Last year's crop produced a wide range of results, from the disappointing Govett & Co, which slipped 35 per cent, and Berisford, a 10 per cent faller, to Rank, which trod water, and the stars Dorling Kindersley, up 66 per cent, and Celltech, which ended the year 149 per cent higher.
Congratulations to Philip Winston, our winner in 1995, who tipped Celltech, and to Bernard Clark, who recommended Dorling. A bottle of bubbly is on its way to BZWIM. Here are this year's entrants:
Bernard Clark Lloyds Investment Managers
Recent acquisitions from France Telecom and the French Atomic Energy Authority have given Sema Group a quantum leap into the European big league of well managed computer services companies such as Cap Gemini, Andersen Consulting and EDS (Europe). The industry is still growing fast. Sema's 536p share price could double by the end of 1996.
Philip Winston BZWIM
Trinity International had an eventful year, becoming the largest UK regional newspaper publisher by acquiring most of the Thomson UK newspapers. The acquisition will add more metropolitan franchises - notably Belfast and Newcastle - to its already strong stable of papers. Currently on a market rating but with the prospect of accelerating earnings, the shares at 342p are cheap.
Colin McLean Scottish Value Management
Where under-utilised assets or brands are brought under new management, there is often good potential for value to be released. My share for 1996 - Scholl, the personal care products business - fits this category. Scholl has considerable potential to improve the return on a neglected brand. Led by a new chief executive with extensive consumer products experience, the business is being refocused. Already Scholl has reported a strong first half performance, yet the shares are now well below their recent highs. I believe there could be a rerating of Scholl's shares - currently 194p - even without a bid.
Tom Crombie Scottish Equitable
It is not going to be easy to make money in 1996. I think the best chance will be to find a laggard stock that comes right. There are many laggards to choose from, and my choice is Arjo Wiggins in the paper and packaging sector. It has been one of the worst performing shares in the market in 1995. Profits have been under severe pressure, and brokers' forecasts are still probably not low enough. At 165p, the shares look attractive.
Eidos combines high growth potential from the evolution of visual media, with an existing earnings stream from games software. Eidos's technology compresses digital video signals enabling them to operate on a standard personal computer. This technology is available at an affordable cost using existing CD-ROM drives, avoiding the need for expensive upgrades. The company, shares in which trade at 693p, intends to seek a Nasdaq ADR listing in the spring of 1996, which should widen awareness.
Richard Lehman Royal Insurance
Shares in British Biotech nearly trebled last year largely as a result of promising preliminary data for Marimastat, the company's oral cancer drug. Analysts generally agree that the drug has the potential to achieve sales of pounds 500m by being used to treat several solid tumour cancers, but they differ on what chance Marimastat has of reaching the market. While it is a risky investment, we believe that British Biotech shares will perform strongly before Marimastat's planned launch in 1999.
Vanessa James Legal & General
Tomkins, headed by Greg Hutchings, should finally rehabilitate itself in the eyes of the UK stockmarket by the pending acquisition of Gates Rubber, a private US company. It is Tomkins's first major foray back into its base industrial business since the Rank Hovis McDougall acquisition. We expect an upward rating of Tomkins shares, now 282p, to follow.
Mark Wasilewski NatWest Investment
Having underperformed the market by a fifth in 1995, IMI shares at 328.5p are poised for a re-rating. Since 1990, profits have been poor because of subdued markets, writing-off the previous mistakes and a torrid time in the titanium market. However, major restructuring and improved market conditions promise recovery. Relationships with Coca-Cola and Pepsi in Drinks Dispense will provide secure earnings in the US, backed by additional growth in immature European and Asian markets.
Kevin Fenelon Scottish Amicable
GEC is set to produce strong outperformance in 1996. Not only are the fundamentals improving rapidly but shareholder value will also be unlocked by a more rapid pace of corporate activity. With an order book of pounds 14bn the potential for growth is enormous. Further upside potential arises from the imminent retirement of Lord Weinstock. Subsequent management changes will herald much sharper focus on the delivery of shareholder returns. Shares are currently at 355p.
Mike Grimble Norwich Union
The strong advances in the US and UK equities in particular put these markets on demanding ratings in historic terms. Any failure to meet profits growth expectations in 1996, as economic growth slows, could cause the markets to sell off. In the spirit of the contest, and looking, for once, through short term glasses, one stock which could perform relatively well in 1996 is BTR. Earnings could prove more resilient than the market's current pessimistic view, and from the base of a relatively high yield, the stock could outperform in 1996.
The funds managed by our tipsters may hold or deal in the shares which are recommended.
Arjo Wiggins 165p
British Biotech 1,805p
Trinity International 342pReuse content