Last year the tips put forth by the business team in the main yielded success with the majority of the quoted companies from the Broad Acres backed for success increasing their stock market value.
Of course however, if playing the market were an exact science then everybody would be doing it. Nonetheless the YP team has brought its collective heads together and are hoping to deliver a return on investment for those who trust them.
And so, who will be the winners and losers in 2020?
MARK CASCI - Business Editor
As we head into a new decade, it is my sincere pleasure to inform readers that, had they chosen to follow my advice for investment opportunities among our quoted companies, they would have enjoyed a healthy return on their investment.
My tip for 2019 was Sumo Group – and what a year this tech firm has enjoyed.
A relative newcomer to the world of floated companies, Sheffield-based Sumo’s decision to go public has proved a good one.
Shares were priced at 125p at the start of the year and have closed 2019 at 182p – a very good performance for the tech company.
Sumo also reported pre-tax profit of £1.3m, having registered a pre-tax loss of £2.1m for the same period in 2018.
Led by chief executive Carl Cavers, the company develops computer games, a market in which a plethora of Yorkshire firms are enjoying success.
It said demand was increasing for more content and that games were also becoming more complex – meaning it has had ample reason to swell its headcount.
Sumo, which has studios in Sheffield, Newcastle, Nottingham, Leeds, Leamington Spa and Pune, India, has seen its headcount grow by 15 per cent this year to 679 on June 30, 2019. Just over 300 of the staff are based in Sheffield.
And with the prospect of us leaving the European Union as a member state without a withdrawal deal now seemingly consigned to the dustbin, where it justifiably should reside, its ability to attract the best staff now seems to be in a far better place than earlier in the year.
The fate of the economy and nation were looking very ropey at the start of the year, with the prospect of our leaving the European Union without any agreement looking disconcertingly viable.
However with the UK set to leave in an orderly and professional manner at the end of the month, there is much reason to feel optimistic about 2020.
The Tories have been able to form a government with a healthy majority after big promises on delivering infrastructure improvements for the UK and the North in particular.
As such the many well-managed and forward-looking infrastructure and construction firms in our region could well be set for a fine 2020 – as evidenced by the share tips from my colleagues this year.
However I am going to stick with what I feel is a sector that has the best potential for long-term growth, namely video games.
This year my recommendation for investors is to look at Wakefield’s Team 17.
Yes, another game developer. Yes, another firm relatively new to the Stock Exchange. And yes, another firm with great growth potential.
Team 17 has one of the region’s best chief executives in Debbie Bestwick. Its share price grew from 195p to 378p during 2018 and analysts have been upgrading their forecasts for the firm over the course of the year as it continues to grow.
Before anyone asks, I am no video games aficionado (I think the last game I played was Pacman). However, this is a sector now worth more than the movie industry.I hope Yorkshire can be at the heart of this.
ROS SNOWDON - City Editor
My 2019 share tip was FTSE 100 chemicals giant Croda International, which I thought would be a good defensive play in turbulent times.
The shares started 2019 at 4,776p and closed at 5,120p – a gain of over 7 per cent for anyone who followed my tip.
Investors who sold at the halfway mark in June would have seen an increase of 13 per cent.
Snaith-based Croda, which counts Unilever, Procter & Gamble and L’Oreal as customers, saw growth in 2019, although its personal-care division was hit by the trade war between Beijing and Washington.
This year I’m tipping Elland-based paving specialist Marshalls as it has a healthy exposure to the building-materials sector.
The firm should benefit from Government expenditure in the North and from wealthy pensioners upgrading their outdoor living space.
Many of its private-sector customers enjoy gilt-edged pensions so they won’t be hit by the effects of an economic downturn or the vagaries of Brexit.
The growing popularity of pedestrianisation schemes and the need to fight terrorism are also boosting sales at Marshalls.
In the half year ended June 30 2019, Marshalls delivered revenue growth of 15 per cent to £281m.
The firm’s chief executive, Martyn Coffey, said there was a growing trend towards pedestrianisation in UK cities, which is helping to improve Marshalls’ performance.
He said the company had been involved in paving areas around the Trinity and Victoria Gate shopping centres in Leeds and the company was seeing a boost from policies aimed at keeping traffic out of city centres around Britain.
Recent events have raised awareness of the vital role that barriers and other street furniture can play in preventing terrorist attacks and this is a rapidly growing area for the firm.
Marshalls has focused on terrorist-prevention furniture that blends into the background, such as seaters or planters, rather than barriers. The group’s street furniture is concrete reinforced with steel rods.
The company has also devised a five-year strategy to help it achieve sustainable growth.
