Private Investor: How a hangover cure can make you richer as well

Sometimes you just look at a share price and think " how the heck did that happen?" Sometimes that's bad, of course, and you find yourself wondering how those BT shares that were at £15 just a couple of years ago subsided to 180p.

Sometimes you just look at a share price and think " how the heck did that happen?" Sometimes that's bad, of course, and you find yourself wondering how those BT shares that were at £15 just a couple of years ago subsided to 180p.

It took me too long to get shot of that stock and I don't regret buying into Serco instead. They haven't moved yet, but I'm confident of steady progress for this fast-growing company in the months ahead.

If anything, Serco may even benefit from any pressures on public spending that arise on the other side of the General Election. The Government is ideologically committed to the notion that the private sector always and everywhere delivers better value for money, so if public spending needs to be reined in, what better way to get value for money than to invite firms like Serco to bid for more and more chunks of the state sector that were previously though untouchable?

If public spending is instead protected and taxes rise then there again Serco will be one of the few winners in a corporate sector that may find itself being squeezed by the Chancellor. So, a good each way bet, I would have thought.

The real surprise for me over the past couple of months has been the performance of AG Barr. I find it amazing. This medium-sized company - market capitalisation is £182m - is best known for its Irn Bru and Tizer soft drinks, and also makes Orangina under licence.

Nothing too exciting there you might think , even though it enjoys market leadership in Scotland, just about the only place in the world where Coca-Cola doesn't enjoy the number one spot.

It's a fairly old fashioned company - in the best sense of the term, with a strong family interest, a fine sense of tradition and heritage for its brand and what appears to be a paternal approach to its staff.

There is nothing stand-still, though, in its approach to business, and it has been expanding aggressively in England with some novel advertising campaigns. Now it is bearing down on costs by investing £17m in a new centralised sales, distribution and marketing location. Well, Irn Bru doesn't sell itself, you know, even if I can vouch for its excellent qualities as a hangover palliative...

Last week's results statement showed things are as strong as ever, with full-year pre-tax profits up by 13 per cent and another increased dividend.

Shares in AG Barr have gone up by about 40 per cent in the past year, way better than the market as a whole, the beverages sector or, indeed, my stagnating investment in Coca-Cola. At almost £10 a share they stand at rather more than double the price I paid for them in 2002.

Outstanding as the share price record has been, Irn Bru is actually not so untypical of the FTSE 250 mid caps as a whole which, as has been noted already, have out-run their much larger FTSE 100 counterparts.

It reminds me a bit of the mittlestand, that bloc of medium-sized enterprises that used to be such a pillar of the German economic miracle. Now it seems to be British companies of a certain size that are the powerhouse of the UK's economic revival. Gordon Brown, who as a good Scotsman must have been brought up on the Bru, messes with these mid caps at his peril.

At this point, I ought to mention my speculative investments in two volatile small caps, Sportingbet and Matrix Communications. After a very strong run, they've both headed quite badly south recently.

I'm still in the money with both of them, however, even though Sportingbet is at around 260p, well down from its 350p peak (it started the year at 180p, though). Similarly, Matrix stands at 170p, down from a February peak of 230p. I'm not quitting yet, though.

s.o'grady@independent.co.uk

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