Still going strong

It's even better considering that, on average, our eight Tips of the Year for 2012 generated a dividend yield higher than the All-Share's. The yield factor was in the back of our collective mind when we made our tip selections - income was likely to be highly prized in 2012. Hence the choice not just of Smiths News (prospective yield 11.5 per cent at the time) as the income stock of the year, but also, for example, our cyclical choice (Beazley - yield 6.2 per cent), and even our takeover tip (AZ Electronic - yield 3.4 per cent).

Some of our tips really are for the long term - BG and James Halstead especially - so we should not judge them on just one year's performance. That said, if, on average, the eight add another 9 per cent in the second half, we would most likely be happy. In this day and age, such a return plus market-excess yield is good going. That judgement, however, clearly depends on the performance of equity markets generally, plus the fate of PowerHouse specifically. Our position on that company and the other seven is explained in the following text.

AZ Electronic Materials (AZEM)

We think there is further to go in the share price of our 'takeover' tip. Yes, the company is still independent, but its bosses reckon the semiconductor industry has bottomed out and expect Asia and China to start driving sales growth. A number of customers are beefing up wafer capacity and AZ's chemical materials are used on a host of lucrative platforms, such as the Samsung Galaxy SIII, the fastest-selling smart phone of 2012; and Apple is already a big fan. A stock overhang has cleared, too, now that private equity investors Carlyle and Vestar have sold out to institutional buyers. With strong market share and high barriers to entry, AZ is likely to have popped up on someone’s radar. Putting bid speculation to one side, the shares trade on an undemanding multiple of 13 times forecast earnings. Still a buy.

Beazley (BEZ)

Lloyd's insurer Beazley - our cyclical Tip of the Year - certainly suffered from 2011's string of costly catastrophes and, as we reckoned, that gave it scope to raise premiums to rebuild reserves. Beazley's premiums on renewal rose 2 per cent overall in the first quarter of 2012, with catastrophe-exposed lines performing better still. That prompted the decent share price performance, yet the shares only trade on a par with City estimates for the end-year value of net tangible assets (138p, for example, from broker Numis Securities). Add in a prospective yield of about 6 per cent and the shares still look worth buying.

BG (BG.)

When we described BG as a "reliable growth stock", we meant what we said, with the emphasis on "reliable". Thus the London market’s 10th biggest company by market value has continued to grind out growth this year, increasing operating profits by 21 per cent in the first quarter and generating $2.6bn (£1.6bn) of cash. Also, it will pay down $1bn of debt following the sale of its share of Brazilian gas distributor Comgas, has made significant gas discoveries in offshore Tanzania and continued to benefit from strong demand for liquefied natural gas in Japan. Yet all this could not compete against the effect of falling oil and gas prices on its share price. Hence the dull performance of BG's shares among our tips. This one, however, is for the long term. BG's shares have been among our firm favourites for many years and we won't let a bit of oscillation in the oil price change that. Still a buy.

Hammerson (HMSO)

Hammerson's shares - our 'value' tip of the year - have beaten the real estate sector by nearly 10 percentage points, for three reasons. First, shareholders liked the plan to offload the City office portfolio to become a retail specialist, which chief executive David Atkins unveiled in February. He promptly agreed to sell most of it for £518m, a price in line with the market. Second, Hammerson has long been seen as a bid target for its larger landlords, such as Simon Property Group, Unibail-Rodamco and - above all - Westfield. Having failed to buy Capital Shopping Centres last year, Simon Property picked up a French rival, Klepierre, in March, resuscitating the acquisition story. Third, Hammerson's shares were very cheaply rated at the year-end, but now look more normally priced at 16 per cent below net asset value. They're no longer the deep-value opportunity we identified in January, but with more quantitative easing on the way we remain bullish. Buy.

James Halstead (JHD)

Flooring specialist James Halstead - our 'old reliable' tip - continues to do what the epithet says. In the first half of 2011-12, its turnover, pre-tax profits, EPS and dividend were all at record levels; indeed, the dividend is set to rise for the 36th year running. Trading remains strong. Two-thirds of group turnover comes from outside the UK, including flooring for lifts, airports, hospitals and even Nissan dealerships in Russia. UK turnover rose a more modest 3.5 per cent in the first half, but this, too, is at a record level. The shares now trade on 18 times forecast EPS, but - given the track record and management's optimism that significant new projects are in the pipeline - they remain a buy.

PowerHouse Energy (PHE)

Our 'blue-sky' tip of the year has proved as risky as the label implies. The shares started well enough, quickly gaining 40 per cent. However, when the company announced an extension to its option to buy the 70 per cent of technology provider Pyromex that it did not own at the end of January, that was a veiled warning. Management could not raise the finance to do the deal and requested suspension of its shares at 11p on 12 April. The option has since expired and both the executive chairman and finance director left the business last month. It's encouraging that the company has a new chief executive and secured a $250,000 working capital loan from a significant shareholder, Linc Energy. Even so, the shares remain suspended and, if they return, will almost certainly resume at a much lower level.

Procter & Gamble (PG.)

Buying shares in Procter & Gamble - our international Tip of the Year - was supposed to be a low-risk way to gain exposure to the recovering US economy and to emerging markets growth. However, its safe-haven status has been tested by the uncertainty still plaguing the global economy, which has caused the US consumer products giant to lower its sales targets twice this year. In June the group said sales in the fourth quarter would fall by 1-2 per cent - well below previous expectations of a 1-2 per cent increase - the result of price reductions to prevent further loss of share to rivals in core markets. But we're not writing off our tip just yet. P&G has powerful brands and the financial might to claw back lost ground, which will be boosted by a four-year, $10bn cost-cutting programme. The group also acknowledged that it has spread itself too thinly by chasing growth in emerging markets and will focus on consolidating its position in larger developing countries. Buy.

Smiths News (NWS)

Newspapers and magazines may be in decline, but Smiths News controls over 55 per cent of the distribution market. With a bit of cost-cutting, that means cash profits are continuing to stream in. Smith's bosses said results for the full year to end-August are expected to be at the top end of expectations. Group revenues were up 3.3 per cent in the 44 weeks to 7 July, as the Dawsons and Consortium acquisitions offset the declining print business. Broker N+1 Brewin upgraded EPS forecasts by 10 per cent to 19p, and the shares, now yielding 9 per cent, remain a buy at 105p.

How we're doing so far