New analysis by retirement mortgage experts Responsible Life revealed homeowners injected £271bn of equity into housing this decade – the first decade on record that British people have not made a net withdrawal.
From 1970, when the records began, to the end of the 2000s, homeowners withdrew more equity than they injected in every decade. However, in the 2010s, the trend has completely reversed.
This pattern looks set to continue in 2020, boding well for Marshalls, which has a highly experienced management team and a strong record of growth.
GREG WRIGHT - Deputy Business Editor
AS the chimes ring out to bring in a New Year, the chief executives of every Yorkshire PLC have a single prayer.
“Please don’t let Greg Wright tip my shares this year.”
Ever since 2004, I have displayed a remarkable ability to send the share price plummeting at a host of companies that seemed to be in rude health.
The pattern is a familiar one. On January 1, I make my share tip. After a few weeks’ grace, the company’s share chart usually resembles a very dangerous ski slope. Orders are cancelled. CEOs depart. Profit warnings appear out of an apparently clear blue sky. It can take years for the company to recover its poise.
Last year, I chose the equipment rental specialist VP because I believed the company would be a safe haven in a corporate world that seemed in danger of losing its sanity. As I predicted,
VP’s management kept a steady course during a period of turmoil, although this stability was not always reflected in its share price. The company did not suffer the unhappy fate of many afflicted by “the curse of the Greg Wright share tip”.
The company maintained its profit before tax, amortisation and exceptional items at £25.9m in the six months ended September 30, despite a reduction in revenues. The Harrogate-based firm saw revenues reduce by 3 per cent to £186.6m from £193.2m in the first half. Earnings increased slightly to £51.8m. The interim dividend was increased by 3 per cent to 8.45p per share from 8.2p per share.
Jeremy Pilkington, chairman of VP plc, said: “The group made good progress in the first half of the year against a subdued market backdrop. Despite the ongoing political and economic uncertainty in the UK, our focus on quality of earnings has delivered enhanced operating margins during the period.
“The board remains confident of a positive full year outcome and looking ahead, we believe we will continue to deliver very satisfactory results for all stakeholders.”
VP closed 2018 at 984p. In a year in which its share price faced fluctuating fortunes, it closed 2019 at 940p.
So who do I believe will make investors’ hearts sing in 2020? This year I am placing my faith in another great Yorkshire company, Town Centre Securities .
I believe Boris Johnson’s victory in the General Election will be good news for its shareholders.
Analysis suggests that the new influx of Tory MPs will have a big impact on the Government’s spending plans in 2020. The Conservatives will be looking to stimulate growth in the North and the Midlands.
There are 140 Conservative MPs representing the North and the Midlands. Analysts at Peel Hunt expect the Tories to invest in the region and the plcs that are likely to benefit will include Town Centre Securities.
It has 75 per cent of its portfolio in Leeds and Manchester, both cities which are expected to benefit from increased Government spending, as Boris Johnson aims to retain his new friends in the North. Town Centre Securities has said it will continue to operate in areas that have been less exposed to extreme swings of the property cycle.
Mark my words, the political winds will surely drive my share tip to glory.
Town Centre Securities closed 2019 at 220p.
ISMAIL MULLA - Business Reporter
Last year I decided the best way to get out of my funk – I can’t remember the last time I tipped a winner – was to play it safe.
Go back to basics and play it with a straight bat. So I plumped for power producer Drax.
On paper, it looked a safe tip. The Selby-based business had just announced the acquisition of a portfolio of assets from Scottish Power. Its transition from coal to biomass had progressed really well.
Drax also reported a rise in pre-tax profits and earnings for the year ended December 31, 2018.
However, after a bright and breezy start to the year, the share price slowly started to decline in April, dropping to 260.2p from highs of 413p.
There were a couple of minor rallies that proved to be false dawns. Then when the actual recovery came, it was too late.
Another year where my share tip has left me with my stumps in disarray.
But I’m determined to finally break this string of bad form and this year I’m pinning my hopes on engineering-services provider Renew Holdings.
The firm’s share price has seen a sharp upward turn in the month of December off the back of a strong set of preliminary results in November.
Renew has a proven track record of revenue growth and profitability and cash generation.
Group revenue was up 11 per cent to £600.6m from £541m in 2018.
Dividend for the full year was up 15 per cent to 11.15p, while adjusted operating profit was up 23 per cent to £38.3m.
Analysts at Shore Capital said: “We think its current rating fundamentally undervalues the business, possibly due to its association with contractors that have a much higher-risk profile, in our view due to the relative size and low-volume of their contracts compared to Renew’s.”
