VIEW Taking stock of a tumultuous year so far for the markets
06 Resilient US jobs report sends stocks higher but concern lingers 07 The UK market still shrinking as more mid-cap companies are taken over 08 Where does WPP go next as CEO heads for the exit? 09 Vanquis Banking has been the standout performer in a strong financial sector
09 Gem Diamonds has been in a downward trend for a decade 10 Can Carnival make waves with investors again?
Where does CarMax stand on growth plans?
Buy Hilton Food for its meaty global growth potential
Choose Guinness European Equity Income for pure exposure to the region
17 Mitie was right to swoop on Marlowe with opportunistic bid
The hunt for mid-cap marvels Stocks which have been missed in the M&A mania
24 Trustpilot is looking to earn investors’ faith by executing on growth ambitions
27 How our 2025 picks performed in the first half of the year
Three important things in this week’s magazine
THE HUNT FOR AP MARVELS
Hunting for quality mid-cap stocks
With the takeover bandwagon seeming to have gathered pace this year, particularly in the UK midcap market, we search for growth companies which have so far avoided the attentions of rivals and buy-out firms.
How have our 2025 tips performed so far?
The good news is we’ve notched up a positive return year-to-date, the less good news is we have more losers than winners but we’re obviously hoping that will change in the next six months.
Why big investors are watching the US bond market
The US stock market usually gets all the attention, but analysts and fund managers are increasingly watching the long end of the US bond market for clues to the well-being of the economy.
Visit our website for more articles
Did you know that we publish daily news stories on our website as bonus content? These articles do not appear in the magazine so make sure you keep abreast of market activities by visiting our website on a regular basis.
Over the past week we’ve written a variety of news stories online that do not appear in this magazine, including:
Taking stock of a tumultuous year so far for the markets
Defence names, gold miners and European stocks have led the way in 2025
The difficulty of calling the fortunes of stocks so far in 2025 has been evident in the performance of Shares’ key selections for the year, as we discuss in a feature in this week’s issue.
Hands up, we haven’t covered ourselves in glory so far, even though, in our defence, the market environment has been testing. There have been some notable exceptions, and we’re hopeful of better in the coming months. In general, now is a good opportunity to take stock as we approach the halfway point of the year.
Anyone who took their eyes off the MSCI World in December and looked again today might assume nearly six months of relatively serene progress, with the global index trading modestly higher.
However, as most of us will know that doesn’t tell anything like the full story with the markets enduring a period of significant volatility in early April when president Trump’s Liberation Day tariffs were announced, before a barnstorming recovery in the interim.
Martin Gamble looks at the latest market moves in this week’s News section.
How major global indices have performed in 2025
Source: Sharescope, data to 10 June 2025
notable outperformer as investors have reacted to depressed valuations and improved sentiment towards Chinese technology names in the wake of the Deepseek AI breakthrough and a softer tone towards the sector from Beijing.
The table below shows which indices have performed best since the start of 2025, with Germany the obvious stand-out. The Hang Seng is also a
How major global indices have performed in 2025
Source: Sharescope, data to 10 June 2025 How major global indices have performed in 2025 Top performing global stocks in 2025 How major global indices have performed in 2025
While US stocks have recovered their material losses from earlier in the year they are still notable laggards as investors react to the disruption created by major shifts in US policy under the new administration. Japanese and domestic Chinese stocks have also really struggled amid concern over the impact of tariffs and, for the latter, the strength of the yen as its safe-haven credentials come to the fore.
At a stock level, European defence names have notably starred as the market reacts to a potential step-change in military spending on the continent. Precious metals miners have also found favour as gold prices have reached new record levels.
Source: Sharescope, data to 10 June 2025
This brief review doesn’t encompass in any detail the movements in commodity prices, bond markets and currencies. There isn’t scope to do that justice here, but rest assured we will be bringing you analysis and insight into the whole spread of financial markets in the months ahead.
