Derek Pain: I'm taking the plunge by recruiting Alkane and mauled Lloyds

No Pain, No Gain

The stock market has lost some of its exuberance. At one time, it seemed likely that it would cement the early form achieved in the first part of the year with a 2013 challenge to its all-time peak. However, with the recent in-and-out displays, such hopes have receded.

The Footsie hit its record high as the internet frenzy at the turn of the century sent any share with a hint of online ability soaring into the stratosphere. As the old century drew to a close, the benchmark index hit 6,950 points, before ending the day at 6,930. With the index achieving 6,845 in May, there seemed every chance the buoyancy that had driven blue-chip shares more than 1,000 points in less than a year would continue to influence sentiment and produce a record.

However, shares are now so uncertain that any investor wishing to alight on new stocks can face some difficult decisions. The no pain, no gain portfolio is in that very same boat. After kicking out two underperformers, there was a temptation to rush into producing some new recruits. But the volatile stock market atmosphere, together with my belief that many shares are probably near to being fully valued, have created selection problems.

Still, nothing ventured, nothing gained. I have descended on a couple of widely contrasting shares that will return the portfolio to its 14-strong contingent. I have my eye on one other stock that could be enlisted in the next few weeks or so.

An AIM share and a rather mauled but recovering blue-chip have caught my eye. One is called Alkane Energy, which is on the junior market; the other constituent will no doubt surprise many readers; it's Lloyds Banking Group.

I usually shy away from recruiting a share where the price has doubled in a year and is around its peak. But Alkane, where prospects are encouraging, seems worth the risk. At 40.75p the group, a successful niche player in the energy business, is capitalised at £50m.

It produced an encouraging trading update in May and I expect the half-time figures, due next month, will underline progress. The May statement said 89 per cent of the year's output was already under contract. Just ahead of the comments the company acquired some assets of the doomed Maltby colliery, once the pride and joy of former portfolio constituent, Hargreaves Services. Alkane has an intriguing role in the power game. It captures methane gas from abandoned coal mines, and there are plenty of them, then converts it into electricity. The resultant product is sold to the National Grid. The company also has shale gas licences.

With Britain's anticipated energy crisis, Alkane seems to be sitting pretty. Recently the industry regulator warned of possible troubles. It could be the country will suffer blackouts as it did during the 1970s coal-mining strike. The last set of figures, at the pre-tax level, were a peak £2.3m against £1.7m. It has a record of eight years' growth and with electricity prices likely to increase and with the shale potential, Alkane, now paying dividends, seems in an enviable position.

Lloyds has made headway in the past year or so and with the ballyhoo which will surround the sale of the government's stake, there seems every reason to believe progress is on the cards. In addition the bank, which has suffered embarrassment since former Prime Minister Gordon Brown encouraged it to rescue Halifax/Bank of Scotland, has indicated that dividend payments may not be too far off. The flotation this year of 630 branches will remove another uncertainty.

I am not anticipating the shares, now 74.8p, will return any time soon to around the 600p achieved before the financial crisis erupted. But they have made remarkable progress since those dark days when the problems at HBoS became apparent. The shares are near a year's high and seem immune from the continuous (and often deserved) banker bashing.

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

Finacial products from our partners
Property search
  • Get to the point
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

    Ashdown Group: Editor-in-chief - Financial Services - City, London

    £60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Guru Careers: Management Accountant

    £27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

    Guru Careers: Project Manager / Business Analyst

    £40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

    Day In a Page

    General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

    Miliband's unlikely journey from hapless geek to heart-throb

    He was meant to be Labour's biggest handicap - but has become almost an asset
    General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

    On the margins

    From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
    Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

    'This is the battle of young Egypt for the future of our country'

    Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
    Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

    Why patients must rely less on doctors

    Improving our own health is the 'blockbuster drug of the century'
    Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

    Flesh in Venice

    Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
    11 best anti-ageing day creams

    11 best anti-ageing day creams

    Slow down the ageing process with one of these high-performance, hardworking anti-agers
    Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

    Juventus vs Real Madrid

    Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
    Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

    Ashes series looks a lost cause for England...

    Whoever takes over as ECB director of cricket, says Stephen Brenkley
    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power