Derek Pain: A more demanding stock market has led to some surprises

Has the stock market taken a dislike to the no pain, no gain portfolio? The depressing way that perfectly reasonable results by some constituents have been greeted must at least raise the possibility that the City has become even more demanding.

Last week I indicated that interim figures from the brewer Marston's deserved a more appreciative reaction. The shares dropped sharply before I had put pen to paper. They then recovered. This week I am complaining about the way the shares of two other members, the cash and carry chain Booker and support services group Mears, have responded – perhaps only initially – to what I regard as acceptable announcements.

A quick examination of some other mid and small caps that are not involved in my portfolio has underlined my belief that the stock market, in a year when shares are expected to make considerable headway, wants more buoyant displays by companies than in the past.

Quite a few observers have made the point that some pretty outstanding company performances are needed to keep enthusiasm on the boil. So what was regarded as more than acceptable last year is now seen as mundane.

After all, many share ratings have increased as prices have advanced, so adjustments to attitudes could be justified.

Even so, I am disappointed at the reaction to Booker's year's performance. Sales rose 17.3 per cent to £4.7bn, with pre-tax profits emerging at £122.1m against £92.1m. True, some of the revenue advance stems from the Makro acquisition, but Booker's own returns were up 2.1 per cent. The group adds that sales in the first seven weeks of the current year were ahead of last year's corresponding display, although competition (no doubt represented by supermarket price cutting) is intense.

Booker is increasing the year's dividend by 22 per cent to 3.2p a share and, with cash reserves up from £77.2m to £149.6m, is launching a 3.5p a share special dividend. A similar exercise is anticipated next year.

The group's shares hit a 176.5p peak in March, about the time a trading update was circulated. Since then downward pressure has materialised. Before the figures the price had dipped below 140p; there was a minor rally when the results were published last week, but as I write the shares are 137.1p, a level last seen in September. I realise they are still highly rated, but the Booker display pales against a stock market not far from its all-time peak.

Mears has suffered a similar fate. Before and after it produced a satisfactory trading statement its shares lost their buoyancy. I do not know whether, like Booker, some bright City sparks had suggested that trading had deteriorated. I think not. Yet other than the usual stock market wheeling and dealing, there is no other explanation than the demand for higher expectations.

Mears shares touched 542p last month. They are now around 472p. Yet the statement talks of trading in line with expectations and says the social housing side enjoyed "solid" performances and the home care division "progressed strongly". It adds that new contracts worth £110m have been signed so far this year and 94 per cent of expected turnover for this year and 72 per cent of next year's figure have been lined up.

Stock Spirits has, however, resisted any stock market hangover. The shares are little changed at around 290p after a first-quarter statement that said it had started the year well but higher duties imposed in Poland had "negatively impacted", as expected, on the spirits industry.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Life and Style
Steve Shaw shows Kate how to get wet behind the ears and how to align her neck
healthSteven Shaw - the 'Buddha of Breaststroke' - applies Alexander Technique to the watery sport
News
A poster by Durham Constabulary
news
Sport
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
music
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Guru Careers: Software Developer / C# Developer

    £40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

    Neil Pavier: Management Accountant

    £45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

    Sheridan Maine: Commercial Accountant

    £45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

    Laura Norton: Project Accountant

    £50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

    Day In a Page

    Abuse - and the hell that came afterwards

    Abuse - and the hell that follows

    James Rhodes on the extraordinary legal battle to publish his memoir
    Why we need a 'tranquility map' of England, according to campaigners

    It's oh so quiet!

    The case for a 'tranquility map' of England
    'Timeless fashion': It may be a paradox, but the industry loves it

    'Timeless fashion'

    It may be a paradox, but the industry loves it
    If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

    Could have done with Osama bin Laden staying alive?

    Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
    New exhibition celebrates the evolution of swimwear

    Evolution of swimwear

    From bathing dresses in the twenties to modern bikinis
    Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

    Sun, sex and an anthropological study

    One academic’s summer of hell in Magaluf
    From Shakespeare to Rising Damp... to Vicious

    Frances de la Tour's 50-year triumph

    'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
    'That Whitsun, I was late getting away...'

    Ian McMillan on the Whitsun Weddings

    This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
    Kathryn Williams explores the works and influences of Sylvia Plath in a new light

    Songs from the bell jar

    Kathryn Williams explores the works and influences of Sylvia Plath
    How one man's day in high heels showed him that Cannes must change its 'no flats' policy

    One man's day in high heels

    ...showed him that Cannes must change its 'flats' policy
    Is a quiet crusade to reform executive pay bearing fruit?

    Is a quiet crusade to reform executive pay bearing fruit?

    Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
    The King David Hotel gives precious work to Palestinians - unless peace talks are on

    King David Hotel: Palestinians not included

    The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
    More people moving from Australia to New Zealand than in the other direction for first time in 24 years

    End of the Aussie brain drain

    More people moving from Australia to New Zealand than in the other direction for first time in 24 years
    Meditation is touted as a cure for mental instability but can it actually be bad for you?

    Can meditation be bad for you?

    Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
    Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

    Australia's first-ever Eurovision entrant

    Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine