Stagecoach was just the ticket

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The Independent Online
Our new year share tips for 1996 came in with a respectable 14.8 per cent increase in value (excluding dividends) - outperforming the FT- SE All Share index's 11.6 per cent rise by over a quarter, writes Paul Farrelly.

Paul Rodgers' selection of Stagecoach was not only inspired but also earned him the accolade of Fleet Street's top new year tipster.

For founders Brian Souter and Ann Gloag, 1996 was a momentous year. In a pounds 650m spree, the group snapped up Sweden's company Swebus, the South West Trains franchise and the newly privatised Porterbrook train leasing company.

Analysts are forecasting profits of more than pounds 110m for 1996/97, up from pounds 44m, and an impressive 30 per cent rise in earnings per share. Now worth pounds 1.7bn, after just 10 years Stagecoach stands on the brink of the FT-SE 100 index and appears to have further to go.

Patrick Tooher also came up trumps. Indeed, a strong year-end rally from bio-technology company Cantab Pharmaceuticals almost took top honours. Cantab is developing vaccines for cervical cancer and genital warts and a link-up last year with SmithKline Beecham - on top of a deal with Pfizer - sent the stock skywards. Promising test results also gave Cantab an early Christmas present in November.

My own tip, Trafalgar House, also delivered. After years of being voted Britain's worst company, a pounds 900m bid from Norway's Kvaerner in March finally put investors out of their misery. I am adopting a similar strategy (above) this year and do feel a little aggrieved: in the real world, of course, I would have sunk all the proceeds into Stagecoach and beaten Mr Rodgers hands down.

Steve Lodge might have done the same. Pet City was the second of our tips to be taken over. The out-of-town chain was only floated on AIM in late 1995 and fell to a pounds 150m bid from Petsmart of the US in October.

Allied Leisure rewarded Derek Pain with a good run, paying dividends under new management for the first time in three years. However, Capital Radio and Group Chez Gerard, tipped by Mathew Horsman and Roger Trapp, failed to live up to bid hopes.

We had seven disappointments, four of them blue chips, including Hanson, the worst- performing FT-SE 100 share.

John Shepherd, our runaway 1995 winner, came unstuck with Saltire, as did Tom Stevenson with Self Sealing Systems, an AIM newcomer which makes machines for balloons without knots. With concerns over the quality of AIM entrants, we are avoiding the junior market this year.