Shares: Benefit by northern exposure

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The Independent Online
INVESTORS wanting a success bias for their portfolios should fill them with shares stamped 'made in Yorkshire'. Not only is the county the home of many of the UK stock market's greatest long-term performers, it is arguably the perkiest area as the economy begins to come out of recession.

Only London has more newly floated companies among the UK's regions so far in 1993. Yorkshire businesses have a bias to manufacturing and benefit from sterling's devaluation. There also seems to be a Northern caution making for unflashy companies that keep costs down and go for steady long-haul performance - just the kind of attitude that investors want in the 1990s.

The roll-call of monster winners based in Yorkshire is remarkable. They include the printer Watmoughs; a components distributor, Farnell Electronics; the greeting-cards group Fine Art Developments; the supermarkets group William Morrison, which is growing twice as fast as J Sainsbury; a textile printer, Leeds Group; a door-to-door financial services business, Provident Financial; in speciality chemicals, Allied Colloids, Yorkshire Chemicals and Hickson International; the upmarket textiles concern Allied Textiles; the dairy products and fresh foods supplier Northern Foods; in property, Evans of Leeds and Town Centre Securities; construction company Henry Boot; a steel foundries business, William Cook, transformed by Andrew Cook, whose gritty realism extended to sacking his father when the company's fortunes were at a low ebb; and Barr & Wallace Arnold Trust, where family buying has lifted a thinly traded share.

An investor who had bet his shirt on any of these companies 20 years ago would certainly no longer need to work. Appreciation has typically been a hundredfold or better, excluding a fast-growing stream of dividend income. Success breeds success, making it odds-on that these companies will continue to do well. Buy them all for a great growth portfolio.

There is also a second wave of potential stars coming along, including shares in some newly quoted companies, which are likely to be cracking performers through the rest of the decade. In this list I would include the supermarkets group Asda, at 69.5p, which is being revitalised by the former Kingfisher finance director, Archie Norman; a computer software specialist, Sanderson Electronics, at 296p, and Electronic Data Processing (reporting shortly) at 555p; car retailer Central Motor Auctions at 135p, and the newly floated parts retailer Motor World at 273p; printer Hunters Armley at 135p; the office equipment supplier ISA International at 105p; a plastic pipes specialist, Polypipe, at 145p; and the own-label paints group Kalon, now moving into the French market, at 165p.

Yorkshire companies are also featuring in some exciting corporate activity. Last week I mentioned Sheffield Insulation, which has more than doubled its size with the equity-financed acquisition of WMS, the door and window-fixings importer. An equally ambitious and well-timed initiative has been launched by Sanderson Murray & Elder, at 143p, which is buying a string of motor distributorships to catapult the business into a bigger league.

Investors looking for a mixture of income and capital growth could do worse than build a portfolio with Yorkshire in the title. This would include the two utilities, Yorkshire Water at 483p and Yorkshire Electricity at 506p; the newly floated Yorkshire Food Group at 124p; Yorkshire Chemicals at 377p; and Yorkshire-Tyne Tees TV at 186p, which is struggling after its high franchise bid, but would surely feature in the shopping spree that would follow any easing of the rules on takeovers of TV contractors.

There are plenty of opportunities, too, for special-situation investors. Parkland Textiles, at 130p, has had a tough recession, but the business is being refocused by an experienced management team and must have great scope with a market capitalisation of pounds 7.5m against turnover that has topped pounds 50m in recent years. The same goes for Headway, at 22p, which has been rescued from near-disaster by a new management team that has changed the name and bitten the bullet on closures and disposals. The company could reap rich rewards in the important garden furniture subsidiary if fine weather continues. The new-issue flood looks set to continue, with one stockbroking firm reckoning to have nine Yorkshire issues coming to market on an 18-month view. Dealings begin on 28 June in a placing for Metrotect Industries, the pipeline coatings specialist and a leader in its field, with 90 per cent of turnover exported and dramatic potential in fast-developing markets such as China, where it has won an important first order. Pricing details will be announced on 22 June and are likely to be pitched at a level that makes the shares an attractive buy in opening dealings.