Resilient US jobs report sends stocks higher but concern lingers
Despite a raft of weak economic data recently, markets finished with a flurry on 6 June after the S&P 500 gained more than 2% and the small cap Russell 2000 index jumped more than 3%.
The market’s enthusiasm was sparked by a surprisingly resilient jobs report which showed the US economy added 139,000 jobs in May, higher than the 130,000 expected, while the unemployment rate held steady a 4.2%.
March and April saw a combined 95,000 downward revision which means employment has risen by an average of 126,000 per month so far in 2025. It paints a picture of a cooling, but crucially, not collapsing labour market.
That said, outside of recessions, the average monthly gain in the first five months of 2025 is the lowest in over the past 30 years according to the BLS (Bureau of Labour Statistics).
Furthermore, the current expansion is arguably long in the tooth, with May’s report marking the 53rd consecutive monthly gain, the second longest streak on record, according to the BLS.
Meanwhile, average hourly wage growth came in above forecasts at 0.4% which, combined with the decent jobs report, is likely keep the Federal Reserve from cutting rates. Futures markets now see the next rate cut in September 2025.
Bond markets sold off slightly after the jobs figures with the 10-year yield moving back up
through 4.5% while the 30-year yield advanced to just under 5%.
Trade talks between the US and China are continuing and any breakthrough will probably be interpreted by investors as another TACO event (Trump Always Chickens Out).
Increased equity and bond market volatility brought about by Trump’s trade policies appears to be dampening risk appetite among institutional investors, suggesting much of the recent strength in equities has been driven by retail investor buying.
For example, the Financial Times reported that Goldman Sachs (GS:NYSE) has dialled back its risk taking, with chief operating officer John Waldron, describing it as ‘a sensible thing for us to do’.
‘Where we can, we pare back risk and stay a little bit closer to home,’ added Waldron, who is seen by some as the heir apparent to chief executive David Solomon.
While Goldman Sachs is not in the camp calling for a US recession, there are increasing worries among economists that the weight of tariff uncertainties will eventually take their toll on the labour market.
Referring to the May JOLTS (Job Openings and Labour Turnover Survey) report, Diane Swonk, chief economist at KPMG told CNN: ‘The labor market is revealing fragility. There is no margin for error when you’ve got a low pace of hiring, a low pace of quits.’ [MG]
The UK market still shrinking as more mid-cap companies are taken over
The takeover bandwagon is picking up speed as the year progresses with deals seemingly now being announced each week.
On 9 June US chipmaker Qualcomm (QCOM:NASDAQ) agreed to take over Alphawave IP Group (AWE), which designs high-speed data transmission technology and licences it to semiconductor designers and manufacturers, much like Cambridge-based ARM (ARM:NASDAQ), once the UK’s biggest listed tech company.
In fairness, Qualcomm made its initial approach in March, and it has taken this long to work out a deal due to the complicated nature of the financing.
As well as offering 183p in cash, almost double Alphawave’s undisturbed share price three months ago, Qualcomm is offering new shares and exchangeable securities which are unlisted and can only be converted into stock on set dates.
On the same day FTSE 250 precision measurement firm Spectris (SXS) revealed it had been approached by US buyout firm Advent with
an offer of £37.65 in cash, a premium of almost 85% on the undisturbed share price.
Unlike the Qualcomm/Alphawave deal, there are no synergies to extract or revenues to cross-sell, Advent is simply buying the business and will sweat the assets.
Even the until-recently unloved real estate sector is getting in on the action, especially ‘beds and sheds’, with another US buyout giant, KKR (KKR:NYSE), locking horns with Primary Health Properties (PHP) as the pair vie to take over primary health care facilities owner Assura (AGR)
Both firms are offering a price which represents roughly the net asset value per share of Assura’s portfolio, the only difference being if KKR wins yet again there are no synergies or benefits, whereas a combination with PHP could unlock savings and would enable investors to continue their interest in a larger, more valuable business.
In the logistics sector, following last year’s merger of UK Commercial Property (UKCM) with Tritax Big Box, mega-shed operator Warehouse REIT (WHR) has agreed to be taken over by US group Blackstone (BX:NYSE) for £470 million after months of to-ing and fro-ing and questions over the valuation of one of its key assets.
