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What a sad start to 2023. The UK is in or heading into a recession, stock markets are looking rather gloomy and many investors are worried about what the coming months will bring.
Still, there are reasons for optimism today. Inflation should fall during the course of the year, economic conditions will improve and, perhaps most importantly, dynamic corporate leaders will continue, determined to deliver growth and reward investors.
Midas tips for 2023 focus on three such companies, drawn from very different industries but united in their focus on strong, sustainable success.
Shares of GlobalData are down 30% since summer 2020, but should be gaining ground
GlobalData
Mike Danson founded his first research company, DataMonitor, in 1992 when he was just 29. He put it on the market in 2000 for £120 million and sold it seven years later for more than £500 million.
Many would have hung up their hats on the spot. But Danson quickly began acquiring up-and-coming data analytics companies, bringing them all under one roof in 2016 to GlobalData.
The company is now valued on the stock exchange at almost £1.5 billion. But the share price is down about 30 per cent since the summer of 2020 to £11.75. That seems unfair. GlobalData is a robust, resilient company and the stock should gain ground as Danson continues to grow.
The company provides in-depth information on sectors such as consumer goods, oil and gas, technology and agriculture. Where DataMonitor specialized in printed reports, GlobalData’s research takes place entirely online. It is continuously updated and contains both detailed analysis and news on specific sectors.
The group has approximately 5,000 corporate clients, including multinational groups such as Unilever, Coca-Cola and Pfizer, as well as hundreds of smaller companies around the world.
Each account costs around £20,000 a year, but many companies have multiple accounts and some pay up to £1 million a year for GlobalData’s services. In an uncertain world, information is becoming increasingly important and companies use Danson’s group to learn as much as possible about things like trends, new product launches, drug trials, mergers and acquisitions.
The research they receive is of high quality, so renewal rates run at 90 percent or more per year, and several companies sign multi-year contracts. That means Danson already has a good idea of what 2023 will bring — and it looks encouraging.
GlobalData’s year-end was yesterday and a trade update is scheduled for this month. Ahead of that, brokers expect revenues of £235.6m in 2022, with profits up 19 per cent to £62m and a dividend increase of 25 per cent to 24.2p. A turnover of £266m is forecast for 2023, alongside a profit of £77m and a payout of 27.6p.
Born and raised in Wigan, Greater Manchester, Danson owns 62 per cent of GlobalData, so his net worth runs into the hundreds of millions of pounds. But he’s a classic entrepreneur, always determined to make this company bigger and better.
Midas verdict: GlobalData Shares have been downgraded due to fears that the difficult economic conditions will affect growth. But the company and its predecessors have proved resilient in past downturns, and information is more valued than ever today. At £11.75, GlobalData is well worth buying. The company is growing fast, pays dividends and is led by a proven winner.
Traded on: AIM Ticker: DATA Contact: globaldata.com or 020 7936 6400
HVivo
Testing new drugs is expensive, time consuming and fraught with logistical challenges.
First, new remedies must be safe. Then companies must prove that they work. This is often done by giving them to volunteers, sending them away, and hoping that some of them will contract the disease their drugs are supposed to treat. Trials can involve thousands of people and take years, especially when testing for seasonal illnesses, such as the flu.
HVivo is taking a different path. The company recruits healthy volunteers and injects them with the drug it is testing. Recruits are quarantined for two or three weeks and monitored throughout to see if the treatment is working.
Undervalued: Drug tester hVIvo is at the forefront of the race for new vaccines
Volunteers are compensated for their time and spend the quarantine period in an hVivo treatment center, which resembles a smart hotel with medical facilities on tap.
These so-called ‘human challenge’ trials are generally cheaper and faster than traditional methods. For example, Pfizer used an hVivo study in humans as part of its investigation of the infection RSV, a flu-like virus that is one of the leading causes of death in children under two years old.
Pfizer hopes to receive approval for a new RSV vaccine this year, a move likely to save thousands of young lives.
HVivo also conducted the first human challenge trial for Covid-19 in 2021, taking shares to over 40 pence. Today they are just 10p, with investors believing hVivo is ‘a Covid stock’.
Still, the group is running multiple trials each year, revenues are growing rapidly, and there’s a strong pipeline for 2023 and beyond.
Midas verdict: A recognized leader in its field, HVivo also runs FluCamp, a popular East London program trialling new flu vaccines. At 10 pence, the stock is undervalued. To buy.
Traded on: AIM Ticker: HVO Contact: hvivo.com or 020 7756 1300
Harland & Wolff
On March 31, 1909, work began on the Titanic, a ship that took three years to build and employed 3,000 men. The company behind that gigantic project was Harland & Wolff, which went on to become one of the world’s leading shipbuilders.
In 2018, however, the group fell into administration. It was said at the time that shipbuilding in Belfast was as good as dead.
John Wood, a proud Scot who started his career in the Merchant Navy, is determined to prove them wrong.
As CEO of a publicly traded company, Infrastratra, Wood purchased Harland & Wolff from the trustees and attempted to create a company worthy of its past. The group now has branches in Appledore, Devon, Arnish and Methil in Scotland and Islandmagee in County Antrim, as well as the iconic Belfast branch.
The company covers everything from design and development to construction, repair and maintenance. It is also involved in several industries: defence, energy, cruises and ferries, commercial vessels and renewables such as offshore wind turbine vessels.
A number of important contracts have recently been won. In Belfast, Cunard’s cruise ship Queen Victoria received a makeover last summer, the largest cruise ship ever to undergo such work in the UK.
The company is rebuilding an ex-Royal Navy mine hunter, HMS Quorn, for the Lithuanian Navy. And, alongside two partners, it is the preferred bidder for a massive £1.6bn contract from the Ministry of Defense to build naval support vessels.
Other contracts are also expected as the government looks to expand the UK fleet, as part of a national shipbuilding strategy.
Yet Harland & Wolff’s shares have plummeted in three years, not least on Friday when it announced several projects would now generate revenue in 2023 instead of the year that just ended.
Midas verdict: Harland & Wolff is a venerable name with a history dating back to the 1860s. The Titanic sank, but this company has recovered from the collapse and should be riding the waves again. At 16p, the shares can provide the adventurous investor with handsome rewards.
Traded on: AIM Ticker: HARL Contact: harIand-wolff.com or 0330 124 0427
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