Derek Pain: Brewery joins ranks of those celebrating a very yeasty year

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The Independent Online

The stock market has enjoyed a splendid run in the past year with the benchmark Footsie index advancing around 1,000 points. Marston's is among the no pain, no gain portfolio constituents that have joined in the celebrations.

Last summer, the shares stood at around 105p. As I write they are 155p after touching 164.5p. Long regarded as the sober outsider among drink shares, their more recent display has almost put them in the same company as saloon bar high flyers.

The portfolio descended on the stock four years ago at 95p a time. For much of their inclusion they have been something of a disappointment. But in the past 15 months or so the shares have experienced a more cheerful glow. The dividend yield underlines the extent of the progress. Not so long ago, Marston's offered a return of more than 6 per cent. Nowadays it has been below 4 per cent.

The latest trading update from the brewer of such traditional beers as Pedigree and Brakspear and running around 2,100 pubs should go some way towards helping to retain the more celebratory atmosphere.

True, the shares fell rather sharply following the trading statement. But they had jumped excitedly beforehand and, I suspect, a few in-and-out merchants were keen to realise quick profits. I was, however, impressed by the company's comments and the portfolio intends to stick with an investment that is showing a handsome profit. With the arrival of summer trading has, not surprisingly, improved. In Marston's top outlets – a further 16 pub/restaurants have opened this year – like-for-like sales were up 2.1 per cent over 24 week. But in a more recent 10-week period, soaring temperatures have influenced a jump of 6 per cent.

The franchised and leasehold estates were described as performing in line with last year which was not what the bulls expected to hear. Still, I believe the shares, assuming the stock market keeps up at least some momentum, will continue to strengthen.

The portfolio arrived at Marston's when many share prices were at a low ebb, eroded by the impact of the financial crash. I then urged investors to take advantage of some of the prices prevailing. Time has proved it to be the right policy with the market now seemingly prepared to challenge its all-time peak.

Findel is another constituent that has got up a head of steam. The shares are above 200p compared with the portfolio's effective buying level in November of 142p. Stockbroker Peel Hunt has lifted its target price to 250p.

The home shopping group, where Toscafund Asset Management sits on approaching 30 per cent of the capital, may not be firing on all cylinders but its two most important divisions, accounting for around three quarters of its business, are doing well. The Express Gifts home shopping operation has achieved an 8 per cent sales advance and the educational supplies business gained some 9 per cent. On the debit side the Kitbag sports section was down 4 per cent against strong comparisons and work to rejuvenate Kleeneze is having "some early success".

But the portfolio still lives with loss makers. Avation, the aircraft leaser, continues to expand and has gained another customer, but the shares remain below the portfolio's buying price. The newcomer is Fiji Airways. It has negotiated a 12-year deal at "typical commercial lease rates" on an ATR 72-600 aircraft. The shares have lost some of their recent altitude and against the 83.5p paid by the portfolio are down to 71.5p. Still, is sticking with its buy recommendation. And stockbroker WH Ireland now has a 125p target price.

SnackTime, the vending group that has failed to deliver in share in price terms, reported its best quarterly performance for almost a year, although the improvement seems to stem largely from cost cutting.

Still, such progress is not to be discounted. Stockbroker Westhouse Securities recently produced a 20p target price with an "add" recommendation.

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