And Unite Group (UTG), one of the UK’s largest providers of purpose-built student accommodation, has confirmed it had made an approach to rival Empiric Student Property (ESP) with a cash and shares offer.
Unfortunately for Empiric, the premium to the undisturbed share price is a measly 10%, although Unite insists synergies could be unlocked through its operating platform, delivering earnings accretion and shareholder returns while keeping a strong balance sheet. [IC]
Where does WPP go next as CEO heads for the exit?
Read steps down after 30 years with the company and seven years in the top job
The CEO of WPP (WPP), Mark Read, announced his retirement from the advertising giant after seven years at the helm on 9 June.
Read will be staying on at the communications company until the end of year until a successor is found to ensure a ‘smooth transition’ according to WPP chair Philip Jansen.
Under his tenure as CEO the company’s share price has halved taking its market capitalisation to approximately £6 billion and since the appointment of former BT (BT.A) chief executive Jansen in July 2024 there has been speculation about his position.
Year-to-date WPP’s shares are down 33% as the company posted worse-than-expected first quarter revenue.
It warned in April that macroeconomic challenges will impact the group’s performance in the second quarter. Some of WPP’s advertising rivals seem to be responding better to the challenges facing the industry.
US rival Omnicom (OMC:NYSE) has chosen to combine with IPG (Interpublic Group) in a $13 billion merger which will create an entity of greater scale which could pose an increased threat to the ailing WPP.
the group in the face of structural changes in the advertising industry.
More recently the rise of AI and the increasing dominance of the advertising market over the last decade by tech giants Alphabet (GOOG:NASDAQ) and Meta Platforms (META:NASDAQ) has marginalised agencies like WPP.
Tony Walford CEO of corporate advisory firm Green Square told the media and marketing publication Drum: ‘When Mark Read took over from Sorrell in 2018, things were very different. During his tenure, we’ve seen the rise of Meta and Alphabet, which now dominate the market in terms of sheer media volume, coupled with the threat of AI becoming reality and the need to streamline operations to face the market differently. When you have over 100,000 staff in a business built in a different world, this is tricky.’
Meanwhile European rival Publicis (PUB:EPA) reported a very strong first quarter with net revenue up 9.4%, reaffirmed its full year 2025 guidance, reported a 4.9% uptick in organic growth as well as ‘record’ new business wins.
WPP’s first quarter revenue was down 5% yearon-year to £3.2 billion and it mentioned that several clients will be impacted by Trump’s trade tariffs.
These contrasting fortunes suggest that WPP has been having problems with strategy and led to criticism that Read has failed to reposition
Russ Mould, investment director at AJ Bell says: ‘The share price falling further on Read’s departure is a sign that investors are all too aware of the problems at hand.
‘This isn’t a simple situation where all that’s needed is fresh thinking from a leadership perspective. WPP needs a complete overhaul and that won’t come easily or quickly.’ [SG]
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Tom Sieber) own shares in AJ Bell.
Vanquis Banking has been the standout performer in a strong financial sector
Specialist lender is embarking on lower-margin but less risky strategy
UK bank stocks have done well this year, thanks to expectations of lower interest rates and a mortgage market which is heating up.
Shares in Barclays (BARC) are up 22%, while NatWest [NWG) shares are up 32% and Lloyds (LLOY) are up 40%.
One of the bestperforming stocks of 2025 is sub-prime lender Vanquis Banking Group (VANQ) – previously known as Provident Financial – which at the time of writing has racked up a 105% gain.
As a niche lender it has high margins – its net interest margin is 20% against 3% to 4% for the Big Four high-street banks – but it also has big loan losses (impairments are around 8% of the loan book against less than 1% for the big players) and a negative return on equity, so it isn’t a stock for the faint-hearted.
Last year the bank was beset by issues, but this year it put forward a plan to tilt its loan book away from car finance and credit cards towards second-charge mortgages, which the market seemed to embrace even though it means it will take longer to get to the same level of
return on equity as its peers.
To put this into numbers, analysts at Cannacord Genuity estimate the risk-adjusted margins on motor finance and credit cards are 8% and 18%, against just 3% for secondcharge mortgages, which is where the majority of loan growth is seen coming from over the next few years. [IC]
Diamonds may be a girl’s best friend, but they don’t seem to be a good friend to investors if the share price of Lesotho mine-owner Gem Diamonds (GEMD) is any guide.
The firm owns a 70% stake in the Letseng mine, which is famous for
In late April, the firm said two large diamonds were recovered in the first quarter and would be sold in the second quarter, but it also revealed the first quarter’s large diamond tender was held over ‘because of US tariff uncertainty’, which has raised doubts as to whether the same thing could happen this quarter and whether any goods will be sold. [IC] Questions over ‘going concern’ and large diamond auctions add to concerns
producing large, exceptional white diamonds, making it the highest dollar per carat kimberlite diamond mine in the world, yet over the last decade the shares have lost more than 90% of their value.
2025 started well enough, with the firm reporting ‘all operational metrics for FY24 within or ahead of the improved revised guidance’ and 13 diamonds greater than 100 carats recovered during the year compared with five the previous year.
However, when the company reported its 2024 results in mid-March, its auditors RSM & Co reportedly gave an unqualified opinion expressing doubt Gem Diamonds could continue as a going concern.
17 June: Ashtead, IG Design
18 June: AO World, Speedy Hire
19 June: Carnival, First Property, XPS Pensions
Can Carnival make waves with investors again?
19 June: NCC
Following a strong 2024 rally, Carnival’s (CCL) shares have fallen roughly 15% year-to-date compared with a gain of similar magnitude for rival Royal Caribbean Cruises (RCL:NYSE)
As such, there’s pressure on the P&O, Cunard and Princess cruise line operator to dock with solid secondquarter results on 19 June that at least match the 7% year-on-year revenue rise to $6.2 billion (£4.6 billion) the market is expecting.
Investors will want to see continued momentum in bookings and pricing as well as evidence Carnival continues to tackle its onerous debt pile following recent successful refinancings.
While the Florida-headquartered company continues to sail in with robust results, investors have booked profits on worries heightened macroeconomic and geopolitical uncertainty could hit demand for cruises, while the FTSE 250 constituent’s $27 billion debt load has been an overhang on the stock.
On 21 March, Carnival raised its full-year 2025 guidance after reporting record first-quarter revenues of $5.8 billion, up over $400
Source: LSEG
million year-on-year, and record firstquarter operating income of $543 million, nearly double the prior year.
‘Our first quarter was truly characterized by outperformance,’ enthused chief executive Josh Weinstein, who predicted his charge remained ‘on track to have another stellar year across our cruise brands’.
Weinstein also highlighted a booking curve which ‘continues to be the farthest out on record, at record prices’.
He added that ‘onboard spending is robust and we have proven to be incredibly resilient. We are delivering amazing vacation experiences every day in a time when people all over the world are placing increasing importance on experiences, particularly those spent with family and friends.’ [JC]
Where does CarMax stand on growth plans?
America’s largest used car seller facing macro uncertainty, but there are bright spots
Online used car dealer CarMax (KMX:NYSE) might pine for the lockdown days of Covid. Since peaking at nearly $155 in November 2021, the stock has been freewheeling downhill ever since, plagued by macro uncertainties, falling used car prices and a generally capricious investment backcloth.
The big question going into first quarter fiscal 2026 earnings (20 June) is where the firm stands on its growth plans, having pulled timelines last quarter following escalating worries overt rising loan losses as the US economy stutters and customers begin to default.
‘We are focused on growing the business, and we continue to make progress toward our long-term goals,’ the firm said in a statement. ‘However, we are removing the timeframes associated with them given the potential impact of broader macro factors.’
On the bright side, CarMax said the growth in the number of vehicles sold was at the highest rate in more than
What the market expects of CarMax
Source: LSEG
three years, and the average price for a car rose, to snap an eightquarter streak of declines, largely thanks to president Trump’s tariffs on new car imports.
There will undoubtedly be a lot to unpack when the company does report, but with the shares having fallen to the $65 level there is plenty of bad news in the price already. [SF]
Buy Hilton Food for its meaty global growth potential
This high-quality, defensive food manufacturer has a long growth runway ahead and the shares are cheap relative to history
Hilton Food (HFG) 870p
Market cap: £779 million
Ashare price pause for breath at Hilton Food (HFG) presents a buying opportunity for investors seeking a high-quality international business with defensive attributes, robust cash generation and a tasty long-term growth runway. This meat and fish packing business is taking market share around the globe and has positive trading momentum, yet the shares trade at a significant discount to preCovid levels. That suggests scope for a re-rating so long as the FTSE 250 firm continues to demonstrate resilience despite the uncertain macroeconomic backdrop, delivers profit improvements in its seafood business and the benefits of new contracts feed through to volumes and stoke earnings upgrades.
This could be a year of consolidation following a period of strong recovery and growth, but Shares expects to see growth step up over the next few years as production begins under new
Source: LSEG
long-term contracts with NADEC in Saudi Arabia and in Canada with the world’s number one retailer, Walmart (WMT:NYSE). Although it is geographically diversified, being a global company means Hilton Food isn’t immune from two risks investors should be mindful of, namely Trump’s tariffs and foreign exchange headwinds.
PROTEIN POWER
For the uninitiated, Hilton Food is a top-quality business whose capabilities in the packing and distribution of proteins ranging from red meat and poultry to seafood and meat-free products underpin exciting growth potential across international markets.
Guided by CEO Steve Murrells and blessed with
Hilton Food key financials
Source: Shore Capital, Hilton Food
a strong balance sheet, Hilton Food’s customers include Britain’s biggest retailer Tesco (TSCO), not to mention overseas players like Ahold Delhaize (AD:VIE), ICA, Woolworths (WOW:ASX), Zabka (ZAB:WSE) and COOP.
By providing high levels of customer service and operating super-efficient sites, the £779 million cap fosters strong relationships with these retailers and is well positioned to enter new markets and attract new customers. The partnership with Tesco and changes in consumer habits are helping to drive strong volume growth for Hilton Food. Hardpressed consumers are increasingly switching spend away from quick-service restaurants and towards grocery retailers due to affordability concerns, which is a tailwind for a company which is well placed for a recovery in UK consumer confidence. Berenberg observes that management has increased automation and SKU (stock keeping unit) rationalisation within the seafood business in order to enhance profitability.
GROWTH ON THE MENU
In its latest trading update (20 May), Hilton Food confirmed that all three of its geographic regions - the UK & Ireland, Europe and APAC - have seen volume growth across the year to date. Despite higher levels of raw material inflation, Hilton Food continues to outperform the UK & Ireland market. ‘Given the unseasonally warm weather in the UK,’ observed Panmure Liberum, ‘we expect the BBQ season may have begun ahead of time, while the late Easter has likely also supported volumes.’
In Europe, Hilton’s core meat and easier meals businesses continues to perform well, with volumes and revenues tracking ahead of last year. And while volume growth has slowed somewhat in APAC, this reflects exceptionally tough prioryear comparatives and the region remains in growth.
Encouragingly, progress continues to plan on Hilton’s long-term partnerships with Walmart in Canada and NADEC, a new customer partnership in Saudi Arabia. The latter deal marks the food group’s first foray into the Middle East, which has an estimated red meat market size of 25 million tonnes per annum. Hilton’s long-term partnership with Walmart in Canada, where the company will provide ‘comprehensive multi-protein solutions’ whilst deploying its state-of-the-art sorting capabilities, is on track for launch in early 2027 and should prove highly lucrative.
