Shares :Rich return in poor market
Sunday 18 December 1994
A number of shares have been real star performers. Hawtal Whiting, which provides design services to the car industry, has seen its share price rocket from 128p when I wrote about it in June to 223p, after peaking at 305p. The company continued investingand maintained its capability during a tough recession and now is reaping the benefits with sharply rising profits.
Full-year profits for 1994, expected to be reported in June, should show an increase from under £1m to £3m or better, dropping the price-earnings ratio to around 13, which still looks reasonable value. Other special situation stocks to do well include the uniforms and textile specialist Wensum, from 65p to 103p, Booth Industries (security doors at No 10) up from 52p to 70p, the special materials group Wilshaw, up from 56.5p to 71p, and B Elliott, switching from machine-tools to higher value-added activities, up from 86p to 99p. All these shares look well placed to make further progress.
Sectors doing well include fund managers, where prices received a boost from the short-lived merger proposal between SG Warburg and Morgan Stanley. Shares in Mercury Asset Management climbed from 619p to 724p on the theory that they will benefit from anydeal. Other fund management group shares to go smartly higher included Edinburgh Fund Managers, up from 624p to 725p, and Jupiter Tyndall, rumoured as a possible bid target, up from 330p to 385p. There are also solid gains on bus shares, includi ng Go-Ahead Group, Badgerline, Stagecoach and GRT Bus, helped by the excellent results being reported.
Sharply increased profits are a key factor behind many of the outperforming selections. Companies reporting dramatic profit increases include the car safety group, First Technology, up from 333p to 370p, the plant hire specialist, Sheriff Holdings, up from 331p to 383p, and the Epos systems specialist, Real Time Controls, up from 163p to 171p.
An area of developing excitement in the stock market is high technology. Among the stars have been Magnum Power Selection, up from 65p to 114p having been as high as 144p, and Filtronic Comtek, 164p from 120p after peaking at 176p. A newly emerging star is VideoLogic, the multimedia technology specialist, where the shares have already leaped from 42p to 63p since I wrote about them last week. A share that has virtually trebled since the summer is likely to be hit by bouts of profit-taking, but the medium-term potential looks stunning.
Alongside figures showing continuing losses, the group has announced a partnership with NEC to complete development on a hardware and software package that should make video games machines cheaper, with more realistic pictures. The next key stage, likelyover the next few months, is an agreement with one of the giants of the video games market, Sega or Nintendo. The market VideoLogic's products are addressing has a global value around £15bn, and the shares remain an outstanding speculative buy.
Many of my recommendations have yet to make a significant move. This is unsurprising in a poor stock market. Patience is an important ingredient, but this only applies to stocks that are behaving well. If the shares are weak and the news flow is discouraging, the shares should be sold. This would include CML Microsystems, where the shares have tumbled to 208p from 269p, after a profits warning because of problems with its traffic division. Borderline cases are the US cruise giant Carnival Cruise Lines, down from $23.50 to $19.88, and Arthur Shaw, down from 26.75p to 21p. Carnival should be sold, but Shaw could be kept unless it drops below 20p.
My weak point has been overall market timing. My theory is that shares are cheap whenever the FT-SE Allshare index falls below 1,500. This has happened three times - in June, October and December. But so far, the subsequent rallies have been short-lived,which has made my recommendations to buy FT-SE 100 traded call options disastrous. My hunch is that it could now be third time lucky and that FT-SE 100 January 3,100 calls at 31.5p (expiring on Friday, 20 January) could be worth buying.
David Schwartz, who specialises in detailed analysis of stock market behaviour, insists that December is historically the best month of the year for holding shares, and that prices usually rise in years ending in a five - as next year does. The turn of the year also benefits from the stimulus of new year tips and pundits making forecasts for the year ahead.
Finally, there has been a pattern since the mid-1980s of bull and bear years coming in succession, pointing to a bullish performance next year.
Premature bullishness has also affected my blue-chip selections, which have languished with the indices. My strategy with blue chips is to try to take a contrary view and recommend buying when shares generally are weak. The reasoning is that shares in large companies always recover to new peaks eventually, so a patient investor should make money by buying into weakness.
- 1 Woman accidentally shoots herself in the head while posing for a selfie
- 2 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
- 3 Puerto Rico, island of lost dreams: People are leaving the debt-hit territory in droves as near neighbour Cuba's star rises
- 4 Female Muay Thai champion hustles coaches to give them a beating
- 5 16-year-old girl beaten and burned alive by lynch mob in Rio Bravo, Guatemala
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...
Day In a Page
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof