What will people have to say about the stock market in 2022? It was tumultuous, unfriendly, and occasionally hazardous. Emerging unsteadily from the pandemic, shares have been pummelling by the war in Ukraine, surging oil prices, high inflation, political uncertainty, and a loss in consumer, corporate, and investor confidence.
Smaller businesses have been hit the hardest. The FTSE AIM index, which focuses on emerging companies, has fallen around 50 percent since January. But businesses have been affected uniformly.
In the past year, the FTSE250 index has lost around 20% of its value, and the Small Cap index is not far behind.
Only the FTSE100 index of Britain’s largest listed companies has shown a modicum of resilience, although it will be fortunate to close the year in positive territory.
Midas has not, by any means, escaped the overall malaise. Some stocks have been severely penalized for missing projections, falling victim to supply chain problems, or even just being in unpopular industries, such as early-stage mining.
Fortunately, the majority have outperformed their respective indices, and there have even been a few large winners – companies that are thriving in the current economic climate.
In uncertain times, NWF, a 150-year-old company selling fuel, food, and animal feed to consumers across the UK, exemplifies the allure of stability. Since Midas’ recommendation at the beginning of the year, the price of its shares has increased by about 30 percent to £2.54, and the trend should continue.
More than one million households use oil to heat their houses. NWF provides many of them, from affluent landowners to rural dwellings. Additionally, the company supplies fuel to business customers, such as farmers, industrial owners, and truckers.
The business has been robust. People tend to stockpile oil when they fear running out and when the temperature drops. The recent cold stretch has had a significant impact, especially as Christmas approaches. Concerns about supply have kept demand high throughout the year, and there is a good possibility this will continue into 2023.
Richard Whiting, the chief executive officer, is also on the search for growth-enhancing acquisitions, and news on this should be forthcoming.
On the food front, the NWF distributes millions of staple products to grocery stores across the nation. NWF collaborates with retailers ranging from Waitrose to Aldi and distributes tea, baked beans, dried herbs, and spices.
Even if consumers begin purchasing food from less-priced merchants, NWF is in a favorable position due to the diversity of its products and clientele, and recent sales have been strong.
Feed is also a steady industry. Whiting primarily serves dairy farmers, offering them not just food but also guidance on what to feed, when to feed, and how much to feed.
This year, milk prices have increased, benefiting dairy producers and the National Wildlife Federation. The organization also operates an academy to train young apprentices to become dietitians.
Brokers anticipate robust sales and earnings growth for the fiscal year ending in May 2023, along with a 7.6p dividend (it was 7.5p last year). The company has increased its dividends every year for over a decade and intends to continue doing so to generate long-term income for its shareholders.
Boss Whiting takes pleasure in providing consistent growth, and a trading update this week should demonstrate that his efforts are bearing fruit. Existing stockholders should continue to support this company. New investors may opt to purchase shares at £2.54.
BAE Systems
Long ago, the defense was viewed as a terrible word in the financial community. Nonetheless, the events in Ukraine have compelled several investors to reevaluate corporations whose products assist governments in defending themselves.
BAE Systems is one such investment, and its shares have increased by more than 25 percent to £8.41 since Midas’ February recommendation.
A business update last month was optimistic. This year, the company has received £28 billion in new orders, including a £4.2 billion contract to build five brand-new warships for the Royal Navy. However, orders come from all around the world, and many extend well into the next decade, indicating that BAE is well-positioned to sustain profit growth for years to come.
Charles Woodburn, chief executive officer, anticipates positive returns for 2022 and beyond, as governments raise spending on security and defense. This year’s sales are projected to climb by almost 7 percent to nearly £23 billion, fueled by both fresh orders and a stronger dollar.
The United States government is a major customer, and many other transactions are also conducted in US dollars. Future optimism will certainly result in increased payouts. Last year, BAE distributed 25p. This year, analysts anticipate a payout of 26.5 pence, rising to 28.5 pence in 2023.
Investors who purchased BAE at the beginning of the year have done nicely. The company is currently trading at an all-time high and has been one of the best-performing equities on the market this year.
The price may not climb at the same rate in 2023, but the returns on the shares should remain appealing. There is little hope for international peace, and defense has become a top priority for governments everywhere. This makes BAE a solid investment (at the very least).
EnSilica
Since Midas recommended silicon chipmaker EnSilica less than a month ago, the stock price has increased by 50% to 76p. The shares were encouraged by a confident trading statement released at the end of last month, two contract wins for nearly £3 million last week, and investors’ growing acknowledgment of the company’s expertise.
EnSilica went public on AIM in May for 50 pence, one of the few successful floatations at a time when large institutions were turning their backs on new companies. But EnSilica is a bit different from the majority of new market entrants.
Chairman Mark Hodgkins and chief executive officer Ian Lankshear waited until the company had a stable foundation and a robust pipeline of potential orders before issuing shares to investors. The plan has been successful, not least because EnSilica produces specialized chips that are in high demand as the world’s reliance on internet access increases.
The company’s chips are utilized in automobile sensors, satellite dishes, medical equipment, and industrial machinery. Brokers are exceedingly bullish about the company’s future, predicting that revenues will more than double over the next three years, from £15.3 million to £32 million, and earnings will increase even more rapidly.
The Midas judgment is that EnSilica is a well-run company in an interesting industry. At 76p, the shares have performed nicely, but they deserve to perform even better. A dynamic stock for the present and the future.
Inspect
In 2022, eyewear manufacturer Inspecs is the Midas turkey. In April, the share price was £3.30 and the company appeared to be thriving.
Now the company is worth only 39 pence due to a toxic mix of diminishing consumer confidence, declining orders, and the resignation of experienced business leader Sir Ian MacLaurin as chairman last month.
A trading update in October exacerbated difficulties raised at the interim report two months earlier — sluggish markets extending into next year in the United States, Europe, and others. Robin Totterman, the company’s founder, believes the company will revive and has been purchasing shares in recent weeks, but few others have followed his example.
He has now replaced MacLaurin as chairman and appointed Richard Peck, an eyeglasses specialist formerly with David Clulow, as chief executive officer.
Inspecs shares are in a poor position, and investors who purchased in April have every reason to feel dissatisfied. However, selling now would almost probably be a mistake.
Totterman is motivated to get this company back on its feet, and Peck is a competent subordinate. Maintain and observe closely for subsequent advancements.
