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
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

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    SThree: Talent Acquisition Consultant

    £22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

    Day In a Page

    Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

    Making of a killer

    What motivated a shy student to kill 38 holidaymakers in Tunisia?
    UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

    Just when you thought your commute couldn't get any worse...

    Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
    Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

    The Real Stories of Migrant Britain

    Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
    Cheaper energy on the way, but it's not all sunshine and rainbows

    Cheaper energy on the way, but it's not all sunshine and rainbows

    Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
    Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

    No grace of God for Katy Perry as sisters act to stop her buying convent

    Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
    Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

    Residents just want water and power in a city chosen to be a ‘smart’ metropolis

    The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
    Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

    Something wicked?

    Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
    10 best sun creams for body

    10 best sun creams for body

    Make sure you’re protected from head to toe in the heatwave
    Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

    Nick Bollettieri's Wimbledon files

    Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
    Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

    There is more than a shiny trophy to be won by England’s World Cup women

    The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
    How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

    How to stop an asteroid hitting Earth

    Would people cooperate to face a global peril?
    Just one day to find €1.6bn: Greece edges nearer euro exit

    One day to find €1.6bn

    Greece is edging inexorably towards an exit from the euro
    New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

    'Iron Man' augmented reality technology could become reality

    Holographic projections would provide extra information on objects in a person's visual field in real time
    Sugary drinks 'are killing 184,000 adults around the world every year'

    Sugary drinks are killing 184,000 adults around the world every year

    The drinks that should be eliminated from people's diets
    Pride of Place: Historians map out untold LGBT histories of locations throughout UK

    Historians map out untold LGBT histories

    Public are being asked to help improve the map