IT’S time to reveal the winners and losers of the YP Business Desk’s 2014 share tips.
If you had followed our tips you’d be sitting on a loss of 22 per cent which compares with a 2.7 per cent fall for the FTSE 100, the index’s first loss since 2011.
So it seems 2014 was not our finest performance. However, readers who followed business editor Bernard Ginns’s Severfield share tip will be sitting pretty with a gain of 13 per cent over the year.
Unfortunately, this was cancelled out by deputy business editor Greg Wright’s 29 per cent fall after backing beleaguered Morrisons and city editor Ros Snowdon’s six per cent fall after backing Vp.
So can we regain our credibility and win you over with our tips for 2015?
We’ve made some interesting selections. Bernard is backing WYG, which looks to be back on course after a difficult few years. Emis will be hoping the curse of the Greg Wright share tip will not interrupt its strong trading and Ros has gone for penny share Avacta - can it win some important contracts this year and live up to its promise?
Our newcomers, Naomi, Ismail and John have also backed some interesting stocks.
Bernard Ginns: Applause and big returns for those who took advice
For Those of you who were wise enough to follow my advice and buy shares in Severfield plc, I applaud your impeccable judgement.
You will be sitting on a handsome return after shares in the steelwork contractor rose 13 per cent in value against an overall market that declined.
The shares started 2014 at 60p and closed it at 68p.
Those who didn’t heed my sage words, oh ye of little faith. It was a good year for the Thirsk-based company, crowned in mid-December with the announcement of a raft of new contract wins totalling £43m.
These include a prestigious contract on the expansion of Anfield Stadium. Severfield will support Carillion to add 8,500 seats to the main stand, increasing overall capacity for Liverpool Football Club to 54,000.
Ian Lawson, chief executive, said: “It continues the momentum we’ve established in recent months, and all of these new contracts are in sectors where we have a strong market share or are seeing positive future trends.
“We are thrilled to be working for Carillion on such a high profile project as Anfield, especially as stadia is a sector where we have a demonstrable track record.”
This pick was a well-timed turnaround story. In 2013, Severfield confessed it had experienced “probably the most challenging period in the group’s history” after uncovering heavy losses on contracts.
But in November, the company was back in the black, announcing pre-tax profits of £1.4m in the six months to September 30. It performed well, just like I said it would.
Now, pride always comes before a fall, so with that in mind management and shareholders beware as I select my stock for 2015.
I am going for WYG, the global project management and technical consultancy formerly known as White Young Green.
Based in Leeds, this company is looking very well placed for growth. WYG had a difficult time during the downturn, undergoing a necessarily painful restructuring journey after a debt-fuelled acquisition spree in the boom years. It even suffered the ignominy of being described a “basket case” in our Blackfriar column.
But all that seems a distant memory with strong trading across its geographies and a double-digit increase in its order book.
Underlying pre-tax profits rose 35 per cent to £2m in the half year to September 30 although WYG made a £400,000 pre-tax loss following share option costs. Revenues were flat at £63m.
Analysts at WH Ireland rate it a ‘Buy’ with “a significant margin opportunity”.
Analyst Nick Spoliar said: “A strong set of first half results shows profits/earnings rising substantially and well supported by a double digit increase in the order book.
WYG is my choice for 2015. The shares closed 2014 at 104.5p.
Greg Wright: Dragged down into the manure by share tip curse
I suppose I could place the blame for my abject performance on cattle manure.
There’s no doubt my decision to place my faith in Bradford-based supermarket chain Morrisons in 2014 was not an inspired move. But, a year ago, I really believed that Morrisons was heading towards a bright new dawn.
Working on the principle that latecomers can still steal the scene at the best parties, I thought Morrisons would deliver the goods for investors. The “party” in question was online shopping, a market Morrisons was about to enter in early 2014.
Alas! It’s proved to be a pretty dire year for Morrisons, with one former senior executive comparing the company to a supertanker heading towards an iceberg.
Roger Owen, a former aide to Sir Ken Morrison, also said Morrisons needed a dynamic trader who knew how to fill the shelves, during a period in which the Bradford-based group has lost ground to German discounters.
Perhaps the lowest point came at the AGM, when Sir Ken delivered a withering critique of the company’s management. Dalton Philips, Morrisons’ CEO, was subjected to a humiliating dressing down. Sir Ken compared his strategy with the manure produced by his cattle herd. Morrisons’ sales fell a disappointing 3.2 per cent in the three months to December 7, making it the worst performer out of the “big four” supermarkets. Morrisons shareholders must dream of happier times.
Morrisons shares closed 2013 at 261p. Yesterday, after a year the management would rather forget, it closed at 184.2p, down 29 per cent.
So, after taking a deep breath, which Yorkshire firm will be lumbered with the curse of the “Greg Wright share tip” this year?
Well, this year I’m backing Leeds-based Emis Group, which aims to improve the quality of healthcare for us all. Emis is one of those smart, fast-growing firms which Yorkshire keeps producing. It’s a big provider of healthcare software to GPs, and its business model is in tune with Government policy, which aims to reduce paperwork and improve efficiency.
It recently bought Medical Imaging (UK) which provides diabetic eye screening to the NHS in England.
Emis said it not only expects the acquisition to be earnings enhancing in 2015, but it will also help prevent blindness in the increasing number of people suffering from diabetes.
With more people living longer, and the public sector facing a spending squeeze, the need for Emis Group’s services can only grow.
The Government wants the NHS to go paperless by 2018 to save billions of pounds, improve services and help meet the challenges of caring for an ageing population.
