No Pain, No Gain: The rules of gravity always apply, what goes up...

A great many shares soar into the stratosphere – only to crash to earth as reality checks in. With hindsight, it is clear that Myhome International, the franchise group that is a constituent of the No Pain, No Gain portfolio, was well ahead of the game when it hit 106p last year.

Last week, the residential cleaning-to-car-valeting company was down to a miserable 14p. Following my comments, the price moved to 29p. It is now around 23p.

A number of former constituents, such as Prezzo and Goals Soccer Centres, have also failed to retain glamour ratings. But not all high-flyers surrender their glory. Asos, the internet retailer, is a classic example of a wonder stock that is still going strong.

Its AIM-traded shares recently topped 300p compared with the forlorn 4p or so where they resided five years ago. The price, as I write, is 273p.

A host of City analysts think the shares will continue to romp ahead. Their confidence is underpinned by the company's impressive trading performance. In the 12 months to March last year, pre-tax profit rose 144 per cent to £3.4m with sales 116 per cent higher at £42.6m. For good measure, it had £5.4m sitting in the bank. Back in 2003, the company (then called AsSeenonScreen) was making exceedingly confident noises about prospects but its pre-tax loss increased from £1.1m to £1.7m; figures, it could be argued, that justified that down-in-the-dumps 4p share price.

But that was the nadir of the group's fortunes. It soon swung into the black. And, for the year just ended, it has posted an encouraging trading bulletin. With sales reaching £81m, it indicated that profits would beat stock-market expectations. So, expect a figure around the £7m mark, struck after a £1.1m one-off charge.

For the current year, another profit explosion is likely. Indeed, stockbrokers seem to be queuing up to lavish praise and produce heady forecasts.

That is not always a good sign, although in Asos's case it could be unwise to argue against the chorus of praise. As a relatively small company (capitalised at nearly £200m), the internet player has already won the attention of many small-cap stockbrokers. But last week it collected a heavyweight admirer – none other than the blue-blooded and powerful institution of Cazenove.

It reckons the group's ability to convert sales into cash should make the shares worth 387p. I think Caz is the most optimistic of the fortune-tellers. For example, the much smaller Daniel Stewart has a 350p target. With profits of £11.1m being talked about for this year – and don't forget retailers are having a tough time – there must be a chance Caz is being too adventurous.

I last commented on the group in 2004. I was then thinking of adding the shares to the portfolio. Unfortunately, Asos is a runaway success that escaped. The shares had, in almost a straight line, then climbed from 4p to 30p. So I suggested would-be investors should wait for the excitement to abate a little. Although the shares have since suffered inevitable hiccups, anyone who ignored my advice is sitting pretty.

The group has been trading for eight years. It came to the stock market when the madcap internet surge had already evaporated. At first it concentrated on fashionable womenswear that appealed particularly to internet-savvy 16- to 34-year-olds. But it has since widened its range and now embraces such areas as menswear and jewellery. After an indifferent start, online shopping is taking an increasing share of the retail market. Asos has 1.8 million registered customers, and it seems set to log on many more.

Still, I have decided not to recruit the shares to the portfolio, at this point anyway. It is a decision I may well (again) regret, although they are on a sky-high rating that could be too rich for these turbulent times. But after so sadly missing the boat in 2004, I would not try to dissuade any investors who are prepared to climb on board.

There is always, of course, the chance of takeover activity. Asos must be looking particularly attractive to hard-pressed high-street fashion chains feeling the recessionary pinch.

I would, therefore, not be surprised to see it engulfed in corporate action. The impressive profit record should ensure a premium bid.

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