MIDAS SHARE TIPS:  From drug trials to M&S, how our top ideas beat the market

The scene is set. Across the world, families are gathering, Christmas trees are twinkling and the streets are alive with last-minute shoppers and revellers out for a good time.

American investors have particularly good reason to feel festive. US markets have soared during 2023, fed by better-than-expected economic figures and a rebound in titans such as Amazon, Apple and Facebook owner Meta. 

The tech-focused Nasdaq index has surged more than 40 per cent and even the more traditional S&P 500 is almost 25 per cent ahead since January.

Strong performance: A drug-testing specialist, hVivo, was one of the Midas top tips for 2023

Most European markets have done pretty well too, with French and German indices rising more than 15 per cent over the past 12 months.

UK stocks have fared poorly by comparison. Our FTSE 100 index of Britain’s biggest listed companies has barely moved this year while the junior AIM market has slumped more than 10 per cent and is now little higher than it was in the very darkest days of the Covid pandemic.

Why should this be? Are UK businesses significantly worse than their US or Continental counterparts? Are they less entrepreneurial? Are their bosses slower and lazier?

No, no and again no. Instead, our markets are suffering from a sour-tasting cocktail of apathy, disillusion and short-sight. Nervous investors have been selling shares at the slightest sign of trouble – or even earlier, creating a downward spiral which has sucked in far too many plucky UK firms.

Fortunately, a number of companies have managed to escape the prevailing malaise. Midas stocks have mostly beaten the market, some by a considerable margin.

And optimism for the future can be seen even among firms whose shares have spent months treading water. Focused on day-to-day business, determined to deliver results, these companies should see their efforts rewarded as sentiment shifts.

hVivo doubles in price

That shift has already begun for our share of the year. A drug-testing specialist, hVivo, was one of the Midas top tips for 2023. It has more than doubled in price, from 10p to 22p over the year.

The business conducts so-called human challenge trials, where healthy volunteers are given doses of potential new drugs to see whether they work. The trials are conducted in quarantine conditions and they are designed to help new products come to market faster.

Under chief executive Mo Khan, hVivo has had a storming 2023. 

Days ago, Khan revealed that results this year should be ahead of expectations, while 2024 is shaping up to be even better. 

The firm has just received a prestigious, £17million testing contract and will be opening a new, state-of-the-art quarantine facility next year so it can conduct more trials and increase annual revenues. 

The new unit, in London’s Canary Wharf, will be funded almost entirely by customers, a sign of just how much they value hVivo’s work.

Tangible evidence of the firm’s contribution to new drugs emerged earlier this year. After using an hVivo human challenge trial, pharmaceutical giant Pfizer gained approval for the world’s first vaccine against RSV, a flu-like virus that can be fatal for young children and the elderly. 

The drug will now be on sale far earlier than it would have been without hVivo’s help, potentially saving thousands of lives.

Trials are being conducted against several other diseases too, including flu, malaria and HMPV, a new virus that can be serious among those with low immunity. 

A trading update in January should bring fresh cheer to investors and brokers expect strong and sustained growth in sales and profits. Khan even paid a special 0.45p dividend earlier this year – more of the same may be on the cards.

Midas verdict: hVivo has delivered handsomely for shareholders and some may wish to bank profit at 22p. But there is plenty more in store from this stock next year and beyond. Supportive investors should stick with Khan and his team.

Traded on: AIM Ticker: HVO Contact: hvivo.com or 020 7756 0300.

Eden Research climbs 60%

Eden Research is another innovative UK firm whose shares have motored in recent months, rising 60 per cent to 5.85p since Midas recommended them this summer.

The performance reflects a step-change in this business, which makes pesticides that help crops to grow without harming the environment.

This market is expected to be worth almost £8 billion by 2025, amid increasing concern about the impact of chemical insecticides on consumer health.

Eden works with some of the giants in the industry and only last week announced new approvals for a seed protection product developed with Corteva, one of the largest agricultural firms in the world.

More good news is expected in 2024 and Eden shares should respond.

Traded on: AIMTicker: EDEN Contact: edenresearch.com or 01285 359555

How M&S soared 85% 

Small niche players are not the only winners from 2023. Marks & Spencer has had a fabulous year, recommended in January at £1.46 and now 85 per cent ahead at £2.72.

After years of disappointment, M&S is starting to deliver what shoppers want – and investors are responding. 

Profits soared by 56 per cent to £326 million in the six months to September, the dividend was reinstated at a penny and chief executive Stuart Machin expressed confidence about the business, reiterating his ambition to become Britain’s most trusted retailer again.

Sparkling again: Marks & Spencer has had a fabulous year

Changes have been made and more are coming, online and on the shop floor. M&S has long overpromised and underdelivered and investors with long memories may have doubts about what lies ahead. 

There are signs, however, that this time is different, not least because retail veteran Archie Norman is in the chair and a root and branch overhaul is under way. 

M&S shares have had a sparky few months but there should be more to come. This stock topped £7 back in 2007 – so there is still a long way to go.

Ticker: MKS Traded on: Main market Contact: corporate.marksandspencer.com or 020 7935 4422

Other notable winners this year include insurance specialist BP Marsh, up 20 per cent, steelmaker Billington Holdings, up 15 per cent and vehicle rental and repair group Redde Northgate, up 13 per cent.

This trio may be very different but they have all exceeded market expectations this year and their shares have risen – proof that investors can and do respond to firms with consistent results and strong prospects for growth.

Brands: Pebble makes promotional goods for large companies across the globe, including Burberry

…and the not so good share tips

There have been some losers too, notably Pebble Group which shocked the market with a profits warning last month and saw its share price slump more than 30 per cent in response.

Pebble makes promotional goods for large companies across the globe, including Burberry, Michelin and Google.

However, chief executive Chris Lee admitted that some customers, particularly technology and consumer firms, have been putting through fewer orders than expected so sales and profits will be lower this year than last.

Midas recommended the shares at 92p only weeks before Lee’s revelation and shareholders have every right to feel aggrieved, with the shares now at 55p.

Supporters are confident however, that Pebble’s fortunes will rebound and some brokers believe the stock will hit £1.50 over the coming months.

Lee is a determined individual so all but the most cash-strapped of investors should hold on to this stock for at least a little while longer.

Traded on: AIM Ticker: PEBB Contact: thepebblegroup.com or 07500 124121.

UK offers rich returns… let’s invest in our firms

Rewarding: Animal drugs giant Dechra was a takeover target

Takeover activity this year shows just how attractive UK businesses are, even if local investors fail to appreciate them.

More than 100 companies were on the receiving end of bid approaches in 2023, including 15 Midas recommendations. 

These range from the £4.5billion deal for animal drugs giant Dechra Pharmaceuticals to a £142million bid for Africa-based miner Shanta Gold.

Unveiled only last week at 13.5p a share, the deal represents a 27 per cent premium to the price at which Midas tipped the stock two months ago.

Shanta is not alone. Almost every offer this year delivered material rewards to Midas investors, including music royalty fund Round Hill, tipped in June at 63p and acquired for 90p three months later and logistics firm DX Group, recommended at 32p in July and taken out for 48.5p in November.

Most bids were materially higher than the prevailing share price too and, perhaps most tellingly, ten of the 15 bids came from private equity firms, many of them American.

Private equity has a reputation for ruthlessness. Industry big-hitters are routinely accused of prioritising short-term gains over long-term growth, doing anything in their power to make a quick buck.

If these apparent vultures are being welcomed as saviours by frustrated UK businesses, perhaps it is time for homegrown investors to sit up and take notice. 

Of course, it is reassuring to see share price gains for top companies from a host of different industries – from enterprising young firms to some of the best-known names in the UK.

But the stock market as a whole remains desperately undervalued.

This state of affairs is almost certain to improve and change could come as early as next year, especially if inflation continues to fall and interest rates follow suit.

The UK includes some of the most pioneering businesses in the world. Let’s show our appreciation and invest in them.

This post first appeared on Dailymail.co.uk