How did Midas do this year? The winners and losers from our stock picks of 2015
Michelmersh makes premium bricks and paving stones, for places including shops such as the Jimmy Choo store in Bond Street, Mayfair
The past year has been highly unusual for shares. The rout in commodity markets and the tumbling oil price has had a calamitous effect on some of the UK’s biggest stocks.
As a result, the FTSE 100 index, which includes the shares from those sectors, has fallen 4.5 per cent to 6,254.64. At the other end of the spectrum, however, London’s junior AIM market has gained ground over the year.
The AIM index, which usually trails behind its more established rival, has risen 4 per cent through the year to 728.24 – not an outstanding performance, but still considerably better than the Footsie.
The FTSE 250 index, which ranks just below the top 100 and includes many more domestic stocks, also put up a decent show, rising more than 8 per cent to 17,415.1.
Against this backdrop, Midas had a strong year. Three-quarters of all our 2015 stocks are either broadly stable or well ahead of the price at which we recommended them.
WINNERS
Two of our three New Year recommendations for 2015, Hayward Tyler and Michelmersh Brick Holdings, have made great strides, rising 18 per cent and 31 per cent respectively over the past 12 months.
Michelmersh makes premium bricks and paving stones, for high-value homes, major commercial projects, such as the redevelopment of Elephant & Castle in South London and even shops, such as the Jimmy Choo store in Bond Street, Mayfair.
In January, the shares were 71p and the company was just emerging from several painful years. Today, the stock is 93p and the business is on a solid footing. In July, Michelmersh paid its first dividend since 2007 and analysts expect annual dividends to be paid for the foreseeable future.
Michelmersh makes about 70 million bricks a year from four sites around the country. The group is producing at maximum capacity so profit growth is more likely to come from increased efficiency than large increases in sales. Reflecting this, the group is focused on cutting costs while improving the quality of its bricks.
Analysts expect profits to rise from £2.9 million in 2014 to £4.2 million for the current year and at least £4.5 million in 2016. A dividend of 1p is pencilled in for this year, rising to 1.2p for 2016.
Midas verdict: Looking ahead, investors will be unlikely to see the same share performance in 2016 as this year so they may want to sell some of their stock. But they should not sell out completely, especially now that the shares have started to generate an income.
Hayward Tyler is an engineering group that specialises in top-of-the-range electric motors and pumps, used in situations where failure is not an option.
Last January, the shares were 78p. Today they are 92.5p and supporters believe the stock should rise to more than 120p over the coming 12 months.
About 70 per cent of the group’s customers are in the energy and nuclear sectors around the world, including in America, China and India. A Centre of Excellence is opening next year in Luton, Bedfordshire, to improve design and manufacture and double capacity.
The company also recently acquired Peter Brotherhood, a business whose products complement its own.
Brokers expect profits to increase by 15 per cent to £5.1 million in the year to March 2016 and by 33 per cent to £6.8 million the following year, as the Luton site comes on stream and Peter Brotherhood is integrated into the business.
Midas verdict: Hayward Tyler shares have done well but the best is yet to come. Hold.
LOSERS
Unfortunately, there have been some soggy performers, too, particularly in the high-tech and biotech sectors, where Microsaic Systems, Quantum Pharma, Horizon Discovery Group and Midatech Pharma had a disappointing 2015.
Microsaic suffered from poor first-half sales and the share price reaction was savage. The company makes mini mass spectrometers, used to analyse products from Scotch whisky to drinking water to early-stage drugs. The efficacy of its kit is not in doubt but, like many small technology companies, the group is taking longer than expected to generate decent revenues.
The shares have plummeted almost 50 per cent to 24.5p since Midas tipped them in March, but all is not lost. Chairman Colin Nicholl, a former partner at illustrious stockbroker Cazenove, seems keen to whip the company into shape. Both the chief executive and the finance director have been replaced this month and trading in the second half of the year has picked up substantially. Don’t sell now.
Quantum Pharma lost ground too, falling more than 20 per cent to 110p since Midas recommended the stock in May. The decline follows delays with one of its most eagerly awaited drugs and the firm’s fortunes may take some time to resolve. Impatient investors should cut their losses.
Horizon Discovery and Midatech have also fallen, but in both cases, the businesses remain fundamentally sound. The companies are making good progress and have suffered largely from a general malaise hanging over the biotech sector since Hillary Clinton, the favourite US presidential candidate for the Democrats, accused the pharmaceutical industry of charging too much for drugs.
Her criticism sent US biotech stocks into a tailspin and the effect reached the UK too, but Horizon and Midatech should recover next year, so the shares are worth holding.
- Michelmersh Brick Holdings PLC Share Price | This is Money
- Hayward Tyler Group Share Price | This is Money
- Microsaic Systems PLC Share Price | This is Money
- Quantum Pharma Plc Share Price | This is Money
- Horizon Discovery Group Plc Share Price | This is Money
- Midatech Pharma Plc Share Price | This is Money
- Optibiotix Health Plc Ord 2p Share Price | This is Money
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