With pub company share prices going down as rapidly as a pint of cold lager on a summer’s day, investors could be forgiven for thinking that the sector is drinking in the last-chance saloon. Shares in Punch Taverns have fallen by almost 80 per cent in the past 12 months, suffering a horrendous sell-off in the past few weeks, yet as recently as March it was still exploring a possible bid for Mitchells & Butlers (down 77 per cent on a year ago).

But yesterday’s full-year results from Greene King, which has seen its shares fall by a comparatively modest 58 per cent, suggest that, while the trading environment is tough, the most agile operators can still make decent money. Pre-tax profits before exceptionals rose 2 per cent to £142 million from revenue up 5 per cent to £960.5 million, while adjusted earnings per share were 14 per cent better at 74p, allowing the group to lift the dividend by 14 per cent.

Given the wider trading environment – and the travails of some rivals – these are strong numbers. The group has had to contend with a smoking ban, a duty increase, dirt cheap supermarket beer, a huge rise in costs such as food, glass and energy, poor weather and, last but not least, consumer confidence at an 18-year low.

Greene King, which has almost 2,600 pubs, has been able to weather this storm better than most by being nimble on its feet in meeting consumers’ changing circumstances, ruthlessly attacking costs and continuing to invest judiciously in both the fabric of its pubs – the first conversions to the Loch Fyne brand look promising – and the marketing of its three main ale brands: Abbot, Old Speckled Hen and Greene King IPA.

That said, the fourth quarter, which included a cold Easter, was not great, and the first few weeks of the new financial year have followed a similar pattern. Consumers, as the Marks & Spencer figures show, are unlikely to loosen their purse strings any time soon and cost pressures look set to worsen before they improve. But after last year’s dire weather, even an average British summer would provide a boost. What’s more, the 18 per cent profit jump at its Belhaven operation in the second year after the Scottish smoking ban provides a glimmer of hope of some improvement south of the border in the coming year.

The other factor in Greene King’s favour is its financial position. It recently refinanced on good terms, removing any credit risk until 2012. It also revealed that it has secured agreement in principle from HM Revenue & Customs to convert to a real estate investment trust without having to undergo a demerger. It will report back on this in December.

The pub sector may be in the eye of a perfect storm and shares may have further to fall. But investors seeking long-term value could do worse than buy into Greene King.

Centrica

Centrica is a well-run company with one big problem. With 16 million customers, Britain’s biggest retail supplier of gas and electricity lacks enough of its own power stations and gas supplies to serve them.

This leaves it more exposed to fluctuations in the wholesale energy market than any of its competitors, a predicament that has undermined its profit margins this year as prices have soared. The problem is compounded because 95 per cent of Centrica’s own electricity generation comes from gas-fired power plants.

All of which has left its shares trading at a significant discount to better-hedged rivals with more access to their own, more diversified power supplies. The shares have drifted from nearly 400p last autumn to 299p.

But Centrica’s management is all too aware of the problem. Success in tackling the issue through an acquisition or merger would prompt a rerating of its valuation, making this a good buying opportunity.

Some kind of tie-up with British Energy, the nuclear generator, remains a possibility but there are plenty of other options. Centrica’s announcement yesterday that it is to drill for coal-bed methane in South Wales demonstrates a willingness to think creatively about the issue.

In the meantime, the company is unlikely to shy away from raising retail prices in the next two months – a step that will help to protect its short-term margins. The shares are worth holding.

Game Group

What better way to escape from the current economic gloom than by shooting a few villains in a fantasy world? If shoppers are tightening their belts when it comes to spending on food and clothes, they are showing no such restraint when it comes to the latest video and PC game releases. Game Group yesterday reported a 28 per cent jump in like-for-like sales in the first half. The computer games retailer is not immune to the wider high street malaise yet it is doing a good job of appearing to live in a parallel universe.

Game has been helped by an unusually strong release schedule in the shape of Grand Theft Auto IV and Metal Gear Solid 4. The momentum is bound to slow next year, although Game says Christmas releases will also be strong, albeit lacking a single blockbuster.

Fans of Game Group argue that many more people now have consoles as the market has spread beyond the bedrooms of teenage boys into the nation’s living rooms, thanks particularly to Nintendo’s Wii. But bears argue that this is a cyclical business and that Game is at or very near the top of the cycle.

Competition is also increasing, as the likes of HMV and Tesco step up their interest, putting pressure on prices. Game may be the high street star for now, but it will be difficult to keep this up as the consumer slowdown gathers pace. Avoid.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• Unemployment rises at fastest rate in 17 years
• Alchemy leads in Fraser and Mosaic bid talks
• US and UK shares slump as recession looms