Questor’s tip of the year: a fast-growing software firm that yields almost 6pc

“Accurate processing of these payments is extremely important for retailers, especially online,” he said. “You want to catch all the attempts at fraudulent use but you don’t want too many ‘false positives’, when the system rejects a payment that is actually legitimate, because this is annoying for customers and can lose business for the retailer.

“Having the right ‘gateway’ software makes all the difference here. There is plenty of competition in this area, including from large companies such as Worldpay, but we are very impressed by SafeCharge’s payment technology, which it developed in-house.”

Williams pointed out that the company was based in Israel, which gave it access to a pool of excellent software engineers thanks to the technological prowess of the Israeli armed forces.

“The underlying business is very strong and transactions have been going through the roof, with 60pc growth in 2018,” he said. “Every customer it signs up is profitable, although profit margins vary because some customers need more support than others. I am not even slightly worried about margin erosion.”

He said the company had also moved away from certain types of business, such as betting, which were seen as riskier.

“Investors have seen this and sent the share price lower. As a result, the stock trades at about 16 times expected earnings for the year just ended and about 14.2 times earnings for 2019,” Williams added. “This is superbly cheap for such a good business.”

He said Miton was one of the largest shareholders, while the directors also have very large stakes – something that Questor finds reassuring as it encourages managers to take a sensible, long-term approach.

The company is able to grow without much need for capital investment, so it has been able to grow its dividends “beautifully”, Williams said. At today’s depressed price the shares have a forecast yield of 5.8pc. SafeCharge also has net cash of £65m, against a market value of about £350m.

“This year I think the stocks that will do well are those with minimal debt and a growing dividend,” the fund manager said. “We are allergic to geared [indebted] companies at the moment.

“But we are very excited by SafeCharge. We love its yield and we love its cash cushion.”

Questor says: buy

Ticker: SCH

Share price at close: 235p

Update: Kromek

We tipped Kromek, which makes advanced radiological detectors, in March 2017, also on the basis of Gervais Williams’s holding of the stock. Its share price is now 1.9pc lower but the fund manager has lost none of his faith in the business.

“So far it has not had the big break we are looking for but we think it has the potential to become a very substantial business,” he said. “We have not sold any shares – in fact we have bought more.” Hold.

Questor says: hold

Ticker: KMK

Share price at close: 26.5p

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Update: ISS, Questor’s tip of the year for 2018

Our tip of the year 12 months ago was ISS, the Danish outsourcer. It has not lived up to our hopes, with the share price currently 21pc lower.

We published an update on ISS in November so will simply reiterate the views of the fund manager whose holding prompted the tip, James Milne from Crux Asset Management.

He said then: “Currently it is trading at a depressed multiple of depressed earnings. We think sales will rise and margins improve next year [2019]. We are happy to hold for the foreseeable future.”

Questor says: hold

Ticker: ISS:DC

Share price at close: Dkr190.3

• Ques​tor archive: telegraph.co.uk/questor