The stock market has had a scorching few weeks. Many stock prices have fallen since January and the collapse of a tech-focused bank in California has shaken the financial sector.
Reputable companies have chosen to list in America rather than here, while others have hinted they could follow suit. In the midst of all this come suggestions that the UK is past its prime, stuck in a rut, a broken 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 British companies are showing their mettle and delivering rewards for investors.
4print
Every year thousands of companies decide they need to stamp their identity on everyday items – pens, mugs, T-shirts, umbrellas, bags, golf balls and the like. And 4imprint helps these companies buy what they need when they need it at an affordable price.
The group started in 1987 with a 12-page catalogue. Today it is the world’s largest promotional products group, selling millions of items online in the UK, Ireland and North America.
The shares have gone up in suit. Just £2.17 when Midas recommended them in 2011, they have since risen more than 20 times to £46.70. Many followers believe the stock still has more to go.
Last week, CEO Kevin Lyons-Tarr revealed stellar numbers for 2022. Earnings more than tripled to $104m (£86m), dividend increased from 33.8p to £1.32 and a special payout was announced – of £1.65 per share.
The company reports primarily in dollars because more than 90 percent of sales are generated in the Americas, where companies are especially fond of using logo-embossed products to attract customers and reward employees.
But 4imprint is headquartered in London, there is a thriving hub in Manchester and the board remains heavily involved in the UK market.
The company has been well regarded for years and offers better service, more choice and cheaper prices than competitors. But growth has taken a new level in recent years, not least because Lyons-Tarr has remained loyal to its workforce and invested in its business in difficult times.
City observers believe this focus will continue to yield results, with brokers at Liberum suggesting shares could hit £50 in about a year.
Midas verdict: 4imprint has been a fantastic 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 controls less than 5 percent of its market, Lyons-Tarr is ambitious and the company is a winner.
Traded on: Main market Ticker: FOUR Contact: 4imprint.com or 0161 850 3490
Greencoat British wind
When Greencoat UK Wind went public, it was a novelty: the first listed company to focus on the sustainable sector.
That was in 2013. Many companies have joined the wind and solar side since then, but Greencoat is still the largest of its kind – and among the best.
Led by thoroughbreds Stephen Lilley and Laurence Fumagalli, Greencoat owns and operates offshore wind farms.
One of the best: Many companies have joined the wind and solar side, but Greencoat is still the largest of its kind
Ten years ago there were six in the portfolio, representing 127 MW of assets. Today there are 45 farms and more than 1,000 turbines, generating 1,610 MW of power, enough for 1.8 million households.
The company was then valued at £260 million. Today it is worth more than £3.5 billion.
Over time, the share has risen from £1 to £1.58, delivering ten years of consecutive inflation-linked dividend increases, totaling more than 65 pence per share.
Either way, the company is a success, working with utilities and government ministers to strengthen the UK’s supply of home-grown power and its environmental performance. Moving forward, Lilley and Fumagalli are eager to go further by adding new locations, increasing capacity and contributing to the government’s ambitions to be net zero.
Shareholders should continue to reap the benefits of this strategy. Greencoat has a stated goal of increasing dividends in line with inflation and preserving capital in real terms. +++++++
The entire company is built around this policy, which has served investors well so far and should continue to do so.
The group focuses on purchasing farms from developers once they are operational, construction risk has been removed and long-term energy contracts have been secured.
As veterans of the market, Lilley and Fumagalli have contacts across the industry, seeing deals early so they can pick the most promising – and they do so, ensuring the company continues to grow and thrive.
Midas verdict: Midas recommended Greencoat when it first went public. This month the group celebrates ten years of being a listed company, marked by consistent dividend growth and an almost 60 per cent increase in the share price to £1.58. With the government increasingly focusing on homegrown renewable energy, Greencoat should continue to deliver. In an uncertain world, this is an attractive prospect for existing and new investors.
Traded on: Main market Ticker: UKW Contact: greencoat-ukwind.com or 020 7832 9400
Bloomsbury
Publishing is one of those industries that the UK is particularly good at and Bloomsbury is one such example.
Founded in 1986 by book lover Nigel Newton, the company has spent years handpicking bestsellers from JK Rowling’s Harry Potter series to American author Sarah J Maas’ romantic fantasy novels to Paul Hollywood’s latest cookbook, BAKE.
Last week, Newton said last year’s results would beat expectations, with profits up around 14 percent to more than £30 million.
Success: Bloomsbury was founded in 1986 by book lover Nigel Newton and the company has been handpicking bestsellers for years
This is the fifth upgrade the company has issued since January 2021, with growth fueled not only by gripping armchairs, but also by a growing online academic arm, particularly in America, and by a phenomenon known as BookTok, where users of the social media phenomenon TikTok post exciting videos about books they’ve read, including several published by Bloomsbury.
Midas verdict: Doomsayers have been predicting the demise of publishing for years, but people keep reading and the industry keeps growing. At £4.50, shares of Bloomsbury are up more than 60 per cent since Midas recommended them in December 2020, but Newton is one of the industry’s most experienced players and the share should continue to rise.
Traded on: GOAL Ticker: BMJ Contact: bloomsbury-ir.co.uk or 0371 664 0300
Keyword studios
The video games market is up 50 per cent to £250 billion during the pandemic.
Many observers expected interest to die once lockdown restrictions were lifted. But growth is continuing and the industry is expected to exceed £400bn over the next five years.
Keyword Studios primarily benefits from the continued enthusiasm for gaming: it provides music and artwork for games, translates them into multiple languages and tests new titles before they are released.
Targeting: Keyword Studios is primarily benefiting from the continued enthusiasm for gaming
Originally based in Ireland, the company has spread its wings around the world and customers include Microsoft, Sony, Apple and Google.
The 2022 results showed how well Keyword is doing, with profits up 30 per cent to €112m (£99m), a 10 per cent increase in dividend to 2.37 pence and the promise of more growth going forward .
Midas verdict: Midas recommended Keyword in 2015 at £1.53. The shares have since risen more than 17 times to £26.42, but there is still momentum in this business. Keep the faith.
Traded on: GOAL Ticker: KWS Contact: 00 353 1 902 2730 or keywordsstudios.com
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