No Pain, No Gain: Glowing reports on a lustrous confectionery stock

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The Independent Online

The No Pain, No Gain portfolio has more or less held its own in the fallout generated by the Madrid bombings. The stock market is now showing signs of recovering from the latest outrage against civilians, but shares are still hesitant and are likely to remain so until the heat is taken out of the Arab terror campaign.

The No Pain, No Gain portfolio has more or less held its own in the fallout generated by the Madrid bombings. The stock market is now showing signs of recovering from the latest outrage against civilians, but shares are still hesitant and are likely to remain so until the heat is taken out of the Arab terror campaign.

The Footsie blue chip share index, as is customary, led the retreat but, somewhat surprisingly, quite a few small-caps, usually resilient in times of international stress and strain, lost their shine.

Glisten, the little chocolate maker, has been the star constituent since I last examined the portfolio's performance in February. Its shares were then 233.5p; they are now 280.5p and, according to stockbroker Oriel Securities, have further to go. The analyst Charlie Bonham believes sales this year will advance 40 per cent to £21.8m, with pre-tax profits emerging 33 per cent higher at £1.8m. He also suggests that EPS will be up 16 per cent at 13.8p.

Mr Bonham's optimism is encouraging. Glisten came to the stock market in the summer of 2002 at 80p. The group then had one confectionery business but declared its intention to expand through acquisitions. It has since put through three sweet deals that have clearly impressed its followers. Other buys are likely. Indeed it has just increased its war chest by raising £1.8m through a share placing at 275p. Now worth some £25.5m, Glisten has ambitions to develop into a £100m capitalised company. It intends to grow by buying niche companies in the confectionery world. But it may not stop there: I get the impression deals for smaller players in the broader food industry will eventually materialise.

I moved into Glisten when the shares were 114p. I must admit to some astonishment that they have made such joyous progress in less than a year. Clearly the group has the right recipe. But, of course, as it grows it will become much more difficult to achieve the sort of progress it has so far managed and although I, like Mr Bonham, rate its management highly I suspect future share progress will be more sedate.

Glisten is, in a sense, a copycat version of Inter Link Foods, a former constituent. I was probably too hasty when I unloaded the cake and pastry maker, admittedly at a handsome profit. I will, I hope, not make the same mistake with Glisten, but with such a mouth-watering gain the temptation to sell, particularly if the shares show signs of losing their lustre, may be irresistible.

S&U, the finance group which attracts little investment research, has seemingly overcome the problems that reduced earlier profits. The portfolio's longest-serving member has achieved a 15 per cent profit advance to £9m, a little below its best-ever level. The yearly dividend was lifted 1p a share to 29p. Chairman Anthony Coombs says the group's bad debts have been "significantly reduced" and the car hire purchase side, which produced profits of £1.6m (£1.3m), should make further headway. Problems at its south London office were responsible for the earlier setback.

Shares of Printing.com, my Ofex representative, have returned to my 30.5p buying price. The sight of the chief executive, Tony Rafferty, unloading 403,000 shares at 30p may, I suspect, have unsettled investors and prompted the fall to 28.5p. Still, with a near 30 per cent shareholding, Mr Rafferty, the man behind the development of the hi-tech printer, is still deeply involved in the group, which plans a trading statement for the year ending next month in a couple of weeks. The analyst Roger Hardman has forecast sales of £9.6m with profits of £930,000. If he is correct the shares are selling at 19 times earnings.

Glisten and Printing.com are in their infancy and dividends are not yet on their agenda.

Finally Wyatt, the little online risk consultancy. I hear rumours it is on the verge of clinching an acquisition and another is in the pipeline. A cash-raising exercise may also be underway.

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