There are some additions and some subtractions to the list of recommended stocks for 2007, starting with another renewable energy name, writes Pramit Ghose

For 2007, Bloxham remains of the view that the trend in the global oil and gas markets presents interesting investment opportunities in alternative energy.

Following on from the success of our Gamesa recommendation last year, we have therefore decided to add another renewable energy name to our stock list for 2007.

Outside the wind power sector, Conergy represents our preferred play in the renewable energy space. The company develops and sells renewable energy equipment, primarily in solar power. The market has enjoyed strong growth in recent years and Conergy itself has delivered average revenue growth of nearly 100 per cent annually over the last three years.

Supported by international expansion outside the domestic German market and diversification of the product offering, sales are expected to grow annually at a minimum rate of 50 per cent over the next three years. With earnings expected to double over that period, we believe that Conergy represents an exciting growth company offering an attractive exposure to alternative energy.

CSR represents a unique play on the transition of consumer electronics to a wireless world.

The company is currently the number one player in the Bluetooth market, designing and manufacturing single-chip wireless devices. Its products are used in a range of electronic products including mobile phones, PCs and games consoles.

CSR has a strong track record and the group has established a market leadership position, boasting a unit market share in excess of 50 per cent. While recent share price performance has been volatile, we continue to believe that the shares offer attractive upside over the longer term.

Indeed, it is our view that the current valuation fails to reflect the company's strong growth potential. Growth is likely to be driven by increasing attach rates in mobile phones, design wins in mp3 and gaming (including the PS3) and rising automotive attach rates driven by legislative changes. Earnings are forecast to grow more than 25 per cent next year, yet the shares currently trade on a prospective 2007 P/E of only 13 times.

The Senior company designs and manufactures engineering products for the aerospace, automotive and specialised industrial markets.

The company's aerospace operations are enjoying some thing of a boon period at present, powered by the demand for Boeing and Airbus aircraft that should see build rates at a higher level for a number of years to come.

While the travails of the automotive market are well documented with build rates of passenger cars likely to remain flat in the group's markets over the near term, it is the longer- term opportunity in heavy-duty diesel products that we believe makes the shares attractive.

The availability of common rail diesel technology in recent years means that diesel engine vehicles in Europe continue to gain market share. This high pressure fuel technology improves performance and fuel consumption and helps meet emission standards.

However, it is the large US market that represents the greatest long-term opportunity.

Production of the new heavy-duty diesel products is on schedule for late 2006 and represents the beginning of significant organic growth potential. With analyst estimates failing to reflect this sizable growth opportunity, we believe that earnings upgrades will drive the shares higher over the next 18 months.

United Drug remains on our list and offers a unique sectoral exposure on the Irish stock market, namely low-risk healthcare. Its defensive characteristics combined with growth trajectory make it one of the low-risk ways to gain an Irish healthcare exposure.

While the shares have underperformed of late, we believe that the current share price fails to reflect United Drug's longer-term growth credentials. The group's high growth earnings track record continues unabated, and the company can now boast 21 consecutive years of double- digit earnings, profit and dividend growth.

That out-performance reflects a high-calibre management team delivering on a strategy of developing its niche markets, pharmacy wholesale and manufacturer outsourced services. Despite these positives, the share price has remained moribund for the past two years, and now trades at a significant discount to its historical valuation.

As the worst performing bank on the UK market this year, HSBC naturally appeals to our contrarian instincts and now features as a holding in all three of the Bloxham investment styles.

Our view remains that the shares remain attractive for long-term investors seeking a quality global bank with a solid dividend yield of nearly 5 per cent, and so we have retained it on our 2007 list.

Valuation attractions remain strong with the stock trading on a P/E discount to the European banking peer group and a modest yield premium.

The bank operates a quality global banking franchise and in addition to a strong presence in the UK and US, HSBC also offers attractive exposure to Asia-Pacific and South America which are the exciting growth areas.

While concerns relating to the US credit environment have led to a 10 per cent fall in the shares since November, we remain fans of the "World's Local Bank".

Pramit Ghose is a partner in Bloxham Stockbrokers