No Pain, No Gain: The rules of gravity always apply, what goes up...
Saturday 24 May 2008
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.
Compare with the Independent: See how much you could save by switching credit cards. Compare now
Pensioners to be told how long they have left to live to help them plan their finances
Garden city in Ebbsfleet, Kent not enough to solve housing crisis in UK
Should I delay retiring because of the Budget?
How to start your own internet business
Bargain Hunter: The Easter holidays offer some sweet surprises from Playmobil
- 1 Poveglia: 'World's most haunted island' up for sale...is anyone brave enough to buy it?
- 2 The Hobbit: There and Back Again set for possible title change
- 3 Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'
- 4 24 people applied for the 'world's toughest job', here are their interviews
- 5 Andre Johnson: Wu-Tang Clan-discovered rapper severed his penis and jumped from LA building
The food poverty scandal that shames Britain: Nearly 1m people rely on handouts to eat – and benefit reforms may be to blame
US Navy christens huge $3 billion destroyer ship USS Zumwalt that appears as a fishing boat on enemy radar
Scottish independence: It is the English who should be on their knees, begging the Scots to vote ‘No’
Nigel Farage fatigue? Half of voters ‘immune’ to Ukip’s appeal
Nigel Farage on Have I Got News For You: Ukip leader ridiculed over expenses and party 'fruitcakes'
Nigel Farage: I’m taking on the status quo, and the Establishment’s fighting back
iJobs Money & Business
£150.00 per week: QA Apprenticeships: This company has been providing on site ...
£221.25 per week: QA Apprenticeships: This company is a well established Inter...
£40000 - £50000 per annum: Harrington Starr: Client Relationship Manager - SQL...
£35000 - £50000 per annum: Pro-Recruitment Group: Take your chance to join the...
Day In a Page
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
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square
A charming four-bedroom house overlooking Burleigh Square Park, close to Thorpe Bay
A three-bedroom farmhouse with a large inglenook fireplace and exposed beams
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds