MIDAS STOCK TIPS: How our tips helped grow your money during tough times

What will people say when they look back at the stock market in 2022? It was turbulent, inhospitable and at times downright dangerous. Stocks, emerging uncertainly from the pandemic, have been battered by the war in Ukraine, soaring energy prices, runaway inflation, political upheaval and a loss of confidence among consumers, businesses and most investors.

Smaller companies have suffered the most. The FTSE AIM index, which focuses on emerging companies, has fallen around 50 percent since January. But businesses have been hit across the board. The FTSE250 index is down about 20 percent of its value over the past 12 months, and the small-cap index isn’t far behind.

Only the FTSE100 index of Britain’s largest listed companies has shown any resilience, although it too will be lucky to end the year early.

Powering ahead: Defense giant BAE Systems, animal feed supplier NWF and silicon chip maker EnSilica

Midas certainly hasn’t escaped the general malaise. Some stocks have been brutally penalized for missing forecasts, struggling with supply chain issues, or simply being early-stage in unpopular sectors like mining. Luckily, most have beaten their indices, and there have been some big gains as well — companies that are thriving in today’s environment.

NWF

Stability has an allure of its own in uncertain times, as exemplified by NWF, a 150-year-old company that supplies fuel, food and animal feed to customers across the UK. Its shares are up almost 30 per cent to £2.54 since Midas’ recommendation earlier in the year – and the price should continue to rise.

More than a million households heat their homes with oil. Many of them – from wealthy landowners to country houses – are supplied by NWF. The group also supplies fuel to commercial customers, including farmers, factory owners and trucking companies.

Business was brisk. People tend to stock up on oil when they fear it is running low and when temperatures are dropping. The recent cold snap has therefore had a significant impact, especially as Christmas approaches. All year round, however, concerns about supplies have kept demand high and there’s every chance this will continue into 2023.

Chief Executive Richard Whiting is also on the lookout for acquisitions to spur growth, and news on that should be announced soon.

On the food front, NWF distributes millions of staples to supermarkets across the country. Goods range from tea and baked beans to dried herbs and spices, and NWF works with grocers from Waitrose to Aldi. Product and customer proliferation puts NWF in a good place, even as consumers begin to buy cheaper groceries from less expensive retailers — and recent trade has been robust.

Lining is also a stable business. Whiting works primarily with dairy farmers, not only providing them with feed but also providing advice on what to feed, when to feed and how much.

Milk prices have increased this year, so dairy farmers are doing well and NWF is benefiting. The group also runs an academy to train young apprentices to become nutritionists.

Brokers expect strong revenue and earnings growth for the year to May 2023 and a dividend of 7.6p (up from 7.5p a year earlier). The company has offered annual dividend increases for over a decade and strives to maintain it and generate long-term returns for shareholders.

Midas verdict: Boss Whiting is proud of his steady growth and a trading update this week should show that his efforts are bearing fruit. Existing shareholders should hold on to this deal. New investors can also opt for shares for £2.54.

Traded on: TARGET Ticker: NWF Contact: nwf.co.uk or 01829 260260

BAE systems

Defense has long been a dirty word in the investment community. Some still think so, but events in Ukraine have forced several investors to reconsider companies whose goods help nations protect themselves.

BAE Systems is one such stock, and shares are up more than 25 percent to £8.41 since Midas recommended it in February.

A trading update last month was bullish. The group has landed £28bn in new orders this year, including a £4.2bn deal to build five brand new warships for the Royal Navy. However, orders are coming in from around the world, and many stretch into the next decade, suggesting BAE is well positioned to deliver earnings growth in the years to come.

Chief Executive Charles Woodburn expects good results for 2022 and beyond as governments increase spending on security and defense. Sales are expected to rise around 7 per cent to nearly £23 billion this year, thanks not only to new orders but also to the stronger dollar.

The US government is a leading customer and many other transactions are conducted in US currency as well. Confidence in the future will likely translate into rising dividends. Last year BAE paid out 25p. This year, analysts have projected a payout of 26.5p, rising to 28.5p by 2023.

Midas Verdict: Investors who bought BAE earlier this year have done well. The stock is at an all-time high and has been one of the best-performing stocks in the market this year. In 2023, the price will not rise quite as much, but the stock should continue to deliver attractive returns. World peace seems a long way off and defense has become a priority for governments around the world. That makes BAE a strong hold (at least).

Traded on: main market Ticker: B.A Contact: baesystems.com or 01252 373232

EnSilica

Midas recommended silicon chipmaker EnSilica less than a month ago, but shares have since risen 50 percent to 76 pence. Shares were boosted by an upbeat trading statement late last month, two contract wins worth almost £3million in the past week and a growing appreciation from investors that this company knows what it’s doing.

EnSilica was listed at 50p on the AIM in May, one of the few IPOs to make it as major institutions turned their backs on new companies. But EnSilica is a little different from most newcomers on the market. Chairman Mark Hodgkins and CEO Ian Lankshear took their time before going public, ensuring the company was on solid ground with a rich pipeline of future orders before offering shares to investors. The strategy has worked, not least because EnSilica makes specialized chips that are in high demand as the world becomes more dependent on internet connectivity.

The group’s chips are used in car sensors, satellite dishes, medical devices and industrial machinery. Brokers are extremely optimistic about the prospects, expecting sales to more than double over the next three years from £15.3m to £32m, with profits growing even faster.

Midas Verdict: EnSilica is a well run company in an attractive industry. At 76p, shares have performed well but deserve better performance. An exciting stock for now and in the future.

Traded on: TARGET Ticker: ENSI Contact: ensilica.com or 0118 321 7310

inspections

Eyewear group Inspecs is Midas Turkey of the Year 2022. Shares were trading at £3.30 in April and the company appeared to be in high gear. Now the stock is down to just 39p, crushed by a toxic cocktail of falling consumer confidence, falling orders and the loss of veteran business leader Sir Ian MacLaurin as chief executive earlier this month.

A trading update in October exacerbated problems that first aired two months earlier on the preliminary numbers – weak markets stretching into next year here, Europe and beyond. Founder Robin Totterman believes the group will recover and has been buying shares in recent weeks, but few others have taken his lead. He has now succeeded MacLaurin as chairman, handing over the position of chief executive to Richard Peck, an eyewear specialist formerly with David Clulow.

Midas Verdict: Inspecs stock is doing poorly and investors who bought in April are rightly offended. However, selling now would almost certainly be a mistake. Totterman is determined to get this business back on its feet, and Peck is a capable deputy. Hold and carefully monitor further developments

Traded on: TARGET Ticker: SPEC Contact:inspecs.com or 01225 717000