It has been exactly one year since I started writing this weekly column, so it seems like a good time to give you an update on my gamble of the week' share tips. Overall, we have done pretty well, in that out of the 48 selections I have made over the year, 35 presently trade at levels higher than their tip prices that's a hit rate of 73%.
Moreover, if it is assumed that equal funds had been invested in each stock, then the overall portfolio return would have been 47.7%, which compares very favourably to the gains on the FTSE 100 (16.1%) and Aim (8.9%) indices over the same period.
Gamble of the Week portfolio: for the full list of Paul's recommendations, click here
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The last status report was provided on 22 December, so today I intend only to focus on those companies where my recommendations have changed for some reason. These appear in the order in which they originally featured in the magazine.
Pixology (PIX) On 26 April, the board agreed to a 40p cash bid from Photochannel Networks. The price seems fair to shareholders.
Update: SELL (from HOLD) ie, you should accept the takeover offer at 40p.
Gladstone (GLD) is a developer of membership software for health and fitness clubs, with a 20% share of the UK market. The company reported solid interim results in April, with underlying earnings per share up 4% to 1.2p. The shares are on an undemanding p/e ratio of 11, and the balance sheet is strong with £4.9m of cash and a £2m freehold property.
Update: BUY (from HOLD) at 25p
Theratase (THE) is one of the world's leading manufacturers of high-quality specialist enzymes to the medical diagnostics industry. In May it was acquired by BBI for a mixture of cash and shares, valuing Theratase at 72.6p.
Update: SELL (from HOLD) any remaining BBI shares, as they trade on a punchy 2007 p/e ratio of 18.2.
International Marketing and Sales (IMSG) is a sales and marketing company concentrating on emerging markets. In August 2006 it announced that its core Russian business had been hit by two changes to the law, which led to a profits warning and sent the shares crashing to lows of 75p. My suspicion that this was an overreaction proved correct, and the shares have since recovered. Nevertheless, after the recent good run, the shares are now on a hefty 2007 p/e ratio of 22.
Update: SELL (from HOLD) at 181.5p
Highway Insurance (HWY) is a UK motor insurer. Even though at 80p the stock is still not expensive priced on a 2007 p/e of 10.7 and offering a chunky 7% dividend yield the industry is struggling with cut-throat competition and poor returns. With investment performance also set to slow from here, I think it's time to find better value elsewhere.
Update: SELL (from HOLD) at 80.5p
Asterand (ATD) is a provider of human-tissue samples and related drug-discovery research services for the healthcare industry. After a difficult 2006, Asterand received a takeover approach pitched at 7.75p per share in cash on 17 May. However, on Monday the shares were unexpectedly hit by the Russian government's decision to introduce restrictions on
the export of human biological materials. The impact of these restrictions is not yet known, as the company is seeking alternative sources of supply.
Update: HOLD (from BUY) at 7.4p await developments.
Careforce (CFG) provides home care for the elderly and for people with physical and/or learning disabilities.
Update: The company was acquired by Mears at 150p in cash on 30 April 2007.
Vindon Healthcare (VDN) is the UK's leading provider of environmental products and services to the pharmaceutical, life sciences and food industries. Its storage suites allow customers to deposit their drugs, ingredients and clinical trials in Vindon's rooms to test how their materials react under various temperature, humidity and light conditions.
Update: TAKE PROFITS (from BUY) at 25p after recent gains.
Northbridge Industrial Services (NBI) sells and hires load bank equipment, which is used to maintain independent power sources, such as diesel generators and gas turbines. The company's markets are buoyant at the moment, and four directors topped up their stakes at 150p in April.
Update: HOLD (from BUY) at 198p
Advanced Medical Solutions (AMS) provides the global healthcare market with sophisticated woundcare dressings and tissue adhesives. Although the business has made a strong start to 2007, the shares are now up with events.
Update: SELL (from HOLD) at 20.3p, as the stock trades on a full 19 times 2007 earnings per share.
Armor Group (ARG) is a leading international provider of protective security services in countries such as Iraq, Nigeria and Afghanistan. After a string of encouraging contract wins, supported by an improving market, Armor Group issued a bullish trading statement at its annual general meeting on 18 May. Despite the rise in the price, the shares still rate as good value.
Update: HOLD (from BUY) at 89.5p
AI Claims Solutions (ACS) provides "end-to-end" claims management for insurance companies covering accidents, costs, debt recovery, vehicle repair, replacement cars and personal-injury damages. Like Highway Insurance, AI Claims Solutions was tipped on the back of improving prospects for the UK motor insurance industry, following years of suicidal price wars and poor returns.
Update: Unfortunately, price increases have proved difficult to pass on, so with the shares now trading on a 2007 p/e of 16, the stock looks vulnerable.
Update: SELL (from BUY) at 30p
Avesco (AVS) is an international provider of specialist audio/visual, staging and production services for the corporate presentation, entertainment and broadcasting markets. Customers are charged for its hi-tech equipment hire, event-management and logistics services. Previous high-profile shows that have been staged include the Live 8 concert in Hyde Park and Big Brother. In March, the board announced that the company would be merged with InvestinMedia in an all-share deal.
Update: HOLD (from BUY) at 132p
Inter Link Foods (ITF) is the UK's second-largest cake manufacturer and former winner of Aim Company of the Year. However, after four successive profits warnings in the past 18 months, the shares have tanked from an all-time high of 770p back in March 2006, to their current 113p. As a result of this weakness, Inter Link Foods has attracted the attentions of acquisitive Irish firm McCambridge, who are presently conducting due diligence.
Update: HOLD (from BUY) at 113p await developments.
Tribal Group (TRB) is an outsourcing and consultancy business that provides services such as school inspections and distance-learning programmes to the public sector. In March, the company sold its healthcare division to Care UK for £77m, which triggered a re-rating of the group. Nonetheless, after the recent strong performance, the stock presently trades on a full p/e multiple of 18. Given the inherent risks in dealing with the government, I think it is time to bank profits.
Update: SELL (from HOLD) at 163p
None of the above picks are for the faint-hearted, so before buying, you must assess how much risk you are prepared to take on. If you choose sensibly and monitor your stocks closely, then overall the gains from should outweigh painful losses. But do expect the odd sleepless night.
Paul Hill also runs a highly successful share-tipping service, Precision Guided Investments. The absolute return on Paul's PGI portfolio, Mar 06 to Jun 07, is 52%. Tel: 0207 633 3634. Email:
pgi@f-s-p.co.uk
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