Derek Pain: I'll ignore sell talk and keep Whitbread

No Pain, No Gain

The City seems to have mixed feelings about the Whitbread leisure group. Whereas some stock-market players enthusiastically claim the shares are on the way to 2,650p – even 2,800p – others are much more subdued.

Indeed, it is not difficult to come across those who suggest selling is the order of the day. According to many stockbroker analysts, the shares will suffer from profit taking and it would be wise to at least trim holdings. There is also a feeling that the group faces some uncomfortable trading as customers tighten their belts.

True, Whitbread shares are not in the bargain basement. The no pain, no gain portfolio has enjoyed a generous time since it invested at 1,105p in July 2008 against, as I write, 2,419p.

Like all consumer-facing businesses the budget hotels, pub/restaurants and Costa Coffee group, operates in a tough environment. Yet it enjoyed robust trading in its third quarter and seems to be on track to meet, and possibly exceed, City expectations.

The powerhouse is the Costa operation. At the last count the rapidly expanding division embraced 2,437 coffee shops and 2,365 stand-alone coffee machines. To add a little caffeine stimulation to Costa's growth there is every possibility that it will continue to benefit in this country from rival Starbucks' tax humiliation. There is also the prospect that Whitbread will eventually float the coffee side as a separate company. So the portfolio is hanging on to the shares.

The trading update came too late for my portfolio valuation, published last week. Nevertheless, its performance, which briefly pushed the shares to 2,557p, represented a high note on which this column ends 2012 as my next effort will not appear until next year.

There is, it appears, a view that it could be a rewarding one. Schroders, one of the City' oldest names, is bullish. It says unequivocally : "We have already passed the low points for UK equities – below 3,500 on FTSE 100 twice in the last 12 years – and are in the foothills of a new bull run." And AXA Investment Managers suggest being "overweight" in shares.

Others who are relatively cheerful include Aberdeen, the investment group, claiming "investment opportunities remain" despite world economic uncertainty and Bestinvest which says shares provide better value than fixed-income offerings and adds: "Equity yields are also attractive and well covered by underlying earnings."

The closing year has yielded some smart returns as evidenced by the Footsie advancing some 500 points although it is still a long way from the high achieved at the turn of the century when it almost touched 7,000.

I am happy to go along with the optimists; shares should make further headway next year, although I would be surprised if the old peak is conquered. After all, the euro crisis and worldwide economic problems are unlikely to be resolved in the coming 12 months.

One share, naturally a no pain, no gain constituent, I expect to perform is Northern Petroleum. It has been something of a disappointment with the stock market unwilling to accept the valuations flying around. The dry well off the South American coast that I referred to last week has, I believe, had an unjustifiably severe impact.

Director buying has helped lift the price from 48p to around 57.5p, still below the portfolio's 68p investment., the internet website, points out that Northern's stake in the South American exercise may be worth £60m. At the present £54m capitalisation, the rest of the group's interests are, therefore, in for nothing. Assets include £22m in the bank, wells in England and Holland and highly promising licences in Italy that together could add up to around £174m.

The dry drilling has little, if any, impact on the likely value of the South American adventure. Oil has already been found in the vicinity and further exploration is expected to confirm impressions that a significant oil field has been discovered

Avation, another constituent, continues supplying aircraft to the joint venture of Australian airlines SkyWest and Virgin Australia. Although profit expectations have been pulled back, the shares still have long-term attractions.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Barn owls are among species that could be affected
charity appeal
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
Life and Style
news... you won't believe how bad their skills were

Arts and Entertainment
Mark Wright and Mark Wright
tvStrictly goes head-to-head with Apprentice
footballPremier League preview: All the talking points ahead of this weekend's clashes
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

    $200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

    Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

    $125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

    Sheridan Maine: Commercial Finance Manager

    Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

    Sheridan Maine: Regulatory Reporting Accountant

    Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

    Day In a Page

    Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

    Homeless Veterans appeal

    In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
    Could cannabis oil reverse the effects of cancer?

    Could cannabis oil reverse effects of cancer?

    As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
    The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

    The Interview movie review

    You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
    Serial mania has propelled podcasts into the cultural mainstream

    How podcasts became mainstream

    People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
    Jesus Christ has become an unlikely pin-up for hipster marketing companies

    Jesus Christ has become an unlikely pin-up

    Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
    Rosetta space mission voted most important scientific breakthrough of 2014

    A memorable year for science – if not for mice

    The most important scientific breakthroughs of 2014
    Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

    Christmas cocktails to make you merry

    Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
    5 best activity trackers

    Fitness technology: 5 best activity trackers

    Up the ante in your regimen and change the habits of a lifetime with this wearable tech
    Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

    Paul Scholes column

    It's a little-known fact, but I have played one of the seven dwarves
    Fifa's travelling circus once again steals limelight from real stars

    Fifa's travelling circus once again steals limelight from real stars

    Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
    Frank Warren column: 2014 – boxing is back and winning new fans

    Frank Warren: Boxing is back and winning new fans

    2014 proves it's now one of sport's biggest hitters again
    Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

    Jeb Bush vs Hillary Clinton

    Karen Tumulty explores the power dynamics of the two first families
    Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

    Stockholm is rivalling Silicon Valley

    The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
    Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

    Crucified Santa: Urban myth refuses to die

    The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
    Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

    The Boy in the Dress: On set with the stars

    Walliams' story about a boy who goes to school in a dress will be shown this Christmas