MIDAS: How our share tips for 2020 have raced ahead of the market

This time last year, Boris Johnson had just won the General Election by a huge majority and it seemed as if a new era was about to begin. 

A few cases of a strange virus had been reported in China, but few people noticed. As far as most economists and stock markets were concerned, the virus was an Asian problem.

That all changed as February drew to a close and Covid-19 began to hit Europe. Lockdowns became the new normal and shares plummeted. 

Fast lane: Codemasters has more than doubled its share price in a year

Even today, the FTSE 100 index of Britain’s biggest listed companies is almost 15 per cent lower than a year ago, the FTSE 250 has fallen nearly 7 per cent, and many stocks on the junior AIM market have been through tough times, too.

Fortunately, Midas has managed to stay broadly on the side of the winners and outperform the wider stock market. 

Admittedly, there have been some disappointments but these have been outweighed by strong performances from dozens of stalwart UK companies.

WINNERS

The prize for the best performance of 2020 goes to Codemasters, the video gaming firm for car racing enthusiasts.

Its roster includes the Formula 1 series and a host of other titles that involve fast cars and wacky races.

Midas recommended Codemasters in January as one of its top tips for the year. The stock was £2.78, it was clear that gaming was increasing in popularity, and chief executive Frank Sagnier was confident about the future.

But even he could not have predicted how Covid-19 would change the dynamics for businesses like his.

Successive lockdowns have forced billions of people to stay at home. Many have turned to video games to pass the time and Warwickshire-based Codemasters has benefited handsomely.

Sales and profits soared, new games were enthusiastically received and the share price motored through the spring and summer.

Midas has managed to stay broadly on the side of the winners and outperform the wider stock market

In recent weeks, it has been turbo-charged, hitting £6.65, as Codemasters has become the subject of two takeover bids. In November, Take Two Interactive, which owns the rights to the Grand Theft Auto games, launched a cash-and-shares offer, valuing each Codemasters share at £4.85.

Earlier this month, California-based Electronic Arts swooped in with an all-cash offer of £6.04 a share, valuing Codemasters at £945million.

The latest deal has been recommended by Sagnier and his board, but some investors hope that Take Two or a third party will come back with a higher bid. That is why the shares have remained above Electronic Arts’ offer price, since the Californian bid was announced on December 13.

Midas verdict: Hopes are high, but there is no certainty of an all-out bidding war erupting for Codemasters. Shareholders who bought at the start of this year have been handsomely rewarded by this stock. All but the most adventurous should quit while they are ahead and sell. Even those determined to see this battle through to the end should sell at least half their stock now.

Ticker: CDM; Traded on: AIM

Contact: codemasters.com or 01926 816000

Boku 

Technology pioneer Boku has also benefited with consumers stranded at home. Its software helps people to pay for video games, music and hundreds of apps via their mobile phone bill – and millions of them have been doing just that in recent months.

Midas recommended the business in March, when the shares had been through a rough patch and were down to 59p.

Boku connects more than 200 mobile phone operators worldwide with businesses such as PayPal, Netflix, Microsoft and Spotify

They have since soared to £1.44, following strong interim figures and a series of upbeat statements from chief executive Jon Prideaux. This month, he revealed that results for 2020 would be better than expected and brokers now forecast a more than doubling in annual profit to $9million (£6.5million).

Strong growth is also expected for 2021 and beyond, because Boku is not just a Covid-19 benefactor. 

The firm connects more than 200 mobile phone operators worldwide with businesses such as PayPal, Netflix, Microsoft and Spotify so phone users can buy services from these firms swiftly and safely. User numbers are rising fast and there is strong potential for further growth from the core business and related areas.

Midas verdict: No one ever lost their shirt by selling shares at a profit and, at £1.44, canny investors might choose to reduce their holdings and bank some cash. But they should keep a chunk of stock in the hope that Prideaux continues to deliver.

Ticker: BOKU; Traded on: AIM

Contact: boku.com or IFC advisory on 020 3934 6630

Golden Prospect Precious Metals 

When times are tough, gold comes into its own. The precious metal rose to more than $2,000 a troy ounce in the summer and, though the price has fallen back to about $1,875, it has still risen by almost 25 per cent over the past year.

Safe haven: The price of gold has risen by almost 25 per cent over the past year

Golden Prospect Precious Metals, which invests in small and mid-sized miners, has done even better.

Midas recommended Golden Prospect on March 1, when markets were just starting to become jittery and the stock was 29p. The company has made some canny investments since then and shares have soared by 80 per cent to 53p, vastly outperforming gold itself.

Like gold, copper has also risen by more than 25 per cent this year and now stands at $3.55 a pound. The metal’s price is often seen as an indicator of economic activity and there are hopes that growth will rebound in the coming years, fuelled by a surge in construction and infrastructure spending.

Taseko 

Copper price gains have bolstered Canadian miner Taseko, whose shares have climbed more than 40 per cent to 93p since Midas recommended them in August at 65p.

However, the company has also benefited from several internal initiatives, with chief executive Russell Hallbauer making firm progress on expansion plans.

Midas verdict: Gold tends to do well when times are tough. Copper benefits from robust economic growth. In today’s uncertain world, it may be wise for investors to hedge their bets. Golden Prospect and Taseko offer exposure to both metals and are well run businesses in their own right. Hold.

Tickers: TKO and GPM; Traded on: Main market

Contacts: tasekomines.com or 001 778 373 4533; ncim.co.uk/golden-prospect-precious-metals-ltd or asset manager CQS on 020 7201 6900

… and a single turkey 

LOSERS

Loser: Bakkavor supplies most major supermarkets with freshly prepared food

Looking back on 2020, all but a handful of Midas recommendations have prospered.

But our turkey of the year is Bakkavor, which supplies most major supermarkets with freshly prepared food, such as pizzas, salads, fancy breads and chilled – not frozen – ready meals.

Recommended in February at £1.35, the stock has tumbled more than 40 per cent to 80p, as the company battled with changing consumer habits here and lockdown rules in China, a key market. In the UK, households have cooked more, spent less on ready meals and turned to longer-life fare so that they can limit the number of shopping trips, all of which have hit Bakkavor sales.

In China, the group supplies cafes and other food outlets, many of which have been closed intermittently through the year.

On top of that, Bakkavor was previously considered a reasonable dividend stock.

However, chief executive Agust Gudmundsson ditched the final payout and suspended the interim payment when he unveiled Bakkavor’s sorry-looking half-year results in September.

Ticker: BAKK; Traded on: Main market

Contact: bakkavor.com or 020 7908 6143

This post first appeared on Dailymail.co.uk