The firm also benefits from visibility of revenues for long-term frameworks, a high operating profit margin, strong cash generation and has an established market position with UK infrastructure investment expected to grow.
All these factors are enough to inspire confidence heading into the New Year.
And that’s why I’m backing Renew to help me to return to form.
Renew Holdings closed 2019 at 546p.
LIZZIE MURPHY - Business Reporter
It’s fair to say that Clipper Logistics has had a pretty good 2019, despite the challenges affecting some parts of the retail sector, with shares rising X per cent.
In the year ending April 30, the Leeds-based firm, which distributes goods for retailers such as John Lewis, Marks & Spencer, and Asda, drove its revenue up by 15 per cent to £460.2m from £400.1m.
Pre-tax profit grew by 18 per cent to £17.1m but fell slightly once the effects of property deals were added in.
The company reported a strong end to 2019 last month with a 12 per cent jump in half-year revenues to £255m.
Clipper said growth was driven by a strong performance in e-fulfilment and returns management. Pre-tax profits rose 10 per cent to £10m in the six months to October 31.
Clipper added that it delivered a successful Black Friday weekend, with many sites reporting record volumes.
Executive chairman Steve Parkin, who founded Clipper in 1992 and who owns nearly a third of the shares, is reported to be lining up a £300m takeover bid to take the company private.
The company received a preliminary approach from Sun European Partners in relation to the potential acquisition of the company. Before Christmas, he was granted an extension to his December deadline to make a decision on the company’s future.
This year I’m backing land regeneration firm Harworth Group.
The Rotherham-based business, which regenerates land and property for development and investment, owns, develops and manages a portfolio of 20,500 acres on around 120 sites located throughout the North of England and Midlands.
The company ended the year strong after completing three transactions that will generate additional net recurring income of £564,000 a year, including a 20-year pre-let with the UK Atomic Energy Authority for a 25,000 sq ft fusion technology research centre at the Advanced Manufacturing Park.
Its shares are the highest they’ve been for the last five years, which should put me off. However, Yorkshire is expected to receive some Tory investment this year. Analysts at Peel Hunt recently said Harworth appears to be ideally positioned to benefit from this with its aim to become “the leading land and property regeneration specialist in the North of England and Midlands”. So I’m cautiously optimistic about the year ahead.
Harworth Group closed 2019 at 141p.
JOHN GRAINGER - Business Reporter
IF the big Luxembourg-based equity funds don’t have my phone ringing off the hook this week with job offers then there’s simply no justice.
Not only have I finished the year in profit for the third year running, but my pick for this last year, Renew Holdings, has increased in value from 347.9p per share to 534p – a whopping 53 per cent. If that’s not a Yorkshire Post business desk record, it should be.
Renew, which is based at Aberford near Leeds, provides engineering services for critical infrastructure networks (think bridges, tunnels and power stations).
When I picked the stock last winter, I reckoned that any government dealing with the fallout from Brexit – which was due to go ahead at the end of March – would feel bound to continue investing its dwindling tax returns in the kind of big infrastructure projects that help keep a country afloat. In other words, the kind of projects that firms like Renew thrive on.
I also thought that Brexit would cause problems for many companies, especially those that rely on trade with the Continent, effectively ruling them out of my share-pick options.
Brexit, of course, didn’t happen as billed, but mine turned out to be a decent strategy nevertheless, as there was indeed disruption for some companies, arising from uncertainty, defensiveness and even stockpiling.
Renew, on the other hand, grew both revenue and operating profit in its core engineering services division by 21 per cent, reducing debt and increasing dividend per share. In short, it was the very image of a thriving company, and its share price had risen by over 30 per by December 12, when Britain went to the polls.
Boris Johnson’s landslide victory sent the markets soaring and saw share prices, including Renew’s, spike in the euphoria.
So how am I going to follow this stock-pick hat-trick? Well, given that Brexit has been delayed for a year, last year’s rationale may well hold good for another 12 months at least, so I’m steering clear of anything reliant on cross-Channel trade, high-street sales or consumer sentiment.
My pick for 2020 is MJ Gleeson, the Sheffield-based plc that specialises in urban housing regeneration and strategic land trading. I’m gambling that the new government will loosen planning regulations and aim to make a visible dent in the woefully low housebuilding figures, enabling companies like MJ Gleeson to get busy creating low-cost housing.
MJ Gleeson, which was voted the most sustainable business in the UK in March, has been doing rather well over the last five years and its share price is currently riding high. That would normally be enough to put me off, but under the unusual economic circumstances I’m hoping its stock will head further north over the next 12 months.
And if I’m wrong, what have I got to lose? I’ll surely be in Luxembourg by then.