This year, I’m certain I’ve picked a winner. Emis Group’s shares closed 2014 at 870p.
Ros Snowdon: My prognosis is healthy new year returns for hi-tech medical firm
Last year I opted for a “safe bet” with Harrogate-based equipment hire firm Vp.
Vp’s shares started 2014 at 666p, which I said at the time I hoped would not prove to be an ominous sign...
Maybe I should have listened to myself as they closed 2014 at 625p, representing a fall of six per cent.
So, what went wrong? In all fairness, nothing. Vp has had an excellent year, but was hit by downgrades elsewhere in the support services sector. It’s a cross many companies have to bear – they may well be outperforming but if there are problems elsewhere in the sector, they get knocked back.
At the end of November Vp announced record half-year results thanks to strong demand from housebuilders and an improvement in the general construction market.
The company said pre-tax profits rose 27 per cent to £16.2m in the six months to September 30 on the back of an 11 per cent rise in revenues to £101.3m.
Group managing director Neil Stothard said the six-month period was the strongest the group had ever had.
Analyst Nick Spoliar at WH Ireland said that while Vp’s shares lost ground over the year, he expects a further rise in capital expenditure and sees good potential for the shares going forward.
This year I’m opting for diagnostics specialist Avacta Group, which posted a higher annual loss in October, but said it is confident about the prospects for its latest invention – Affimers, a hi-tech alternative to antibodies.
The Wetherby-based group, which makes devices to speed up and reduce the cost of drug development, reported a pre-tax loss of £2m in the year to July 31, up from a loss of £1.9m the previous year after higher administrative expenses and one-off costs. However revenue rose 18 per cent to £3.2m.
Chief executive Alastair Smith says the group has shown that there are no technical hurdles remaining before it scales up the commercialisation of Affimers.
The group said it sees “enormous potential” in its Affimer technology and it is now in a position to turn the recent technical and operational progress into commercial success.
In September Avacta launched an on-line catalogue that will make Affimers available to customers off the shelf and earlier in the year it raised £10m through a placing.
Analysts believe Avacta could become a new mini Abcam, one of AIM’s largest and most established healthcare companies.
Two of Abcam’s senior people obviously agree and have jumped ship to join Avacta.
Dr Matt Johnson joined as chief technology officer, leaving his role as head of R&D at Abcam and Dr Daniel Gare joined Avacta’s business development team in September, leaving his role at Abcam as head of strategic accounts Europe with commercial responsibility for custom products across Europe.
Avacta’s shares closed 2014 at just 0.64p.
Naomi Rainey: It’s time to get in step with WANDisco fever
In my first share tip as part of The Yorkshire Post business team, I’m backing the small Sheffield data company that’s making a big impression, WANdisco.
The Big Data firm is currently riding high off the back of several major contract wins through 2014 and looks set to continue its rise in the next 12 months.
While it is yet to reach profit – 2013’s full year results saw a pre-tax loss of £12m after significant investment – it started 2014 with an 86 per cent increase in bookings, taking its orders to £9m.
The announcement of a “transformational” deal with British Gas and a tie-up with University of California’s Irvine Health facility, UCI Health, put weight behind the numbers in March.
Its Q3 interim statement revealed a 21 per cent year-on-year surge in bookings and new deals with Tesco and Nippon Steel.
Demand appears strong both for WANdisco’s flagship Application Lifestyle Management (ALM) service and its growing Non-Stop Hadoop solution.
With so much going for it, investors for WANdisco should be in the mood for dancing through 2015.
The shares ended 2014 at 477.5p.
John Grainger: Cutting edge analysts a no-brainer for safe bet
IF YOU’RE not a professional, picking stocks can be rather like choosing your annual horse in the Grand National.
Do you go for the one with the best credentials, or simply opt for the one with the snappiest name?
And what about the odds – long-shot or favourite?
For 2015, I’ve gone for a bit of both. Brainjuicer certainly has the name in its favour – whether it makes you smile or feel queasy, you’re unlikely to forget it – but it’s got a lot to recommend it as a company too.
Brainjuicer aims to re-invent market research by using behavioural economics to “turn human understanding into business advantage”.
This brand of smart, cutting-edge neuroscientific foresight is in the ascendant, and more than half the world’s biggest buyers of market research are among its clients. It closed 2014 at 384.5p, closer to its 52-week low than its high, yet its fundamentals appear sound.
Revenues and profits both rose sharply last year and it’s produced a reasonable dividend.
As for the odds, well, it’s listed on London’s junior AIM market, which is hardly the home of the dead cert, but if you like a punt on a good-looking runner with decent form, you could do a lot worse.
Ismail Mulla: Technology group is well-placed to prosper
For my share tip I’m backing Sheffield-based technology group, Servelec.
Recently they announced the £23.5m acquisition of software provider, Corelogic – its first acquisition since its IPO in December 2013.
Providing social care case management software and financial services to the UK market, Corelogic has a 22 per cent market share.
I believe this could be a very good move as Servelec sets itself up for the coming year.
This acquisition and the fact that Servelec has been named the preferred bidder for IT services at 17 NHS Trusts, shows they are well placed. Especially when you take into account the UK government’s converged care agenda. Servelec’s shares ended 2014 at 297p.
The recent price increase follows the acquisition of Corelogic, which analysts have described as a “sensible strategic deal.”
Servelec has a target price of 363p.
Of the seven Yorkshire firms that floated over the past 12 months Servelec was one of four to outperform their float price.
The businesses focus on acquisitions and organic growth promise to make 2015 an even better year than 2014, which has been very good for the technology group.