Private Investor: A little Docklands wonder that's worth catching

Regular readers will know that I don't have a terribly well developed theory of investing that I stick to religiously, like Warren Buffet or Jim Slater, say.

Regular readers will know that I don't have a terribly well developed theory of investing that I stick to religiously, like Warren Buffet or Jim Slater, say. The fact that they are where they are and I am where I am suggests that of the three of us, one has not quite got the hang of this getting rich game.

Never mind. Modest returns are the best that I think most of us ought to aspire to, from well diversified portfolios with an eye to the long term. One thing that is always worth looking for, however, is a good "secular" growth story, one that will sustain pretty much whatever happens to the economy short term, and, indeed whatever befalls the nation politically.

Thus the liberalisation and expansion of the gambling market should be one lucrative area for those operating in it, despite the climb-downs the Government has to execute in its Gambling Bill. The relaxation of the licensing laws is another.

Both policies are morally reprehensible, as they will increase drunkenness and addiction to gambling, the evils of which will be known to anyone unfortunate enough to have brushed with them. Booze and betting can be fun, but they can also destroy families. Yet the opportunities for investors to profit from vice are clear to all, and that is why I have shares in Sportingbet and Scottish & Newcastle, for example.

The other secular growth story that has been well chronicled over the years but which never seems to pause for long is the trend to outsourcing. There are plenty of companies now crowding into this field, and I have bought Capita as a good way into this market. I think that Serco is an even better bet though, and one that I have neglected until now, when its very good results this week caught my attention.

For Serco not only gets stuck into the routine sort of PFI style activity such as rail franchising and running young offenders institutes (another play on human vice, but I digress); it also has an interest in running some our speed cameras.

These much loved national institutions can only proliferate as the public authorities use them more and more as a revenue raising device. If they were all about safety - and I concede that they must always be partly about safety - then surely the authorities would not make them so hard to see and easy to miss. For if the Government really wanted its "safety camera partnerships" to keep death off the roads they would be planting gigantic signs warning about speed traps well in advance.

No matter. There are hardly any on the motorway network, they are still relatively uncommon in some parts of the country and developments in technology will make them ever more difficult to evade. Drivers may be infuriated by the fines they have to pay for comparatively minor transgressions, but it is all good news for Serco and its shareholders.

And it's not all Gatsos; the other bit of Serco's business that seems set to continue its success is the Docklands Light Railway in London. Despite the coming of the Jubilee Undergound Line to Canary Wharf and Stratford, the DLR is still a busy little railway, largely automated and very reliable. It is an excellent play on the continued success of London's Dockland business district, which has now grown to such a critical mass that it ought to be able to withstand most recessions (as it spectacularly failed to live through the last one).

Serco seems a good bet to have its contract to run the DLR renewed next year. The only risks with Serco are its expansion into the IT business in the UK and the defence industry in the US, both by recent acquisitions. Companies like Serco ought to stick to their knitting, but the risks seem in proportion. So I shall be buying into Serco on the first hint of weakness in the share price, and possibly before. Maybe Warren and Jim have shares in it too.

s.o'grady@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
British musician Mark Ronson arrives for the UK premiere of the film 'Mortdecai'
music
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
Sport
footballBrighton vs Arsenal match report
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
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: Tax Assistant

    Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

    Recruitment Genius: Outbound Sales Executive - OTE £25,000

    £16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

    Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

    £45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

    Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

    £35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Day In a Page

    Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

    What the six wise men told Tony Blair

    Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
    25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

    25 years of The Independent on Sunday

    The stories, the writers and the changes over the last quarter of a century
    Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

    Homeless Veterans appeal

    As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
    Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

    Smash hit go under the hammer

    It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
    Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

    The geeks who rocked the world

    A new documentary looks back at origins of the computer-games industry
    Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

    Belle & Sebastian is taking a new direction

    Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
    America: Land of the free, home of the political dynasty

    America: Land of the free, home of the political dynasty

    These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
    A graphic history of US civil rights – in comic book form

    A graphic history of US civil rights – in comic book form

    A veteran of the Fifties campaigns is inspiring a new generation of activists
    Winston Churchill: the enigma of a British hero

    Winston Churchill: the enigma of a British hero

    A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
    Growing mussels: Precious freshwater shellfish are thriving in a unique green project

    Growing mussels

    Precious freshwater shellfish are thriving in a unique green project
    Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

    Diana Krall interview

    The jazz singer on being friends with Elton John, outer space and skiing in Dubai
    Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

    Pinstriped for action

    A glimpse of what the very rich man will be wearing this winter
    Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

    Russell T Davies & Ben Cook: How we met

    'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
    Bill Granger recipes: Our chef serves up his favourite Japanese dishes

    Bill Granger's Japanese recipes

    Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
    Michael Calvin: How we need more Eric Cantonas to knock some sense into us

    Michael Calvin's Last Word

    How we need more Eric Cantonas to knock some sense into us