VALUE MORSEL
For the year to December 2025, Shore Capital forecasts a rise in adjusted pre-tax profit from £76.1 million to £80.1 million, fattening up to £86.5 million and £94.7 million in 2026 and 2027 respectively.
Based on this year’s estimates, Hilton Food trades on a forward price-to-earnings (PE) ratio of 14 times, falling to 12.9 and then 11.8 on the outer year forecasts, a big discount to the price to earnings ratio north of 20 times before the pandemic struck, while Hilton also offers a juicy yield north of 4%. [JC]
Choose Guinness European Equity Income for pure exposure to the region
This focused fund invests in a small number of quality stocks on an equal-weighted basis
Guinness European Equity Income (BVYPP13) £28.38
Assets: £63 million
(as of 6 June 2025)
After the market volatility caused by president Donald Trump’s Liberation Day trade tariffs, investors have been slowly but steadily ‘dedollarising’ or moving money out of US assets, be that shares, bonds or the US dollar itself.
Continental Europe has been a big beneficiary, with the German market ─ the region’s biggest and most liquid - an obvious early winner, but Shares believes there is a great deal more upside potential across the board.
One way to play this through Guinness European Equity Income fund (BYVHVZ9), which takes a focused approach to investing in high-quality, income-paying stocks and has a novel way of managing risk.
WHY EUROPE, AND WHY NOW?
The fund’s managers, Nick Edwards and Will James, point to three major European policy errors of the last few decades - a reliance on Russia for cheap energy, a reliance on the US for security, and a reliance on China by European companies for growth.
Each of these has proved to be a mistake, but the managers argue Europe has the wherewithal to change course and the companies to help it move forward.
for growth companies.
Europe does, however, have more internal rules and regulations than the US, which means trade within the continent is less than half that across US states, so if barriers can be brought down trade will be able to flow more freely.
Also, there is huge potential to grow Europe’s financial markets ─ individuals tend to hold around a third of their financial assets in cash, and unlocking just 5% of that wealth could inject €1.8 trillion or around 10% of the continent’s GDP.
HOW DOES THE FUND WORK?
The managers use a bottom-up approach, looking at all European markets including the UK, restricting themselves to companies with a market capitalisation of €500 million or more, solid balance sheets and a ROCE (return on capital employed) of more than 8% over eight consecutive years.
This approach means they can whittle their stock universe down to around 200 companies which have weathered different economic cycles and have maintained above-average returns.
Nick Edwards explains: ‘The focus on cash generative companies which can both reinvest in growth as well as paying sustainable and growing dividends has allowed us to compound attractive returns on a through cycle basis, resulting in a high-return portfolio well placed to weather and take market share in difficult market environments.
Moreover, Europe is a far better financial position than the US, with less debt and lower interest rates, so conditions are more favourable
‘Together with a concentrated (30 stock), balanced (equal-weighted) approach, this has driven outperformance in down markets and attractive risk-adjusted returns over time.’
The managers’ preference for an equal-weighted approach to the portfolio means there is less sector concentration and less individual stock risk.
It also means smaller, more dynamic companies have a greater weighting than they would in a market-cap weighted portfolio, which is a source of alpha generation.
LOW TURNOVER
The fund’s average investment horizon is three to five years, which means a low turnover ratio and low dealing costs, although there is a minor cost in rebalancing the fund on a regular basis.
The managers have a strong sell discipline, so if a new stock is added, an existing stock has to go to make way.
Last year, the fund made two purchases, French advertising giant Publicis Europe (PUB:EPA) and Scandinavian insurance group Sampo (SAMPO:HEL).
The two holdings which left the portfolio were German chemical and personal goods company Henkel (HEN:ETR) and car giant Mercedes Benz (MBG:ETR).
As a result of the managers’ bottom-up investment process, the portfolio is index-agnostic and has quite different country and sector exposures to the Europe ex-UK benchmark.
The fund is heavily overweight the French market, as well as having greater exposure than the index to Belgium, Scandinavia and the UK. Conversely, it is heavily underweight Germany and Switzerland, with smaller underweights in Ireland and Spain.
On a sector basis, it is strongly overweight consumer staples, financials and industrials - through stocks such as Axa (CS:EPA), Danone (BN:EPA), Euronext (ENX:EPA), Schneider (SU:EPA) and Unilever (ULVR) ─ and underweight consumer discretionary stocks, energy stocks and utilities.
SUPERIOR PERFORMANCE
The fund has an impressive track record, beating its benchmark, the MSCI Europe ex-UK, over three, five and
Top 10 holdings of the Income fund
10 years.
name
Weighting (%) Company name
The managers argue Europe has a large proportion of high-quality companies which can generate persistently high returns, despite the vagaries of the economy, and this is what allows them to pay consistent and growing dividends, which is key to the fund being able to outperform.
To that end, the fund offers an attractive dividend yield of 3%, and the ongoing annual charges are 0.89%, which we feel is competitive. [SB]
Performance of the Guinness European Equity Income fund
Mitie was right to swoop on Marlowe with opportunistic bid
Mitie Group (MTO) 140p
Gain to date: 33%
Since we recommended facilities management specialist Mitie Group (MTO) in April 2024, the firm, under the leadership of chief executive Phil Bentley and his team, has gone from strength to strength.
One year into its three-year plan for ‘facilities transformation’, the business is already reaping the rewards of the hard work it put in with doubledigit growth in revenue and operating profit and a return on investment well above its weighted average cost of capital.
On 5 June it announced the acquisition of Marlowe (MRL:AIM), describing it as ‘a strategically and financially compelling opportunity to create a leader in ‘Facilities Compliance’’ while accelerating its three-year plan.
WHAT
HAS
HAPPENED
SINCE WE SAID TO BUY?
Mitie is already the UK’s largest integrated facilities management company, providing security, engineering, decarbonisation and hygiene services across the public and private sector, in offices, schools, hospitals, shopping centres, supermarkets, banks, government buildings and critical national infrastructure.
Source: LSEG
The total order book at the end of March amounted to £15.4 billion, a 35% increase and also a new company record, taking the book-to-bill ratio to just under 1.5 times.
In the year to March 2025, it has increased its revenue by 13% mostly thanks to organic growth through new contract wins, scope increases, price rises and project upsell, with a small contribution from acquisitions.
During the period it took in total contracts with a value of £7.5 billion, including renewals and extensions, a 21% increase on the previous year and a new company record.
The firm’s order pipeline of potential projects grew 27% to £23.7 billion, of which over 70% is due to awarded over the next 18 months.
To bolster growth, management this month agreed the takeover of fire safety, inspection and certification firm Marlowe in a cash and shares deal worth £366 million, which we believe is a smart move at an attractive price.
WHAT SHOULD INVESTORS DO NOW?
We would use the 12% fall in the share price, which was in reaction to the new shares issued as part of the bid and the cancellation of the buyback, to increase positions.
In our view, the combination with Marlowe makes Mitie an even more compelling proposition for investors and potential customers. [IC]
THE HUNT FOR MID- AP MARVELS
Companies which sit in the middle of the market capitalisation range, represented in the UK by the FTSE 250 index, by definition have the potential to become the next large-cap leaders.
Unlike small caps, mid caps are big enough to have built a stable business supported by a strong balance sheet, but in contrast to large caps, still have the potential to grow for decades to come.
The problem is, in recent years, many of the UK’s most promising, high-quality mid-cap businesses have been acquired, either by private equity buyers or overseas companies looking to take advantage of the UK’s cheap valuations.
In this feature we look at companies that have disappeared from the market and pose the question, are there any quality mid caps left worth investing in?
Purely from a valuation perspective, the UK looks relatively attractive, reflecting a market almost universally unloved, suggesting it might be a good hunting ground for finding hidden gems in the midcap space.
An interesting observation on investor sentiment and valuation comes from fund manager Thomas Moore at Abrdn Equity Income (AIE), who notes it is highly unusual for the FTSE 250 index to offer a higher dividend yield than the FTSE 100.
