Midas: 2017 share tip winners
The investment column that makes the most of your money
IN JANUARY 2017, the mood was sombre. President Trump had been inaugurated at the White House, Europe was battling with political extremism and the UK was locked in Brexit-related uncertainty.
Many brokers believed that markets would reflect these problems and share prices would fall. How wrong they were!
The FTSE 100 index of the biggest quoted companies at the year end is up 7 per cent at 7,688. The FTSE 250 index has closed at 20,726 – 14 per cent higher than at the start of the year. And the index of AIM shares has risen 24 per cent to 1,050.
Midas recommendations have gained ground too. A couple have been hit by specific problems or growing pains. Most, however, have made strong progress.
WINNERS
AMONG our winning stocks, the top five are a reminder of the benefits of diversification, comprising an energy consultancy, a miner in Greenland, a German property group, a pawnbroker and a virtual reality specialist. Our top stock was Inspired
Energy, which helps companies to save money on their gas and electricity bills. The stock, which Midas recommended in February, has risen by exactly 50 per cent to 19.125p and brokers believe it should reach 25p over the coming months.
Inspired’s performance is all the more impressive as its founder and chief executive Janet Thornton resigned abruptly in October for personal reasons. The company has reassured investors that her departure had nothing to do with the shape of the business and brokers remain optimistic about Inspire d’ s prospects. Importantly too, a new chief executive was instantly appointed – Mark Dickinson, an energy consultant with a successful track record of running energy firms.
The group buys energy on behalf of companies, using its scale to negotiate cheaper terms than individual firms could obtain. Inspired also advises businesses on how best to manage their energy usage.
Profits for 2017 are expected to rise by almost 40 per cent to £8.5 million with £11 million pencilled in for 2018. There is a decent dividend too – with 0.6p forecast for this year, rising to 0.7p next.
Thornton and her team built up Inspired by serving existing customers well, acquiring new ones and encouraging new and old to buy more services from the group. Dickinson will maintain this approach but is likely to accelerate growth through acquisitions. Midas verdict: Existing shareholders should stick with Inspired. New i nvestors could also f i nd value at 19.125p. MIDAS recommended
in August, since when it has soared by 34 per cent to 22¾p. The group is forging ahead with one of the l argest and highest grade ilmenite projects in the world, based in north-west Greenland.
Ilmenite is used to produce titanium dioxide, an essential component of white paint, sunscreen, certain cosmetics and even some food products. The mineral has a wide range of industrial applications, demand is global and Bluejay should have an excellent supply once it moves into production.
Chief executive Rod McIllree is confident that the group will start to produce ilmenite in 2018, moving into profitability two or three years later. Early signs are positive and brokers are backing him, suggesting the shares should continue to rise over the coming months. Midas verdict: Bluejay has come a long way fast and nervous investors may want to take profits at 22p¾, especially as mining companies are high-risk before they actually start making money. Adventurers should hold on though. McIllree is highly competent and the mine site is exceptionally good quality.
SIRIUS Real Estate was recommended in March. The price has since risen 28 per cent to 65¾p.
The company owns business parks in Germany and specialises ise in turning down-at-heel sites into modern offices. Once they are operating well and are filled with happy tenants, rents and values increase. Some are also sold on, giving Sirius the firepower to repeat the process. The strategy provides investors with share price growth and a healthy dividend yield.
Interim results released last month were ahead of City expectations and brokers expect strong growth for the full year, with the net asset value per share (the underlying value of Sirius’s assets, divided by the number of shares) rising 13 per cent to 64.8 cents (57.5p) and the dividend up just over 10 per cent to 3.2 cents (2.84p). Midas verdict: Germany is still the most robust economy in Europe and Sirius chief executive Andrew Coombs knows what he is doing. At 65¾p, this investment is worth holding on to for a number of years. BRITAIN’S largest pawnbroker and virtual reality music specialist were strong performers too. H&T has risen 24 per cent to 335p since Midas looked at it in January. EVR was recommended just five months ago but has soared by 31 per cent to 8p, after pop star Adele was said to have invested. H&T has benefited from branching out into shortterm loans and foreign exchange. The group has also developed a decent digital presence, allowing customers to borrow money and obtain p a wn valuations online. Brokers now expect 2017 profits of £12.8 million, a 32 per cent increase over last year, accompanied by a 10p dividend. Midas verdict: Chief executive John Nichols has made real progress with H&T’s diversification strategy and the shares have responded. At 335p, the stock has further to go.
EVR is a pioneer, with the largest library of virtual reality music and a growing portfolio of live musical experiences.
If virtual reality headsets really take off, this company should soar. Clearly, however, there are risks involved, as in any burgeoning sector.
At 8p, the shares are a good punt for music and tech aficionados but they are not for the nervous.
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