Thomas Cook has heated up our 2013's 10 stocks to follow like a packet full of Trinidad Moruga Scorpion chillies dropped into a wok.
Less than 18 months ago the travel company looked to be down on its knees, wilting under a burden of debt, facing declining trading as a result of unrest in Egypt and Tunisia and floods in Thailand, and having to reassure customers that their bookings would be protected to prevent them from deserting from it en masse.
Since then it has undergone a remarkable turnaround, securing a lifeline from its banks, installing the former Premier Farnell boss Harriet Green as chief executive, and unveiling a turnaround strategy that has won rave reviews in the City.
It hasn't come pain-free. Shops have been closed and jobs lost as the company switches its focus to more profitable sales channels such as the internet. Nor is the company risk-free. It still boasts a formidable debt pile, and can't be immune from the poor economic situation in the UK and Europe.
But it does appear to have turned the corner, and barring further mishaps, Ms Green can relax with one of her 4am yoga sessions in the knowledge that the ship has been steadied.
Picking Thomas Cook for the 10 was a calculated risk. We felt that the market hadn't woken up to what was going on at the company, and so far we've been proved right. The shares have more than doubled in value (134.1 per cent gain) and are a major reason for our portfolio being on track to outperform the FTSE 100 by a considerable margin by the year's end.
Shares generally have been strong performers this year, not least because of the attractive valuation and yields they offer in comparison with other asset classes. The FTSE 100, which went into the Easter break at 6,411.74 has gained 8.7 per cent so far this year, and although it's hard not to see it enduring some sort of correction at some point this year, it looks on course to beat even the most optimistic predictions of the eight experts who were brave enough to step forward and provide us with a prediction for the year-end FTSE 100 value.
The most optimistic of our panel were the veteran City commentator David Buik and Steve Adams, head of UK equities at Kames Capital, both of whom went for a closing value of 6,550.
Although Thomas Cook has been our portfolio's big winner, Close Brothers, with a 21 per cent return, heads the rest. It is a rather unusual bank, operating in a number of niche areas (asset finance, fund management, retail stockbroking). It also hasn't required any leg-up from the state, and the shares have been on a tear.
Close has also avoided the sort of chicanery that has led the sector's big guns to face heavy fines. The acceptable face of banking? Possibly.
Vodafone, up 20.8 per cent, and GlaxoSmithKline, 15.2 per cent, both looked criminally undervalued at the beginning of the year, and thus it has proved, with the market pushing the shares up strongly.
Another winner has been St James's Place Wealth Management, which helps rich people to look after their money. Investing in its shares is one way of making profits from the 1 per cent who have sailed through the financial and economic crises with relative ease. The business is formidably well run, and the decision by Lloyds Banking Group to sell down its controlling stake has helped the shares no end.
In addition to Thomas Cook, the other risky play we picked was Amerisur Resources, one of an army of oil and gas explorers listed in London. It has been buoyed by its announcement that certified proved and probable field reserves at the Platanillo Field in Colombia had more than tripled. That has provided the fuel for an 18.7 per cent rise in the shares on our buy-in of 46.75p.
But you can't win them all. We picked Icap as a turnaround story, and the interbroker dealer was looking good – until the roof fell in on Wednesday, when it warned that the present financial year's profits will underwhelm as a buoyant start to that year was brought to a juddering halt by the latest developments in the eurozone crisis, which badly hit trading volumes. The road to recovery may prove a hard one for Icap's shares, and with the Libor scandal looming over it, the company may act as a drag on the 10's performance for some time.
However, the stock, down 5.4 per cent this year to date, is still in the sunlit uplands when compared with Anglo American. Seen as undervalued and tagged as another possible turnaround story with the departure of chief executive Cynthia Carroll, the mining behemoth has suffered amid a patchy recovery in China and Europe's continuing problems.
It is iron ore that has been adding a tinge of rust to the shares. The price has been plummeting with worse to come according to analysts, and that's bad news given that it accounts for a big slug of the company's earnings.
Tough to see much in the way of relief for shareholders in the short term, and there's been a recent analyst downgrade to add to its woe.
Aggreko and Betfair have been treading water so far, up a bit but both underperforming the market. But overall, had you invested £1,000 in each of the above, the total profit on your ten grand would be £2,202. Which isn't bad.
Certainly better than our experts, but they're also ahead of the game. In addition to predicting the FTSE they're asked to pick just one share to follow. Among their choices were the tool hire company Ashtead and funeral operator Dignity – both of which are solidly profitable, sensibly run businesses. That's in fashion these days (about time) and they're up 30 per cent each.
The experts' oil and gas explorer Parkmead hasn't done the business (its shares are down a bit), and shares in Utilitywise, the energy broker, haven't moved. All our City gurus' other tips are in positive territory. Although they haven't happened upon a superstar such as Thomas Cook, they have (collectively) produced a 14.5 per cent positive return. So hats off to them too.
And let's hope it continues as we enter the spring AGM season before Thomas Cook's customers fly away for their summer breaks.Reuse content