The Babes in the Wood investors have taken time out to catch their breath. After selling three shares and investing in two more last month, they have refrained from calling their broker at all. “We want to let nature take its course,” says Barry Gardiner, the club’s treasurer.

But anyone who thinks that they are resting on their laurels while enjoying a healthy rise in the value of their portfolio would be mistaken; the club is contemplating its next move very carefully. Mr Gardiner says: “We are thinking about selling Morrisons. We didn’t commit to it in the last meeting, but we will discuss it again when we next get together.”

Wm Morrison, the supermarket group, has been a success story for the club. The shares have risen 63 per cent since they invested in the retailer in December 2005. But, as Sarah Butler explains below, prices have been buoyed by the investment suitors now circling the group’s larger rival, J Sainsbury. Should the potential buyers back off, all supermarket shares could suffer.

The Babes are also keeping a close eye on Augean, the waste-management company, which is currently 3.5 per cent down on what they paid for it in November. “The price has been fluctuating a lot, so we are watching carefully,” Mr Gardiner says.

Certainly this month is an important time for Augean. First, the company welcomes a new chief executive, with Peter Worlledge due to take the reins on Wednesday. He was most recently managing director of Waco UK, which manufactures relocatable and permanent modular buildings. Before that he was a director at Deloitte, the accountant.

In addition, Augean will announce its annual results. Analysts are awaiting the annual report with great interest — not for the figures, which are expected to be in line with a revised-down forecast, but rather for other information that the company has promised to deliver.

Perhaps the most important is a guide to valuing its assets. Francesca Raleigh, support services analyst at Numis, explains: “General landfill is valued at about £3 to £4 per cubic metre. But no one has put a price on the value of hazardous landfill sites. The company is set to share its views on how it values its landfill sites.”

The company is also expected to tackle the sporadic nature of its business by announcing how it intends to develop more contract work.However, the Babes also have Sir Alan Sugar in their sights. “We have been tracking Amstrad over the past couple of weeks and it is on the agenda for the next meeting,” Mr Gardiner says.

“The business can be lumpy, as it is difficult to predict demand more than a couple of months ahead. But by developing contracts, Augean can work at smoothing this out,” Ms Raleigh says.

EXPERT ANALYSIS: WM MORRISON

The club has done well with Wm Morrison since 2005, enjoying a 63 per cent rise in the supermarket’s share price.

The grocery market has been strong in the past six months, boosted by inflation in the price of some basic foods. A trend towards healthy eating has also encouraged shoppers to spend more on premium-quality foods.

That benign market meant that, like all the major supermarkets, Morrisons enjoyed a strong Christmas. Having completed the integration of Safeway, the much larger chain that it bought in 2004, Morrison is also enjoying a lift from its own medicine — improving operating margins through increased efficiencies.

In a fortnight Marc Bolland, the company’s relatively new chief executive, will outline his plans for the future of the business. He is expected to talk about ways of broadening Morrison’s appeal beyond its price-conscious heartland and may finally drag the historically gadget-shy retailer into the 21st century with new IT systems and online retailing.

Shares in all the supermarkets have recently been lifted by analysts’ recognition of their freehold property assets, particularly after it emerged that private equity firms are considering making a bid for J Sainsbury.

Analysts are hoping that Mr Bolland will also discuss ways for Morrison to capitalise on its property portfolio, which is valued at a minimum of £7.5 billion, against the company’s total market value of £8 billion. If Mr Bolland disappoints in this area and plays down hopes of dividend increases in favour of more investment in the business, the shares could fall back. If Sainsbury’s potential suitors walk away, that may also hit the share price.

Morrisons is valued at 26 times predicted 2008 earnings and 37 times the earnings that analysts expect to be revealed this month. The dividend yield also looks very weak at 1.4 per cent. For those looking to take profits, this is a good price to sell. But Morrison is still in recovery and, even without the Sainsbury’s factor, the shares will continue to be underwritten by its property assets, which may yet attract bid interest. Hold.

Sarah Butler, Retail Correspondent

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