Derek Pain: I'm looking to recruit new shares to lift my selection to a sweet 16

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The Independent Online

I am examining four possible additions to the No Pain, No Gain portfolio. Quite clearly it needs recruits, with its number down to a dozen and one constituent, Spirit Pub Co, due to depart next year.

It is my belief that 16 is a nice number for a small portfolio. Such a size allows for a wide spread of interests and should cater for most eventualities. I am not suggesting that the four under my microscope will all achieve membership. But with the column due a festive break, I feel there should be some indication of possible arrivals.

Still, I doubt if any of my foursome will enjoy the reception that greeted my last newcomer, Fulham Shore, a restaurant business. When I put pen to paper, the shares were 9.5p. As I write, the price is 17.25p. The company is run by two former Pizza Express men, David Page and Nabil Mankarious. And the Pizza Express influence is not far from one of my contenders, Patisserie, headed by Luke Johnson. He developed the Italian pizza chain, while the cakes and sandwiches operation, renowned for its Patisserie Valerie brand, is one of his many current enterprises.

It arrived on the stock market earlier this year at 170p; the price is now above 240p. The chain has about 150 branches and is on the expansion trail.

The last set of profits was encouraging at £11.3m and the broker Canaccord Genuity expects £14.2m this year. Unfortunately, the shares are already on a fairly high rating.

I am also intrigued by Peel Hotels, developed and run by the experienced hotelier Robert Peel, whose brother helped create the broker Peel Hunt. Shares in the nine-strong chain are, on the surface, even more pricey than Patisserie, but the group reported robust interim profits of £555,000, against £202,000 last year. Mr Peel observed that after some years of disappointing results, an improvement could be expected. The shares are around 80p; they have been much higher.

Mr Peel has spent his entire working life in the hotel industry and was responsible for the development of the quoted Mount Charlotte chain.

Number three is Utilitywise, which takes advantage of soaring energy prices with cheaper offerings. The shares are well below their year's high at around 250p, although profits have nearly doubled and the dividend was lifted from 2.6p a share to 4p. Further progress is expected this year.

My final possibility is an outright gamble but could be worth accommodating. Distil, once known as Blavod, has often disappointed but there are distinct signs it is at last on the verge of leaving its more sober days behind. It has established a promising range of spirits, although, not surprisingly, there was a £198,000 interim loss. The shares are priced at just less than 1p, capitalising the group at £3.3m. It is a tiny player in an industry dominated by giants.

Two existing constituents have been in action. Whitbread, the leisure group embracing Premier Inn budget hotels and Costa Coffee parlours, produced yet another upbeat trading statement. Total sales grew 13.2 per cent in its third quarter, prompting at least one stockbroker to increase the year's profit expectations by 3 per cent.

And Avation, the aircraft leasing group, has refinanced, through its still AIM-quoted Capital Lease Aviation off-shoot, two aircraft operated by Thomas Cook. The deal reduces the interest load and there are suggestions that similar arrangements could be put in place to cut the overall interest bill.

yourmoney@independent.co.uk

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