We spotlight some of the best mid-cap ideas from top professional stockpickers.
The FTSE 250 is up 3% since we last visited the mid caps in October. A number of the favoured companies of our 'expert eight' stockpickers have seen more substantial rises, including Oxford Instruments (LSE: OXIG), highlighted last quarter at 763p and up 20%.
Despite the number of companies showing good gains, several of our managers' mid-cap picks still look exciting prospects for investors today.
Popular picks
There have been several full-portfolio updates in the past three months, but the list of companies held by more than one of our expert eight remains unchanged since last quarter.
The absence of change, it might be said, is testament to our chosen managers' general philosophy of investing in businesses for the long term (as opposed to relentlessly churning shares in search of a quick buck).
Top 10s
Three firms figured in the top 10 holdings of more than one manager last quarter. The same three are there again this time around, but have been joined by a fourth, Domino Printing Sciences.
| Company | No. of managers holding | Portfolio weighting |
|---|
| Oxford Instruments | 3 | 7.2%, 4.5%, 3.6% |
| Dignity | 2 | 5.7%, 3.6% |
| Devro | 2 | 5.4%, 3.0% |
| Domino Printing | 2 | 2.8%, 2.7% |
I'm going to highlight one these four firms as this quarter's pick of the picks, but first let me tell you about two interesting companies in the previous table that have both released results this week.
Chalk and cheese
Specialist engineer Renishaw designs and supplies advanced measuring products to the manufacturing and healthcare sectors. Its shares were pushing £19 before the August market meltdown, and reached a low of £8 towards the end of November.
I'd been looking forward to highlighting this bargain for your delectation after learning that one of our managers had been quietly buying shares north of £10 before the end of September.
However, Renishaw shares have been motoring and are up a further 14% today -- now trading above £13 -- in the wake of interim results announced this morning.
In contrast, military equipment maker Chemring's shares fell 14%, following the release of its full-year results yesterday. The company had issued a profit warning in November, but profits still fell short of analysts' downwardly revised expectations.
Chemring's shares, which had been above 500p prior to the profit warning, are currently trading at 388p. It's too soon after the results to know how our managers are thinking on this one, but I suspect some may come to view the current weakness as a buying opportunity. If so, Chemring could be a company you'll hear more about next quarter.
Back to the present, and the company I would highlight as being particularly interesting for investors today:
Devro (260p)
Devro is a global leader in, wait for it ... sausage skins! Two of our expert eight find that very exciting. The company is a top 10 holding for John McClure (Unicorn Outstanding British Companies and Unicorn UK Smaller Companies) and Charles Montanaro (Montanaro UK Focus and Montanaro UK Smaller Companies (LSE: MTU)).
I mentioned last month that Devro's shares were 20% below their previous high, but that our two managers had bought well before that, at a considerably lower price. However, what I now know is that McClure's bullishness on the company in July last year, when the shares were trading above today's 260p level, was translated into buying action.
McClure likes Devro's defensive qualities, the simplicity of its business, and its cash generation. He finds the dividend attractive, but also sees a kicker for growth in the company's exposure to emerging markets. In short, McClure sees Devro as a fairly low-risk opportunity for long-term growth and income.
Since our look at mid-cap ideas last quarter, Devro has released a trading-in-line-with-expectations update, which was followed by directors buying. The biggest deal was the chairman's £160,000 buy at 258p.
If the directors and our experts are right, this sausage-skins company will prove to be a long-term sizzler for investors buying at around the current price.
> Here's your free Essential Investor Kit. Over the next few weeks, you'll get share ideas, a sector report and much, much more. Don't miss out!
More in this series:
