Derek Pain: The tiddlers perform well, but perhaps it's time to add weight
Saturday 10 May 2014
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
Mark Dampier: An infrastructure fund that builds returns by taking different roads
The HiFX guide to international money transfers
Simon Read: Timeshare owners accuse Macdonald Resorts of land grab
Five Questions: Changes to car tax discs
Donald MacInnes: Let's pretend Scotland won and now a salmon is running the country
- 2 Friends 20th anniversary: Alison Jackson photographs reunited cast
- 3 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 5 Free U2 album: How the most generous giveaway in music history turned into a PR disaster
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: The Queen breaks silence on referendum debate – as think tank warns of £14bn black hole if Scotland votes Yes
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...
Day In a Page
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize