60. Brooks Macdonald
Wealth management group Brooks Macdonald (BRK) has been going through a period of change, partly as a result of new regulations introduced at the start of the year through the Retail Distribution Review (RDR), and partly as a result of buying offshore wealth management group Spearpoint. The acquisition has resulted in a rebranding of the business and the launching of Brooks Macdonald International, and work is under way on systems integration, and aligning marketing and management processes. On the RDR side, there has been a significant amount of system development work, and there is still more to do. On the plus side, the group was already operating a fee-based system, so there was no direct effect from the abolition of commission payments.
Given the upheaval it would be understandable if management had taken its foot off the accelerator, but this hasn't happened, and total funds under administration continue to benefit from a net inflow of funds and a positive investment performance. The group has also seen a steady increase in demand for its financial consulting service, mainly relating to employee benefits and the legislative changes surrounding pension auto-enrolment. So, given that the group now has an offshore presence, further growth can be expected. That said, trading on 18 times forecast earnings, much of this looks to be in the price already. Hold. JC
59. Oakley Capital
Through its private equity fund, Oakley Capital (OCL) invests in companies identified for their growth potential, and the first six months of last year were pretty tough. That's because the investment climate was so poor that net realisations collapsed. However, in February Oakley announced the successful disposal of one of its strongest investments, online consumer auction platform Emesa for €95m (£80m), which it bought in March 2011 for €35m. Accordingly, net asset value (NAV) is expected to rise from 171p in 2011 to around 180p, which would leave the shares trading at a 12 per cent discount.
After the Emesa sale there are now seven companies in the investment portfolio, including web hosting specialist Intergenia, Time Out America and Time Out Limited, while Oakley also provides mezzanine debt finance at a fixed rate of 15 per cent. It's also worth pointing out that while realisations have been hard to come by, the underlying performance of the companies within the portfolio has been impressive. Integrated voice and data services group Daisy, for example, pushed turnover up by 31 per cent in the first half and cash profits by 38 per cent to £56.3m. And with the portfolio performing strongly, that discount to NAV may start to narrow further. Buy. JC
58. Prezzo
Italian-style restaurant chain Prezzo (PRZ) was founded by chief executive Jonathan Kaye, a member of the Kaye dining-out dynasty, also behind leisure-sector darling Restaurant Group and privately-owned ASK Central. Members of the Kaye clan hold about 65 per cent of Prezzo's shares. And as an investment proposition Prezzo has a fair bit in common with FTSE 250 member Restaurant Group. The company uses tried-and-tested formats for its eateries (principally branded as Prezzo and Chimichanga) and has a strategy based on self-financed expansion of its 194-restaurant estate - currently at a rate of about 25 new units a year. It can afford to do this because it boasts good cash generation and is virtually debt free.
While the consumer backdrop is tough, Prezzo's trading should be buoyed this year due to the fact that 2012 was depressed by one-off events such as the Jubilee and Olympics. Some analysts also hope that the use of promotional deals, which Prezzo has employed aggressively, may ease in 2013 thereby reversing recent margin erosion.
A big hope for shareholders is that they may start seeing a bit more of the company's cash in the form of dividends. Last year's payment was more than 20 times covered by underlying earnings, so there is potential for substantial dividend increases from such a low base (the current yield is just 0.3 per cent). The company was the subject of an unsuccessful buy-out attempt prior to the credit crunch and corporate action remains a possibility. Hold. AH
57. Greenko
India has something of a power problem as years of rapid growth have outstripped the necessary infrastructure. That culminated in an estimated 700m people being left without power in July last year, and helped push energy shortages up the political agenda. Greenko (GKO) offers a solution - it is seeking to bridge the gap between India's energy supply and demand through a large-scale renewable energy construction programme in hydro and wind power.
Any large-scale infrastructure investment project like this always brings its risks, but Greenko is now entering a very interesting phase in its development. Generating capacity rose from 183 to 289 megawatts (MW) in the period ended 30 September, and there are ambitious plans for this to grow to 1,000MW by 2015. The company currently has 500MW-worth of capacity under construction and an additional 850MW classed as under active development. As power projects are completed, risks are receding and the investment case is becoming more attractive.
Trading results have been hampered by currency weakness, causing broker Arden Partners to trim its full-year forecasts – it now expects adjusted pre-tax profits of €13.2m and EPS of 5.8¢, rising to €17m and 8.4¢ in 2014 (from €13.9m and 7¢ in 2012). This is an investment for the long term but, if those projects can be completed on time and on budget, returns should follow. Buy. JF
56. Clinigen
Clinigen (CLIN) is the newest entrant to the Aim 100 after listing on the market in late 2012.
The company is characterised by a unique business model, certainly to the UK medical services sector, that combines both elements of a medicines supply business and as a provider of products of its own. It exclusively supplies pharmaceutical trials with so-called 'comparator' drugs that are used to compare the relative effectiveness of the new treatment under trial. However, at the same time it is also a supplier of products to patients directly and has established an important niche with its Foscavir, anti-infective medicine for HIV patients, which it bought from AstraZeneca.
Selling its own products is the single most profitable activity for the group, particularly if new indications are added to the products it acquires. Foscavir, for example, was a declining asset for AstraZeneca, but Clinigen managed to revitalise sales when it gained regulatory approval to use the drug in the treatment of bone marrow transplant patients. The company has been on a product acquisition spree by adding Theravance's Vibativ, to treat hospital-acquired pneumonia, and Novartis' Cardioxane, an oncology drug that mitigates the side-effects of chemotherapy. If either drug proves to be as successful as Foscavir, then the future is bright for Clinigen. Buy. JH
Times have moved on a bit since an electricity meter meant a large black box on the wall that had to be fed with 50ps to keep the lights on. Nowadays the government is advocating the use of 'smart meters' that provide real-time updates on electricity and gas consumption to both the homeowner and the energy companies. But it is an expensive job replacing all the old kit with newfangled meters and this is where Smart Metering Systems (SMS) comes in. The company raised funds through a 2011 float to rapidly expand its installation plans, and the latest full-year results show the progress that has been made - sales jumped by a third to £21m, and £9.3m of that came from recurring meter rental revenue; the company now has some 341,000 meters installed, of which 95 per cent are domestic. Adjusted cash profits leapt from £5.7m to £9m, and reported profit before tax was up 58 per cent to £5.23m.
As Smart Metering Services has successfully expanded, the shares have soared, rising around 120 per cent to 236p in the last 12 months. The company has also started paying dividends - 1.65p in the full year - which it aims to grow in line with earnings. This looks like a solid business if it can continue to grow those recurring revenues and if borrowing costs stay low. Buy. JF
54. Burford Capital
Burford Capital (BUR) provides finance for civil litigation, principally in the US, where the plaintiff has a strong case but is unwilling or unable to put up the money to see the case through the legal process. However, reaching a successful conclusion takes time, and it is only recently that the number of successful cases has started to accelerate. Indeed, investment recoveries in 2012 were as great as the previous two years combined.
And there is a lot of unrealised potential in the investment portfolio. Since Burford floated in September 2009, it's invested $373m (£245m) in 46 cases and has so far generated investment recoveries of $93m or $35m net of invested capital, for a return of 61 per cent. And last year it invested $72m in nine new cases. Furthermore, it is also now operating in the UK following last year's acquisition of Firstassist, the after-the-event litigation insurer, which is also now creating a UK litigation funding business based on the successful US model.
Analysts haven't made any earnings estimates mainly because the revenue stream is rather lumpy, but the pull through of successful cases is clearly starting to accelerate, providing more capital that Burford intends to reinvest in new cases. Speculative buy (see results). JC
OPG Power Ventures (OPG) offers investors another way to play the Indian power shortage theme as the company is entering a crucial phase in its ambitious coal-power plant construction plan. OPG currently has four plants in operation, generating around 190 megawatts (MW) of power, and it expects to more than triple this to around 750MW by the end of 2014, which should have a material impact on earnings. For the year ended March 2013, broker Cenkos is forecasting revenue of £48.8m, giving adjusted pre-tax profits of £10.4m, rising to £82.2m and £14.4m, respectively, by March 2014.
OPG expects to complete its 80MW Chennai III power plant within the next six months and the 160MW Chennai IV plant is set for completion in the second half of 2014. The Tamil Nadu region, where the Chennai operations are based, currently has a power deficit of over 20 per cent and meeting this power need should provide good long-term growth.
The shares have underperformed recently because a weak rupee has weighed heavily on results when they're translated into sterling. But if the coal price stays low and the building schedule goes to plan, this looks like one to tuck away. Long-term buy. JF
52. Dart Group
Airline Dart Group (DTG) started out flying flowers from Guernsey to the UK mainland in the early 1970s, and as Channel Express Group delivered parcels and freight all over Europe. There is still a distribution division, but the Leeds-based company is now best known for its low-cost airline Jet2.com and all-inclusive holiday business Jet2holidays. It's this ability to transform itself that explains the company's success.
It does, however, remain a cyclical business and the rapid ascent in its share price came to a painful end when the financial crisis took hold in 2007 - the same year Dart moved into the package holiday business. Yet, it was that decision which has been instrumental in getting the company to where it is today. Holidaymakers who book with Jet2holidays inevitably fly Jet2.com, too, and the benefits are obvious. In the six months to September, the number of bookings for mostly all-inclusive deals had doubled and Jet2holidays accounted for over two-thirds of the rise in Jet2.com passenger volumes as well as growth in load factors and net ticket yields.
We've backed Dart for a number of years and continue to do so despite a surge in the share price since October and a subsequent pause. Growth may be less spectacular and there remains a clear seasonal bias, yet a forward PE ratio of just seven represents a substantial - and unjustified - discount to rival airlines and earnings upgrades have come thick and fast in recent years. Buy. LW
Leeds-based Dart Group is best known for its low-cost airline, Jet2.com
51. Young & Co
Pub group Young & Co (YNGBA) has one of the best - arguably the best - estates of managed houses in the business. Over recent years the company has honed its focus on high-quality own-managed pubs in and around the capital. The affluence of the areas it has located itself in has supported strong growth, which has put it well ahead of most of its peer group. Young has also bolstered prospects with canny acquisitions over recent years that have provided it with new pub formats as well as locations.
The company has also been profiting from increasing food sales at its high-end establishments and is doing well from its boutique hotel offering. For investors, the shares have become a more straightforward proposition since the company fully divested itself of its eponymous beer brand through the sale of its stake in a joint venture with Wells. However, the stock is relatively illiquid and trades on a wide spread. The shares are also prone to trade dully between results dates but often rally strongly in the months ahead of an announcement - a cause for previous IC 'trading buy' tips. Buy. AH
