisition facility give it scope to supplement its portfolio.

On the view that trust in Hochschild's targets will build, the shares, at 415p, should be tucked away. Buy.

Yule Catto

Shareholders in Yule Catto might feel in need of some of the antidepressants for which the chemicals group provides ingredients. The company's exposure to price rises in oil-derived raw materials, faltering construction spending - it supplies additives used in paint, concrete and flooring adhesive - and unease over a £171 million debt burden have helped its stock to fall more than 40 per cent since October.

Yesterday's full-year figures helped to lift the gloom. A 10 per cent increase in pre-tax profits meant that the group beat forecasts for the first time in recent years, while its polymer division, which accounts for three quarters of sales, produced record earnings on operating margins that rose for the second half-year in a row. Growth was especially strong in Malaysia, where a new latex plant to supply synthetic glove makers is running at full capacity. Elsewhere, the company's agreement to sell James Robinson, a maker of photographic chemicals, and willingness to divest other parts of its Impact chemicals division, which faces tough competition from Asia, provided evidence of progress in restructuring and the scope to bring down debt. A sharp fall in the group's pension deficit to £34 million also reassured. At less than nine times 2008 earnings, Yule Catto is a tempting recovery play, which also offers the highest dividend yield in its sector: a prospective 7 per cent.

However, that allure is outweighed by its balance sheet and yesterday's 14 per cent bounce to 159p. Avoid.

BPP Holdings

That Roger Siddle's first move as chief executive of BPP should be to bring in management consultants - the training group announced a £1 million strategic review yesterday - is unfortunate. Mr Siddle joined last November after 17 years with Bain and so shareholders might feel that consulting skills were not something of which BPP is short. With the provider of professional education also flagging up a £1.5 million reorganisation charge and an £8 million investment in IT, profit forecasts were nudged lower and the shares fell to 510p, a two-year low.

Those plans overshadowed otherwise strong full-year figures, with sales up 16 per cent, earnings per share ahead 32 per cent and all three divisions performing well. They also threatened to obscure the greater opportunity that lies ahead (and which Mr Siddle is seeking to determine): having become the first company in Britain to be granted degree-awarding powers, BPP, through its start-up business school, has the chance to tap a £1 billion post-graduate market. In the near-term, BPP's core law and accountancy courses provide defensiveness, and direct exposure to financial market weakness is modest, with training for investment banks less than a tenth of sales. Although a forward earnings multiple of 15.8 reflects the short-term drag on profits, BPP's longer-term prospects remain intact. Hold on.

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