Past history also suggests that many of the best performers in any new bull phase will be shares in recently floated businesses. Just think of companies such as Body Shop and Spring Ram which were floated in the early 1980s and whose share price multiplied in the 1980s bull market.
Proof that a new-issue flop is not necessarily a disaster came with the 1991 offer for sale of the camping holidays group, Eurocamp. It looked attractive but the public response was minimal. The institutions happily gobbled up their underwriting, the shares opened at around the 225p issue price, and within a year were over 50 per cent higher at 340p.
The first sniff of a real recovery in the market should see those shares now struggling to hold their issue price - such as Kenwood, MFI, Anglian Windows and Taunton Cider - quickly do well. Each is a familiar name with brand strength and a strong market position. They seem capable of raising profits and dividends at a respectable pace even without an economic pick-up.
More adventurous investors may prefer to look beyond these highly visible stocks to those of smaller companies offering more potential and which have joined the market via a placing. Because the stock is placed in firm institutional hands, these shares usually do not trade at a discount to the issue price. Indeed, except in conditions of dramatic weakness in the overall market, investors should be suspicious of a placed new issue that fails to hold the issue price.
Among the more classy recent entrants to the market via the placing route are Industrial Control Services (ICS) at 135p against an issue price of 110p; Country Casuals at 139p against 130p, and Vega Group at 136p against 122p.
ICS makes safety and control systems for the oil and gas industry and has been growing sales and profits at a rapid rate. The company has forecast a further profits advance from pounds 3.6m to pounds 4.5m for the year to May 1992 for a prospective PE of 15. Increased attention to safety should enable healthy growth to continue.
Vega Group is the kind of company that in more buoyant conditions could really kindle the imagination of private investors. The company, which specialises in consultancy services to the European space and satellites market, has grown dramatically under the leadership of Dr John Rigg. If he can maintain the profits progress achieved since he became involved in 1989, the shares should do extremely well.
Country Casuals is closer to the front line in the battle against recession and has prospered from being run by a team who regard themselves as professional retailers first, and in the fashion business, second. It looks likely to sustain its recession-busting performance.
The most adventurous buy from recent new issues is British Bio-Technology Group. It is a start-up company of the type that eats money (the public flotation was the fifth fund-raising exercise for this institutionally- backed business) but which is avowedly setting out to build another Glaxo or Wellcome. It is a serious contender, with 200 research staff against about 3,000 for the giant Glaxo.
It also has three new drugs, for the treatment of asthma, arthritis and the Aids virus, HIV, undergoing clinical trials, which means they have sufficient credibility to justify the huge expense of testing on people.
Development costs on the arthritis and asthma products are being born by joint-venture partners, SmithKline Beecham and Glaxo respectively, giving further status.
Success with any of these three would have the same implications as a big strike for a small oil company and would immediately catapult the company into a bigger league.
So far public interest has been nil and the shares have not budged from the 425p issue price. That clearly could change.
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