Derek Pain: Mears and G4S are sound shares to hang on to in volatile times

No Pain, No Gain

In these stressful times it is encouraging when a share stages an impressive comeback. Even holding its own as many stagger lower displays remarkable resilience. Two constituents of the no pain, no gain portfolio have, to some extent, resisted the market mayhem and produced exciting recoveries.

The "comeback kids" are Mears and the much bigger G4S. Both have been helped by fine trading displays, underlining that investors may be rattled but many companies are still serenely going about their business and doing so in some style. Mears, a support services group covering social housing and home care, was the subject of a fierce bear raid earlier this year, largely prompted by its treatment of pensions cash. Around the start of the year the shares reached 326p. Then, following the pension disclosure and long before the stock market suffered its intense attack of the jitters, the price slumped well below 240p. But a degree of optimism returned although, as interim figures loomed, the shares were again uncertain. The half-time results steadied the price and, as I write, it is above 270p. Not a bad performance, considering Footsie has fallen more than 300 points since the profits announcement.

The trading statement was certainly positive. Revenue rose 16 per cent and adjusted profits were up 7 per cent at £14.1m with the clear pre-tax figure emerging at £10.9m, against £7m. The dividend was lifted 13 per cent to 2.15p a share. And the accompanying comments were bullish with chief executive David Miles declaring that there are "unprecedented levels of opportunity in the public sector". The order book, he added, stood at £2.7bn and 97 per cent of this year's forecast revenue was already in the bag and so was approaching 85 per cent of next year's.

Shares of G4S were 242p just ahead of its interim results. The figures were not particularly scintillating but the trading statement so impressed the stock market that the price topped 270p, up around 30p, before easing back as profit takers took their inevitable toll. Underlying profits came out at £238m (against £236m) with a clear pre-tax figure up 5 per cent to £149m. Chief executive Nick Buckles set the shares alight by revealing that the group's emerging markets business was growing healthily and there were considerable expansion opportunities via acquisitions.

The world's largest security group, with 625,000 employees, now gets 29 per cent of its revenue from emerging markets – Asia, Middle East, Africa, Latin America and the Caribbean – and aims to increase this contribution to 50 per cent in the next seven years. Its ambitious programme to spend around £200m on bolt-on acquisitions looks like providing some interesting results with Mr Buckles talking about a strong pipeline of opportunities. He is confident about the outlook for this year and "into 2012".

G4S, an Anglo-Danish group that is set to provide security at London's Olympic Games next year, is lifting its half time dividend by 8 per cent to 3.42p a share.

Like Mears, G4S is a sound share to hang on to in these uncertain times. Quite clearly, if the stock market had been behaving itself, the two shares could be much higher and their recovery even more impressive. Some other portfolio constituents, although they have suffered in the meltdown, have performed relatively well. Booker, the cash and carry chain, and Hargreaves Services, the coal to transport group, have given ground but still seem to be sound long-term holds. Leisure group Whitbread has taken something of a hammering. The shares brushed 1,900p early this year but have since been down to about 1,400p. Yet it would, I believe, be unrewarding to be panicked into selling at this fraught time.

Last week's two recruits – Northern Petroleum and the Spirit Pub Co – are little changed from my buying prices. There is, however, an outside chance that Northern's shares could get a boost this month as Tullow Oil is due to announce progress (if any) at its extensive exploration area off the Guyane coast. Northern splits a 2.5 per cent interest in the project with Wessex Exploration, an AIM-traded minnow. Its modest involvement could be worth, say 25p a Northern share, should some of the more bullish expectations be confirmed. Wessex is headed by David Bramhill, ex-Nighthawk Energy boss.

yourmoney@independent.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
people'It can last and it's terrifying'
News
people Emma Watson addresses celebrity nude photo leak
Arts and Entertainment
tv
News
Katie Hopkins appearing on 'This Morning' after she purposefully put on 4 stone.
peopleKatie Hopkins breaks down in tears over weight gain challenge
PROMOTED VIDEO
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Life and Style
fashionAngelina Jolie's wedding dressed revealed
Sport
Alexis Sanchez, Radamel Falcao, Diego Costa and Mario Balotelli
footballRadamel Falcao and Diego Costa head record £835m influx
News
i100
Arts and Entertainment
Madame Vastra and Jenny Flint kiss in Doctor Who episode 'Deep Breath'
tv
Arts and Entertainment
Olivia Colman topped the list of the 30 most influential females in broadcasting
tv
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Arts and Entertainment
Danish director Lars von Trier
tvEnglish-language series with 'huge' international cast set for 2016
Life and Style
tech
News
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
Sport
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
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

    HR Generalist (standalone) - Tunbridge Wells - £32,000

    £30000 - £32000 per annum: Ashdown Group: HR Generalist (standalone) - Tunbrid...

    Derivatives Risk Commodities Business Analyst /Market Risk

    £600 - £800 per day: Harrington Starr: Derivatives Risk Commodities Business A...

    Power & Gas Business Analyst / Subject Matter Expert - Contract

    £600 - £800 per day: Harrington Starr: Power & Gas Business Analyst/Subject Ma...

    Infrastructure Lead, (Trading, VCE, Converged, Hyper V)

    £600 - £900 per day: Harrington Starr: Infrastructure Lead, (Trading infrastru...

    Day In a Page

    'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

    'I’ll tell you what I would not serve - lamb and potatoes'

    US ambassador hits out at stodgy British food
    Radio Times female powerlist: A 'revolution' in TV gender roles

    A 'revolution' in TV gender roles

    Inside the Radio Times female powerlist
    Endgame: James Frey's literary treasure hunt

    James Frey's literary treasure hunt

    Riddling trilogy could net you $3m
    Fitbit: Because the tingle feels so good

    Fitbit: Because the tingle feels so good

    What David Sedaris learnt about the world from his fitness tracker
    Saudis risk new Muslim division with proposal to move Mohamed’s tomb

    Saudis risk new Muslim division with proposal to move Mohamed’s tomb

    Second-holiest site in Islam attracts millions of pilgrims each year
    Alexander Fury: The designer names to look for at fashion week this season

    The big names to look for this fashion week

    This week, designers begin to show their spring 2015 collections in New York
    Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

    'I like Orwell's writing as much as the next talented mediocrity'

    Will Self takes aim at Orwell's rules for writing plain English
    Meet Afghanistan's middle-class paint-ballers

    Meet Afghanistan's middle-class paint-ballers

    Toy guns proving a popular diversion in a country flooded with the real thing
    Al Pacino wows Venice

    Al Pacino wows Venice

    Ham among the brilliance as actor premieres two films at festival
    Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

    Neil Lawson Baker interview

    ‘I’ve gained so much from art. It’s only right to give something back’.
    The other Mugabe who is lining up for the Zimbabwean presidency

    The other Mugabe who is lining up for the Zimbabwean presidency

    Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
    The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

    The model for a gadget launch

    Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
    Alice Roberts: She's done pretty well, for a boffin without a beard

    She's done pretty well, for a boffin without a beard

    Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
    Get well soon, Joan Rivers - an inspiration, whether she likes it or not

    Get well soon, Joan Rivers

    She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
    Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

    A fresh take on an old foe

    Doctor Who Into the Dalek more than compensated for last week's nonsensical offering