We’ve had one of our best years in a long time with stellar share price gains
Thursday 19 Dec 2019 Author: Daniel Coatsworth

After a difficult 2018, our latest annual portfolio of 10 stocks has delivered far superior rewards. Last year we outperformed the market, albeit still making a loss. This year we’ve smashed the returns from the FTSE All-Share and generated significant profits.

Our portfolio has delivered a 23% total return (capital gains and dividends) versus 16.7% from the market. That’s one of our best results in many years. To put it in some context, it is more than 15 times better return than you’d get from the current best paying easy-access cash savings account (1.45% from Marcus).

Clearly investing in stocks is much higher risk than putting cash in the bank and three of our selections actually lost us money in the year. However, many of the ones that achieved positive returns did impress on a large scale.

Top performer retailer Next (NXT) surpassed our expectations with a 75.8% total return. Despite a very difficult retail backdrop, Next managed to keep growing its online operations and make good progress in repositioning its physical store estate.

One of the best performers was GB Group (GBG:AIM) with a 70.9% total return. The identity data intelligence specialist doubled post-tax profit in the six months to 30 September. Chief executive Chris Clark summed up the period as having strong organic performance, the successful integration of acquisitions and ongoing investment in the business.

Small cap Keystone Law (KEYS:AIM)rewarded investors with a special dividend a few months ago after delivering 15% growth in adjusted pre-tax profit in the six months to July. It has been hiring more people, expanding its office space and issuing very bullish commentary on its outlook.

BOUNCING BACK

It is quite impressive that one of our stocks has delivered double-digits returns despite issuing a profit warning only four months ago. On The Beach (OTB) troubled the market in August after a weak pound led to a significant increase in its holiday prices compared to rivals who used currency hedging strategies, thus making it less competitive.

A month later Thomas Cook collapsed, leaving a big gap in the supply of holidays and flights. That created a once-in-a-lifetime opportunity for travel companies to chase a large slice of extra market share.

On The Beach took a hit from having to make alternative travel arrangements for some of its customers previously booked to fly with Thomas Cook, but the market opportunity got investors really excited and put the share price back on an upwards trajectory.

RIDING THE UPS AND DOWNS

Some of our top picks were very volatile in the year, principally Fevertree Drinks (FEVR:AIM) amid slowing UK sales growth and Renishaw (RSW) on weakness in Asia. We did well to avoid major portfolio losses with these stocks given the mixed news flow.

We’ve nursed a small loss with Coats (COA), which recently issued a dissapointing trading update, and the same with Rolls-Royce (RR.) which fought considerable negative market sentiment in the second half of 2019. It has found that the cost of resolving problems with its Trent 1000 engines would be higher and last longer than expected.

THE RELIABLE ONE

Despite these portfolio detractors, if there is one stock we knew would be our reliable friend throughout the year it’s Hollywood Bowl (BOWL).

It reported 15.3% growth in pre-tax profit for its 2019 financial year, ahead of expectations. Bowling has proved to be an affordable leisure activity and fairly resilient against different types of economic conditions. Investors are being rewarded with a 22% increase in the final dividend to 5.16p and a 4.5p special dividend on top.

‹ Previous2019-12-19Next ›