Derek Pain: The tiddlers perform well, but perhaps it's time to add weight

The No Pain, No Gain portfolio's two heavyweights have been in profit action. Although Lloyds Banking Group and the Whitbread leisure group inhabit very different worlds, they have both produced encouraging figures even if the stock market, at least at the time of writing, has refused to offer much encouragement.

During the portfolio's 15-plus years I have concentrated on the small caps contingent, recruiting only a relatively few Footsie and middle-ranking stocks. Of the current 15 constituents 11 are – or have been – AIM or ISDX-traded shares. On the whole the tiddlers have performed quite well, but I am wondering whether another more substantial company would add a little weight: perhaps, Serco, the troubled support group. After all, with Rupert Soames, the man who has masterminded the growth of temporary power supplier Aggreko, now installed as chief executive and a successful £160m share placing completed, it should soon be on the recovery route. The shares, last year approaching 700p, are now around 340p; the placing was at 320p. For a long-term investor there are clear attractions.

Whitbread's progress continues. Revenue was up an impressive 13 per cent last year with underlying profits plus 16.5 per cent to £411.8m although some exceptional charges left pre-tax profits at £347m against £343.2m. Still the year's dividend advanced 19.9 per cent to 68.8p a share – not bad in these low interest rate days.

The Costa Coffee side is gathering even more momentum. The old brewer, once famed for Tankard bitter, now seems intent on caffeinating the world. It already has 2,880 coffee parlours and is intent on opening many more.

Premier Inn also contributed; again, expansion is paramount. The chain, for so long the weak link, increased sales by 3.9 per cent.

The shares, recently around 4,500p are not much above 4,000p, but although still expensively rated, retain their appeal. Profits are likely to hit £480m this year. The portfolio paid 1,105p a share.

Lloyds produced profits of £1,369m in the first quarter of the year against a heavy loss in the preceding three months. The group, now much more of a traditional domestic bank, is expected to let small investors participate in the enforced flotation of the TSB banking arm in the summer. It seems complaints about us small players being arbitrarily excluded from many floats have had some impact – after all, when the Government twice reduced its Lloyds involvement, only institutional investors were invited to take part. Likely inclusion in the TSB share sale comes on top of Saga's courting small investors in its upcoming flotation. Lloyds shares are about 80p against the portfolio's 74.8p.

Now to small cap constituents: power generator Alkane Energy reports a slightly lower output in the first three months of the year, perhaps due to milder weather. But the outlook is fairly encouraging, with 76 per cent of the year's expected production already contracted. The shares are a shade below the portfolio buying price at 40p.

Avation, the aircraft leasing group, has again lifted its controlling stake in AIM-traded Capital Leasing. The interest was increased in March to 64.46 per cent and has since risen to 65.4 per cent. Both deals were conducted at 15.25p a share. Can a deal to mop up the outstanding shares be far away? Probably not. Avation shares are 124p against an 83.5p buying price.

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

News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
News
news
New Articles
i100
PROMOTED VIDEO
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
Arts and Entertainment
musicHow female vocalists are now writing their own hits
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
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

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Day In a Page

    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam