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?
SPONSORED FEATURES
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

    £16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

    SThree: Experienced Recruitment Consultant

    £20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

    Recruitment Genius: Collections Agent

    £14000 - £16000 per annum: Recruitment Genius: This company was established in...

    Day In a Page

    The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

    They fled war in Syria...

    ...only to get stuck and sidetracked in Hungary
    From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

    Title sequences: From The Prisoner to Mad Men

    Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
    Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

    Giorgio Armani Beauty's foundations

    Sumptuous fabrics meet luscious cosmetics for this elegant look
    From stowaways to Operation Stack: Life in a transcontinental lorry cab

    Life from the inside of a trucker's cab

    From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
    Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

    Kelis interview

    The singer and sauce-maker on cooking for Pharrell
    Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

    Cameron lowered the flag for the dead king of Saudi Arabia...

    But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
    Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

    Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

    Humanity must be at the heart of politics, says Jeremy Corbyn
    Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

    Joe Biden's 'tease tour'

    Could the US Vice-President be testing the water for a presidential run?
    Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

    Britain's 24-hour culture

    With the 'leisured society' a distant dream we're working longer and less regular hours than ever
    Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

    The addictive nature of Diplomacy

    Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
    Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

    Fashion: Ooh, Lady Chatterley!

    Take inspiration from DH Lawrence's racy tome with equally racy underwear
    8 best children's clocks

    Tick-tock: 8 best children's clocks

    Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
    Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

    Charlie Austin: ‘If the move is not right, I’m not going’

    After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

    'If we lose touch we’ll end up with two decades of the Tories'

    In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea