The FTSE 100 soared 6.5% in August, extending its gains since March. These five shares did much better, with one jumping 149%.
Whilst everyone was on holiday, the market had a great August, jumping 6.5% to end the month over the 4,900 level. This came on the back of a stunning July, when the FTSE 100 rose over 8%, the eleventh best month since the FTSE 100 was created in 1984.
Given the doom and gloom of March, a time when many people were convinced the index would plunge below 3,000, this is heaven.
It's worth remembering the FTSE 100 index of the UK's leading shares is still down 13% over the past 12 months and 27% off its 2007 high. Whilst it's great to regain some ground, many portfolios will still be underwater. There is still plenty of work to be done!
As to what's next for this market, who knows? Will it surge even higher from here, breaking through 5,000 and headed higher still, or will it slump back to 4,000, plunging us all into a depressive state? Answers in the comments box below, please…
Anyway, as ever, there were some bright shining lights. If you'd bought these five shares at the beginning of August, you'd be feeling rather pleased with yourself.
The Shares You Should Have Bought
Obviously a one-month time period is too short a space of time to measure investing success. Share price gains could be due much more to luck than to good management. But whatever the reason, investors in those five companies won't be complaining!
Why Such Juicy Gains?
So why did the companies listed above move so much in just a one-month period?
Quintain Estates is an urban regeneration specialist, redeveloping almost 300 acres of land in London's Wembley and Greenwich Peninsula districts. At the end of July, Quintain said the UK's commercial real estate market was showing signs of revival.
As with many property related companies, debt remains the major issue hovering over the share price. Quintain still has plenty of it, but at least has been able to refinance a chunk, extending some repayment dates. Investors seemingly like the progress at Quintain, pushing the shares almost 150% higher in August alone. They are now up over 400% in calendar 2009.
Is Quintain another of the "dash to trash" brigade or are they set to keep flying higher? That might be one for the property bulls and bears to debate.
More Dash To Trash?
Speaking of the dash for trash, newspaper groups Johnson Press and Trinity Mirror both had excellent Augusts, soaring 134% and 71% respectively.
Call me a blinkered growth investor if you like, but I just can't get excited in newspaper companies at any price. These are businesses and sectors in terminal decline. Newspapers won't necessarily become extinct, but over the next 10 years, I can't see revenues and circulation increasing. Can you?
Obviously this didn't stop shares in both companies flying higher in August, proving if you time it right, you can make money by investing in such heavily indebted "cigar-butt" companies. Good luck for those wanting to repeat the feat in future months.
Do You Feel Lucky?
Volga Gas is a Russian oil and gas exploration and production company. It is making a repeat appearance in the "shares you should have bought" list, having first featured in May. Back then, the shares were 85p, and now they are 88% higher at 160p.
Pushing the shares over 50% higher in August has been the anticipation of the drilling of Volga's first deep sub-salt exploration well in its Karpenskiy Licence Area in Russia. If the well is successful, the CEO says it will be transformational for the business and firmly establish Volga Gas as a significant operator in the region.
Presumably if the well is a "duster", it will be 'regressional' for Volga and its share price. Do you feel lucky? All will be revealed in a couple of months.
A Testosterone Charged Gain
Finally, ProStrakan Group soared 45% in August. The small but fast growing international specialty pharmaceutical company saw revenues jump 40% in the first half on the back of a pain-management drug for cancer sufferers. ProStrakan is currently loss making, but is focused on reaching break-even by the end of 2009 and delivering the company's first full year of operating profit in 2010.
Helping push the shares higher in August was a licensing and distribution agreement for its Fortigel (testosterone) 2% Gel with Endo Pharmaceuticals, whereby ProStrakan will receive an upfront payment of $10m with potential for a further $40m in milestone payments by the end of 2010.
ProStrakan is capitalised at just over £300 million compared with annualised sales of around £70 million. As ever with seemingly promising drug companies, much of that promise is already baked into the share price. Still, ProStrakan migh be one to keep an eye on in the future.
Finding The Shares That Might Take Off Next
What does all this prove? Two things…
1) Share prices can take off, sometimes unexpectedly, at unexpected times, and by surprisingly large percentages.
2) Patience is required. Some of the companies mentioned above have seen their share prices absolutely hammered from their 2007 and 2008 peaks. But all need not be lost. Just because a company has lost 60% or 70% of its value, doesn't mean it can't rise from the ashes and enrich investors who were brave and skilful enough to buy when all about them were panic selling.
If you are looking for cheap shares that might be about to take off in September and beyond, look no further than The Motley Fool's Champion Shares premium share picking service. A free 30-day trial gives you instant access to all Maynard Paton's current buy recommendations.
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> Sadly, Bruce Jackson didn't own any of the companies mentioned in this article at the beginning of August and nor at the end of August.
