The stock market has had a torrid few weeks. Many share prices have fallen since January and the collapse of a technology-focused bank in California has sent ripples across the financial sector.
High-profile companies have chosen to list in America rather than here, with others hinting that they may follow suit. Amidst it all come suggestions that the UK is past its prime, stuck in a rut, a busted flush. Not so fast. As Chancellor Jeremy Hunt said in last Wednesday’s Budget: ‘The declinists are wrong, and the optimists are right.’
Even as the economy faces challenges, determined UK firms are showing their mettle and delivering rewards for investors.
Every year, thousands of firms decide they need to stamp their identity on to everyday paraphernalia – pens, mugs, T-shirts, umbrellas, bags, golf balls and the like. And 4imprint helps these firms to buy what they need when they need it at an affordable price.
The group started out with a 12-page catalogue in 1987. Today, it is the world’s largest promotional products group, selling millions of items online across the UK, Ireland and North America.
The shares have soared in suit. Just £2.17 when Midas recommended them in 2011, they have risen more than 20-fold since then to £46.70. Many followers believe the stock has further to go.
Only last week, chief executive Kevin Lyons-Tarr unveiled stellar figures for 2022. Profits more than tripled to $104 million (£86 million), the dividend soared from 33.8p to £1.32 and a special payout was declared – of £1.65 a share.
The company reports primarily in dollars because more than 90 per cent of sales are generated in America, where businesses are particularly fond of using logo-embossed goods to attract customers and reward employees.
But 4imprint is headquartered in London, there is a thriving hub in Manchester and the board retains a strong commitment to the UK market.
The firm has been well regarded for years, offering better service, more choice and cheaper prices than competitors. But growth moved into another league in recent years, not least because Lyons-Tarr kept faith with employees during tough times and continued to invest in his business.
City watchers believe this focus will continue to yield results, with brokers at Liberum suggesting the shares could hit £50 in a year or so.
Midas verdict: 4imprint has been a fabulous investment over the past 12 years and some investors may choose to take profits at £46.70. But this stock should continue to deliver. The company still has less than 5 per cent of its market, Lyons-Tarr is ambitious and the business is a winner.
Traded on: Main market Ticker: FOUR Contact: 4imprint.com or 0161 850 3490
Greencoat UK Wind
When Greencoat UK Wind floated on the stock market, it was a novelty – the first listed business dedicated to the renewable sector.
That was in 2013. Since then, many companies have joined the wind and solar party but Greencoat is still the biggest of its kind – and among the best.
Led by industry thoroughbreds Stephen Lilley and Laurence Fumagalli, Greencoat owns and operates on and offshore wind farms.
Among the best: Many companies have joined the wind and solar party but Greencoat is still the biggest of its kind
Ten years ago, there were six in the portfolio, generating 127MW of power. Today, there are 45 farms and more than 1,000 turbines, creating 1,610MW of power, enough for 1.8 million homes.
The company was valued at £260 million back then. Today, it is worth more than £3.5 billion.
Along the way, the stock has risen from £1 to £1.58, and provided ten years of consecutive, inflation-linked dividend increases, totalling more than 65p per share.
By any measure, the company is a success, working with utilities and Government Ministers to bolster the UK’s supply of home-grown power and its environmental credentials. Looking ahead, Lilley and Fumagalli are keen to go further, adding new sites, increasing capacity and contributing to the Government’s net zero ambitions.
Shareholders should reap continued benefits from this strategy. Greencoat has a stated aim of increasing dividends in line with inflation and preserving capital in real terms.+++++++
The entire business is built around this policy, which has served investors well to date and should continue to do so.
The group focuses on purchasing farms from developers once they are up and running, the construction risk has been removed and long-term energy contracts are in place.
As veterans of the market, Lilley and Fumagalli have contacts across the sector, seeing deals at an early stage so they can pick the most promising – and they do, ensuring that the business continues to expand and prosper.
Midas verdict: Midas recommended Greencoat when it first came to the stock market. This month, the group celebrates ten years as a listed business, marked by consistent dividend growth and a near-60 per cent increase in the share price to £1.58. With the Government increasingly focused on home-grown, renewable energy, Greencoat should continue to deliver. In an uncertain world, that is an alluring prospect for existing and new investors.
Traded on: Main market Ticker: UKW Contact: greencoat-ukwind.com or 020 7832 9400
Publishing is one of those industries that the UK is particularly good at and Bloomsbury exemplifies the point.
Founded in 1986 by book-lover Nigel Newton, the business has picked out best sellers for years, from JK Rowling’s Harry Potter series to American author Sarah J Maas’ romantic fantasy novels to Paul Hollywood’s latest cookery book, BAKE.
Last week, Newton said that last year’s results would exceed expectations, with profits up around 14 per cent to more than £30 million.
Success: Bloomsbury was founded in 1986 by book-lover Nigel Newton and the business has picked out best sellers for years
This is the fifth upgrade issued by the company since January 2021, with growth fuelled not just by gripping armchair reads but also by an expanding online academic arm, particularly in America and by a phenomenon known as BookTok, where users of the social media phenomenon TikTok post excitable videos about books they have read – including several published by Bloomsbury.
Midas verdict: Doomsayers have predicted the demise of publishing for years but people keep on reading and the industry keeps on growing. At £4.50, Bloomsbury shares have risen more than 60 per cent since Midas recommended them in December 2020 but Newton is one of the most experienced players in the business and the stock should keep on rising.
Traded on: AIM Ticker: BMY Contact: bloomsbury-ir.co.uk or 0371 664 0300
The video gaming market soared by 50 per cent to £250 billion during the pandemic.
Many observers expected interest to fall away once lockdown restrictions were lifted. But growth continues and the industry is expected to top £400 billion in the next five years.
Keyword Studios is a prime beneficiary of the continued enthusiasm for gaming – providing music and artwork for games, translating them into multiple languages and testing new titles before they are released.
Taking aim: Keyword Studios is a prime beneficiary of the continued enthusiasm for gaming
Originally based in Ireland, the business has spread its wings across the world and customers include Microsoft, Sony, Apple and Google.
Results for 2022 showed just how well Keyword is doing, with a 30 per cent rise in profits to €112 million (£99 million), a 10 per cent hike in the dividend to 2.37p and the promise of more growth to come.
Midas verdict: Midas recommended Keyword at £1.53 in 2015. The shares have since risen more than 17-fold to £26.42 but there is still momentum in this business. Keep the faith.
Traded on: AIM Ticker: KWS Contact: 00 353 1 902 2730 or keywordsstudios.com
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