Over the past 15 months, equities have been caught up in all sorts of trials and tribulations – earthquakes, floods, debt crises, austerity measures, terrorist attacks and quantitative easing, to name but a few. Indeed, it is remarkable that the FTSE 100 has managed to notch up a 4.5% gain.
Over the same period my Buy tips have eked out an average return of 5.1%, offset by a disappointing 1% loss from the ‘Gamble of the week’ tips. The stars have been Hamworthy (up 128%), EMIS (up 66%) and Norkom (up 133%). However, these firms have been weighed down by the likes of Nokia (-46%), Research In Motion (-42%) and Portugal Telecom (-26%). Here I will update you on four stocks that have been in the news recently.
Micro Focus ( LSE: MCRO
), tipped on 28 February 2011 at 280p
This IT modernisation specialist received a number of indicative approaches in April, which sent the stock soaring. However, since then the shares have drifted back to pre-bid levels with any potential takeover now thought to be less likely.
For patient investors, though, this shouldn’t be an issue. With new boss Kevin Loosemore at the helm, supported by a solid balance sheet, there is no need for a knee-jerk acceptance of a low-ball offer. This is especially the case given that the B2B software sector seems to be recovering – as demonstrated by last week’s strong results from SAP and Autonomy.
By my reckoning, if Mr Loosemore can work his magic, then Micro Focus is worth north of 400p – even without a bid.
Rating: BUY at 290p
Robert Wiseman ( LSE: RWD
), tipped on 13 May 2011 at 324p
Despite being squeezed by ongoing supermarket price wars and higher input costs, this British milk processor has stabilised its operations after releasing a shock profit warning in September 2010. Admittedly, life is still tough, but with a 5.5% dividend yield, investors are being handsomely rewarded while they wait for conditions to improve.
Rating: BUY at 327.75p
Alstom ( Paris: Alo
), tipped on 13 May 2011 at €41.20
Shares in this French engineer (the maker of Pendolino trains) have slipped due to fears of aggressive Chinese competition in its flagship rail division. However, after two of its closest rivals (CSR and CNR) were implicated in the recent fatal crash on the Beijing-Shanghai high-speed railway line, prospects here should improve. All the same, Alstom does have exposure to the troubled nuclear industry via its power operations.
Rating: HOLD at €35.61
C&W Comm. ( LSE: CWC
), tipped on 3 June 2011 at 43p
C&W Communication’s lacklustre performance this year has been largely attributed to a moribund Caribbean economy, strong competition, mounting debt, and a possible dividend cut. That was topped off by a profit warning in May. Yet C&W Communications owns valuable telecoms real estate and looks like a prime takeover candidate in a consolidating sector. Chief executive Tony Rice seems to agree, as he’s been piling into the stock over the past few months.
Rating: HOLD at 37p
• Disclosure: I own shares in Micro Focus, Robert Wiseman and C&W Communications.