These small caps have been left behind by the market rally.
Just like your portfolio I hope, the Motley Fool's Champion Shares service has enjoyed the market rally that kicked off in early March. Here's how the Fool's share-tipping newsletter stood at yesterday's close:
| Date | Average Champion Shares tip* | FTSE All-Share* |
|---|
| 01 June 2009 | (2.3%) | (5.6%) |
I'm certainly pleased with the performance of the shares I recommended during 2008 and so far during 2009:
| Date | Average 2008/9 Champion Shares tip* | FTSE All-Share* |
|---|
| 01 June 2009 | 5.6% | (4.6%) |
At the start of last year I dropped the obligation for Champion Shares to provide a completely new pick every month. I'm convinced re-recommending old tips has improved the service's returns.
Left Behind By The Upturn
Anyway, several of my recommendations have moved from 'buy' to 'hold' during the recent rally, but there are a number of smaller tips that have been left behind by the upturn. Here are three AIM-traded small-caps that remain on my 'buy' list that I think you should purchase now.
Tip 1 is a niche insurer that joined Champion Shares during June 2008 and sports several appealing features, such as a cash-rich balance sheet, high margins and a long-time management team with significant shareholdings. The business was admitted to AIM in 2007, so does not have a proven quoted record. The firm has not been tested in a recession either. But profits improved 11% last year and what I'd describe as cautious optimism was expressed for 2009.
Tip 2 is a 252-year-old business that has always been run by a descendent of its founder. The firm gained admission to Champion Shares during July 2007 although, with about half of its turnover dependent on the building and construction sector, has sadly reported falling profits and a cut dividend. Still, the balance sheet carries plenty of cash, property and stock, which in total exceeded yesterday's market cap. I expect those assets to support a recovery.
Tip 3 is probably the most speculative within Champion Shares. Selected in September 2008, the key attraction here is a management team that has delivered ten-fold returns through two other quoted companies. I admit this business operates on the high street and has yet to record a profit, so it could well become a victim of the recession. But I feel the firm has plenty of room to open new outlets and a useful cash position ought to see it through the downturn.
Act Now Or Pay More
These three shares are accompanied by eight others on my latest Champion Shares 'buy' list. I'm sure there are one or two names on the list that could interest you. They all look cheap to me and could deliver superior returns over time. Of course I could be wrong and, as with any stock-market investment, they may end up losing you money.
Once you've joined the Champion Shares community through this 30-day free trial, you can learn all about my share tips through the members-only Champion Shares website. The site carries a full archive of all my recommendations and updates, and the identities of the above three shares have been posted on the exclusive Champion Shares Help Desk discussion board.
Finally, please note the price of Champion Shares will increase after June 5th. If you wish to take advantage of the current £99-a-year deal, you have until Friday to act.
* Champion Shares returns are based on mid prices taken on publication of the 'buy' advice and include due dividends but exclude costs. FTSE All-Share returns are based on the FTSE All-Share total return index, which includes re-invested dividends and excludes costs, and taken on publication of the 'buy' advice. Returns include all current and 'sold' recommendations, and are calculated using closing prices on 1st June 2009 or at the time of the 'sell' advice.
For all Champion Shares subscription enquiries please e-mail ChampionShares@Fool.co.uk or call 0845 226 3237.
Risk Warning
You run the risk of losing money when investing in shares. Prices may change quickly, they may go down as well as up and you may not get back the full amount invested. You should not invest using money you cannot afford to lose. We have taken all reasonable care to ensure that all statements of fact and opinion contained in this publication are fair and accurate in all material aspects. Investors should seek appropriate professional advice from their stockbroker or other adviser if any points are unclear. Champion Shares gives general advice only, and the investments mentioned may not necessarily be suitable for any individual.
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