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Our 2019 picks are beating the market hands down
At the halfway point of the year our key selections for 2019 are doing superbly. Our average gain of 18.3% compares with an 11.2% gain for the FTSE All-Share over the same time period.
Pleasingly not a single selection is in negative territory and four names are up by more than a quarter on our starting point. More than half the portfolio has enjoyed double-digit gains.
WHICH IS THE BEST PERFORMER?
Top of the pile is Keystone Law (KEYS:AIM). The ‘challenger’ law firm upped guidance in January and full year results in May were comfortably ahead of expectations with revenue up 35% to £42.7m and pre-tax profit up 57% to £5.1m.
This suggests the company’s business model, allowing lawyers to plug in to its platform in return for taking a slice of their billings, is continuing to work nicely.
So far 2019 has been mixed for the retail sector with Debenhams shareholders wiped out and Topshop owner Arcadia teetering on the brink but high street stalwart Next (NXT) continues to rise above the crowd.
First quarter results (1 May) beat forecasts thanks to a sunnier and warm Easter but, as usual, management have done a good job of ensuring investors’ expectations don’t run ahead of themselves.
BUCKING NEGATIVE INDUSTRY TRENDS
If Next is proving the right retail strategy can continue to thrive despite a difficult backdrop, the same could be said for online beach holidays specialist On The Beach (OTB) which has outperformed a battered travel market so far in 2019, even if Brexit continues to cloud the outlook.
In the remainder of the year investors may start to see how its attempt to break into the offline holidays market, largely through its £20m acquisition of Classic Collection in August 2018, is progressing.
Identity data intelligence outfit GB Group (GBG:AIM) posted a bumper set of full year results on 5 June. Revenue up 20% to £144m encompassed an impressive 12% organic growth, and an improvement in margins to 22.3% helped operating profit advance 21.7% to £32m.
The experience of precision measurement kit manufacturer Renishaw (RSW) in 2019 could have Chumbawumba as its soundtrack. ‘I get knocked down, but I get up again, you ain’t ever going to keep me down.’
Despite twice warning on profit thanks to weak Asian demand, the shares have bounced back strongly on each occasion, suggesting there remains significant investor appetite for the business. Full year results on 1 August will be closely scrutinised for forward guidance.
First half adjusted earnings from media group Euromoney (ERM), posted on 16 May, beat expectations. Significantly there were signs the company had managed to stem the bleeding for its struggling asset management business. This added to previous positive developments including Daily Mail & General Trust (DMGT) offloading its 49% stake.
FEVERTREE LOSES SOME FIZZ
Previously one of our star performers, premium mixers maker Fevertree Drinks (FEVR:AIM) has recently lost some of its fizz as fears about slowing sales were eventually confirmed by industry data from Nielsen in June.
Management have kept their counsel for now but will be expected to address the market’s concerns when they report first half results on 23 July.
Global thread manufacturer Coats (COA) has a reputation as a solid citizen and it has done little to undermine that so far in 2019.
A steady return, although somewhat short of the broader stock market, was underpinned by a reassuring trading update on 23 May which flagged results in line with expectations despite economic uncertainty, with the company encountering some currency headwinds thanks to volatility in the Indian rupee, Turkish lira and Brazilian real.
Shares in aircraft engine specialist Rolls-Royce (RR.) have stalled a bit despite the recovery story continuing under chief executive Warren East with the company revealing on 2 May that its trading to date was in line with expectations.
Engine troubles, particularly with the company’s Trent 1000 series, have helped keep the shares grounded. First half results are scheduled for 6 August.
Tenpin bowling franchise Hollywood Bowl (BOWL) is quietly getting on with the job.
The second half, running to the end of September, is traditionally less strong as warmer weather means people focus more on outdoor activities but a soggy start to the UK summer might have helped trading.