No Pain, No Gain: Good figures alone don't cut it in depressed times

As the credit crisis took its inevitable toll, the three once high-flying shares unceremoniously dumped from the No Pain, No Gain portfolio have, not surprisingly, failed to recapture any of their old sparkle. And the delivery of encouraging profits has again been contemptuously ignored by the stock market.

Last week I commented on the travails of Printing.com, the on-line printer. Its shares never enjoyed the stratospheric success once achieved by the glamour trio. With their fancy ratings it was apparent that once signs of stress and strain emerged, with many investors feeling compelled to unload microcaps, the threesome would be susceptible to some resounding hammer blows.

Goals Soccer Centres is now around 300p after once commanding 444p; Myhome International is a mere 17.5p following a 106p peak and the third, the Prezzo restaurant chain, bumps along near 40p after earlier touching 93.75p.

I have recaptured Myhome, the franchise group, but although GSC and Prezzo are trading well, despite crumbling consumer confidence, I have, for the time being, abandoned any intention of drawing them back into the portfolio.

My reservations about Prezzo have been underlined by its latest figures. They were, in one sense, hugely impressive. Year's turnover was up 29 per cent to £70.1m with headline pre-tax profits emerging at £10.6m, a 23 per cent increase. In its past year the group opened 32 restaurants and now runs a 130-strong chain with a further five in various stages of completion. And chief executive Jonathan Kaye declared: "We remain confident of another positive year for the company."

But there were cautionary elements on the other side of the menu. The year's dividend is up by a mere 14 per cent (against a 40 per cent increase last time) and the "true" profit is actually down – by £1m to £7.7m. The setback is due to a £3.2m provision to accommodate underperforming restaurants that may be sold.

Still, I must confess I have a soft spot for the shares. After all, the portfolio acquired them at the equivalent of 17.25p and sold at 60p. Not a bad day's work, I suggest. Although they are now on a much more realistic rating they could suffer further damage if the trading environment continues to deteriorate and the eating out habit is threatened. On normal considerations the shares could be worth buying. But these are far from normal times and I would hold fire for the time being. Prezzo has much to commend it but I feel little will be lost by adopting a wait-and-see approach.

GSC, running five-a-side football centres, underlined its strength with a 26 per cent sales increase last year and profits up 42 per cent to £7m. The dividend was increased by 58 per cent. Trading remains strong with at least six centres due to open this year. The group, which is trying its luck in the United States, could resist the impact of belt-tightening more, but the shares already reflect such a possibility.

I continue to like GSC. The portfolio scored a reasonable gain, buying at 125.5p and selling at 300p. The shares are no longer on a stratospheric rating but even so they still look awfully pricey. As I have pointed out, commendable figures make little impression in the depressed stock market we are now enduring. But such indifference will not last forever. Investors should wait for the chill winds that are paralysing much of the investment world to abate. And don't let the fear factor, as shares continue to wilt, force panic sales – unless, of course, cash is urgently needed.

Hargreaves Services is one of the portfolio's more active constituents. It has completed another deal – this time absorbing a company called AJS Contracts, which offers maintenance services to the power industry. Cost is £4.64m with £2.2m up front and the rest spread over two years. AJS produces year's profits around the £1m mark.

The transport-to-coal-mining group has made headway since it was recruited to the portfolio two years ago. Like many, its shares failed to hold their peak (645p) but at 521p are still showing a nice little gain from my 417p-buying price.

Earlier this year Hargreaves produced encouraging interim profits and hopes are running high that it will achieve year's profits of £17.1m against £9.6m last time.

cash@independent.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

PROMOTED VIDEO
Arts and Entertainment
Caroline Proust as Captain Laure Berthaud in 'Spiral'
tvReview: Gritty, engaging and well-acted - it’s a wonder France’s biggest TV export isn’t broadcast on a more mainstream channel
Arts and Entertainment
music
Arts and Entertainment
Laura Carmichael in still from Madam Bovary trailer
film
News
i100
Sport
Serena Williams holds the Australian Open title
sportAustralia Open 2015 final report
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

    Recruitment Genius: Software Development Manager

    £40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

    Ashdown Group: Product Manager - (Product Marketing, Financial Services)

    £30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Recruitment Genius: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Day In a Page

    Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

    Michael Calvin's Last Word

    Time for Old Firm to put aside bigotry and forge new links
    Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

    Isis hostage crisis

    The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
    Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

    The runaway buccaneers and the ship full of gold

    Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Maverick artist Grayson Perry backs our campaign
    Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

    Assisted Dying Bill: 'I want control of my life'

    This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
    Move over, kale - cabbage is the new rising star

    Cabbage is king again

    Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
    11 best winter skin treats

    Give your moisturiser a helping hand: 11 best winter skin treats

    Get an extra boost of nourishment from one of these hard-working products
    Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

    Paul Scholes column

    The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
    Frank Warren column: No cigar, but pots of money: here come the Cubans

    Frank Warren's Ringside

    No cigar, but pots of money: here come the Cubans
    Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

    Isis stands strong as its numerous enemies fail to find a common plan to defeat it

    The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

    Virtual reality: Seeing is believing

    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
    Homeless Veterans appeal: MP says Coalition ‘not doing enough’

    Homeless Veterans appeal

    MP says Coalition ‘not doing enough’ to help
    Larry David, Steve Coogan and other comedians share stories of depression in new documentary

    Comedians share stories of depression

    The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
    Has The Archers lost the plot with it's spicy storylines?

    Has The Archers lost the plot?

    A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
    English Heritage adds 14 post-war office buildings to its protected lists

    14 office buildings added to protected lists

    Christopher Beanland explores the underrated appeal of these palaces of pen-pushing