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And the winner is...

Created:
17 July 2008
Written by:
Dominic Picarda

After nine gruelling tests over as many weeks, you the voters have decided which lucky company is to be crowned the Investors Chronicle's Share Champion 2008. But before we reveal which company you've chosen to win this prestigious award, let's have a quick look back over the contest and how it was done.

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We started out all those weeks ago with 10 promising companies. The name of the game was simple: to test those organisations to the limit by making them jump the toughest investment hurdles. Each week, we set a fresh challenge. And every time, we asked you the readers to have your say and determine which company should be eliminated.

Our initial shortlist of 10 companies was a colourful bunch from a variety of industries, selected by our team of in-house experts. First, we asked you which of them left the least favourable first impression. With a consumer slump under way, you understandably gave Whitbread the boot. Then you buried funeral parlour owner Dignity, based on its growth prospects.

Healthy cash flow is an essential element within business success. The heavy spending requirements of building student halls persuaded you to expel Unite in that round of the competition. You were also not convinced that Shire Pharmaceuticals had a sustainable business model for the long run, partly because of the unpredictable nature of drug-development.

The various allegations that have dogged BAE Systems over the years came back to haunt the arms maker in our test of management quality. Fellow FTSE company BHP Billiton was the next victim of the public ballot, as few of you thought the giant miner was a viable take-over target. A clear downtrend on SIG's share-price chart then made the building materials supplier the evictee in our technical-analysis test. Your personal experiences of Capita then caused the business outsourcing firm to miss out on the making the final two.

Thanks to the roaring boom in the energy industry, it was no surprise that BG made it to the head-to-head final. But Aero Inventory – a minnow that services aircraft – was a true dark horse. Despite having a lower valuation than BG, you made Aero Inventory the final company to be voted out of the contest.

That means that the former oil and gas exploration arm of British Gas is the Investors Chronicle's Share Champion 2008. It is indeed quite an accolade to be named the likeliest-looking long-term investment by the readers of Investors Chronicle, so BG can feel rightly proud of its achievement.

Profile of a champion

So what's the outlook for our Share Champion? The changing nature of the liquefied natural gas (LNG) business, so core to BG's profitability in recent years, is one issue. BG started out primarily by shipping LNG produced by other players. Its only firm supply commitments were in the US, where replacement gas is generally easily bought. That allowed it great flexibility in wheeling and dealing these cargoes elsewhere around the world, hence regular forecast-defying LNG profits. Now, however, as it builds up its own LNG production and consolidates a truly global presence, it is making more firm supply commitments elsewhere - for example, in Chile, Brazil and Hong Kong.

Such diversification is solid long-term thinking, but will it also mean BG sacrificing some fleetness-of-foot and becoming more predictable? Oil is also becoming ever more important in its business, and here BG is well and truly on the technical frontiers both at home, where it is pioneering high-pressure, high-temperature wells in the North Sea, and abroad, where it has a stake in the massive but ultra-deep Tupi discovery offshore of Brazil. However, such leadership brings its own risks in terms of budget and schedule overruns.

BG hasn't really put a foot wrong so far - a stalled LNG terminal in Italy and its offshore Palestinian gas being bogged down in local politics are minor irritants. But it remains to be seen how the company would deal with a truly major setback – this is when a champion really shows its colours.

Prize draw

We've also got another winner to announce. Everyone who cast a vote in one of the nine tests and everyone who posted a comment on our bulletin boards were entered into a prize draw. The first name to come out of the hat wins a prize of £1,000 in cash, courtesy of our the Share Champions sponsor, CMC Markets. So congratulations Mr Grant Amey of York, you've hit the jackpot.

Runners-up don't go away empty handed. CMC is giving away 20 coveted places on its 'Understanding Financial Markets' course, as well as 40 sets of training CD-Roms. Winners of each week's draw will also be receiving courses and spread-betting educational material. For the rest of you who have participated, we hope the experience has improved your approach to stock-picking.

THE WINNERS....

Visit the Share Champions microsite to view the full list of this year's winners as well as reading what the experts have to say on the 2008 Share Champion - BG Group.

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