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

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

    Guru Careers: Pricing Analyst

    £30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

    Guru Careers: C# Project Team Lead

    £55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

    Day In a Page

    Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

    Blundering Blair quits as Middle East peace envoy – only Israel will miss him

    For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
    Fifa corruption arrests: All hail the Feds for riding to football's rescue

    Fifa corruption arrests

    All hail the Feds for riding to football's rescue, says Ian Herbert
    Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

    The Kurdish enclave still resisting the tyranny of Assad and Isis

    In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
    How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

    How I survived Cambodia's Killing Fields

    Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
    Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

    How Stephen Mangan got his range

    Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor
    The ZX Spectrum has been crowd-funded back into play - with some 21st-century tweaks

    The ZX Spectrum is back

    The ZX Spectrum was the original - and for some players, still the best. David Crookes meets the fans who've kept the games' flames lit
    Grace of Monaco film panned: even the screenwriter pours scorn on biopic starring Nicole Kidman

    Even the screenwriter pours scorn on Grace of Monaco biopic

    The critics had a field day after last year's premiere, but the savaging goes on
    Menstrual Hygiene Day: The strange ideas people used to believe about periods

    Menstrual Hygiene Day: The strange ideas people once had about periods

    If one was missed, vomiting blood was seen as a viable alternative
    The best work perks: From free travel cards to making dreams come true (really)

    The quirks of work perks

    From free travel cards to making dreams come true (really)
    Is bridge the latest twee pastime to get hip?

    Is bridge becoming hip?

    The number of young players has trebled in the past year. Gillian Orr discovers if this old game has new tricks
    Long author-lists on research papers are threatening the academic work system

    The rise of 'hyperauthorship'

    Now that academic papers are written by thousands (yes, thousands) of contributors, it's getting hard to tell workers from shirkers
    The rise of Lego Clubs: How toys are helping children struggling with social interaction to build better relationships

    The rise of Lego Clubs

    How toys are helping children struggling with social interaction to build better relationships
    5 best running glasses

    On your marks: 5 best running glasses

    Whether you’re pounding pavements, parks or hill passes, keep your eyes protected in all weathers
    Joe Root: 'Ben Stokes gives everything – he’s rubbing off on us all'

    'Ben Stokes gives everything – he’s rubbing off on us all'

    Joe Root says the England dressing room is a happy place again – and Stokes is the catalyst
    Raif Badawi: Wife pleads for fresh EU help as Saudi blogger's health worsens

    Please save my husband

    As the health of blogger Raif Badawi worsens in prison, his wife urges EU governments to put pressure on the Saudi Arabian royal family to allow her husband to join his family in Canada