Shares digital

It’s becoming a habit – your favourite financial magazine hugely outperforms the UK index once more

by Timon Day

Making money from shares hasn’t been easy of late yet in the first four months of 2008 we have made mincemeat of the FTSE All-Share index, while chalking up a hat-trick of 40%-odd gainers along the way. Since the start of the year our tips have chalked up an average 5.9% rise while the broadest stock market indicator has slumped 5.7%, quite a contrast.

Interestingly, globalisation is the thread linking the three Plays that have risen by around 40% already this year. Smart investors are buying stocks in companies that specialise in food, energy, metals and global business needs such as transport, and so it comes as little surprise that translation technology specialist SDL has done so well, up 37% since mid-January and still looking good value.

The company’s software allows global companies to communicate internally across language barriers and help exporters and importers do more business.

A bit more leftfield, giant Norwegian fertiliser group Yara International is also up strongly since being tipped on the last day of January. Growing food shortages were just starting to make headlines back then, a mood we spotted early. Just how short the world is of fertiliser to increase yields remains to be seen, but there appears to be a big shortfall – this is good news for Yara, which has rocketed over 40% so far, with hopefully more to come, helped by the strength of the krona against sterling.

But the best of the lot is Coal of Africa, tipped at 105p on 10 April, soaring roughly 43% to 150p by the start of May, and since rising to 166.5p, for a 58% profit. And that’s in barely a month. Helpfully the giant Mittal steel empire snapped up a big stake a fortnight ago, while broker Mirabaud has slapped a 182p price target on the shares. That alone suggests another 10% or more to go for, assuming this price target isn’t revised upwards, which looks likely given its first mine comes on stream in September.

Other stocks that did well include Anite, Landkom International, Melorio, Ferrexpo, Ashmore, Kentz, Cape and Spirent. On the basis that you stick with your winners and cut your losers, these plus the three above look solid long-term holds.

And from last year...

The best of 2007, Applied Intellectual Capital, zoomed up 88% to 250p, helping our plays weather the dismal market during the second half of 2007. After sticking at this level for a few months a ‘take profits’ was suggested in February since when they have remained unchanged.

Tiny Education Development was already rising strongly when it was tipped on 21 June at 26p. Last week it had surged to 41p for a 58.7% gain and still looks cheap for such a fast-growing, well-managed company.

A whisker behind is Aricom, the Russian iron-ore start-up by the gang that brought you Peter Hambro Mining. The shares are ahead 58.5% at 79p after a wobble earlier this year when they fell back below 70p. With the price of iron ore remaining strong and new world-scale reserves few and far between, the future looks bright.

Heritage Underwriting also looked too cheap on 16 August at 100.5p. So it turned out with a bid soon coming which was rejected. Good trading results and the chance of another bid have lifted the shares almost 51% to 151.5p where they no longer look particularly cheap.

Pace Micro Technology overcame a few charting hitches to win loads of new orders for satellite television decoders. The new Freesat launched this week by BBC and ITV to beam Freeview to all of us installing satellite dishes and receivers is good news. Pace shares are up 40.8% and remain a solid hold.

Staying ahead of the curve

Oil rig maker Lamprell has surged almost 40% to 449p and looks good for 500p at the rate it is winning new work. Specialist wound care company Advanced Medical Systems has surged 33% to 34p since 13 September. Legendary investor Jim Slater has accumulated 5% of the shares and Landsbanki reckons Advanced Medical could be worth 25% more to a bidder.

Also making the top 10 was Just Car Clinics. The shares, tipped at 91p on 28 June, took off like a Formula 1 car, hitting 119p a fortnight later which seemed too much too quick so we advised banking a 31% profit in double-quick time. Just as well as the shares are now only 67p.

The market was truly dreadful – especially for small caps – in the last half of 2007 and the first few weeks of 2008. However, strip out the particularly poor performances of just three stocks – Caledon Resources, Hamworthy and WH Smith, all stopped out, and our past 12 months’ performance would be a good deal better, and Shares will continue to spot some of the best money-making stocks ahead of the herd, boosting your profits for the rest of 2008.