The parlous state of the mid-cap market is summed up by Julian Cane, portfolio manager of CT UK Capital and Income Investment Trust (CHI).
‘Undoubtedly, the sustained volume of outflows from UK equity funds over many years has resulted in relatively low valuations, which in turn is bringing about corporate activity,’ explained Cane.
Fund Manager mid-cap picks
Rathbones UK Opportunities
Source: Fund managers
‘Institutional shareholders need to raise capital and therefore are more likely to accept bids to take the premium now, rather than stay invested and hope for higher returns later.’
Cane says this is not yet impacting his ability to find attractive companies, although he concedes it isn’t healthy for the long-term future of capital markets.
Like Thomas Moore, Cane believes mid caps are at very depressed levels relative to the rest of the UK stock market which itself is trading at an ‘undemanding’ valuation.
In other words, a tantalising double discount appears to be hiding in plain sight, ready to be exploited by patient, long-term investors.
Fund manager Alexandra Jackson at Rathbones UK Opportunities (FUND:B7FQM50), which invests in quality growth companies, expressed ‘excitement’ about UK mid caps.
‘After an unusually lengthy period of underperformance, we believe this market is a coiled spring ready to bounce back,’ enthused Jackson.
‘Valuations for the whole UK market are low, but for mid caps they are even lower than normal. Meanwhile, earnings growth expectations are much higher for mid caps than for large caps.’
The Shares team have put their collective heads together and later in the article we present some of our best ideas in the UK mid-cap space, including companies on AIM or those which do not necessarily qualify for the FTSE 250 index.
Before that, it is worth reminding readers of some UK mid-cap ‘gems’ which have disappeared in the last few years.
Data compiled by Shares shows that of the 30 bid approaches seen year to date, worth a total value of £11.2 billion, the average takeover premium has been 34%, a significant reduction on the 45% seen in 2024 which comprised nearly 50 takeovers worth £49 billion.
Roughly two-thirds of the takeovers this year have taken place among mid caps, providing further evidence the UK market is seen as an attractive hunting ground for private equity and overseas companies.
Some of the bigger takeovers valued at over one billion pounds include US food delivery giant DoorDash (DASH:NASDAQ) swooping in for an all-cash £2.7 billion bid for Deliveroo (ROO) at 180p per share for a relatively meagre 23% premium.
Another corporate takeover saw sandwich maker Greencore (GNC) swallow up the private label pizza-to-hummus company Bakkavor (BAKK) in a cash and shares offer worth £1.2 billion or 200p per
Selection of mid caps exiting the market in recent years
Source: AJ Bell
share, equivalent to a 32% premium to Bakkavor’s undisturbed share price.
The merger will create a leading UK convenience food business with meaty combined revenue of roughly £4 billion, strengthened commercial ties and the potential to deliver tasty synergies. The transaction still needs regulatory approval.
On 9 April, the board of healthcare facilities provider Assura
(AGR) recommened an all-cash offer for private equity firms KKR and Stonepeak worth £1.6 billion or 49.4p per share.
The offer represented 100% of Assura’s EPRA net tangible asset value per share as of 30 September 2024 and a 32% premium to the undisturbed closing price of 37.4p on 13 February.
However, rival trust Primary Health Properties (PHP) made a counter-offer in cash and shares based on an adjusted asset value basis, which the Assura board, under pressure from major shareholders, is now considering.
Analysts at Panmure Liberum are in favour of a combination with PHP, pointing out the potential for cost and operating synergies and the lower cost of capital resulting from scaling up the business.
OTHER GEMS WHICH HAVE LEFT THE MARKET
One of the best-performing companies ever to list on the stock market was video games services specialist Keywords Studios, before it succumbed to an all-cash £1.95 billion private equity takeover from EQT pitched at a 67% premium in May 2024.
Another fast-growing success story to leave the market was all-day bar and restaurant operator Loungers, which was snapped-up by private equity group Fortress – which already owns wine merchant Majestic among other consumer-facing businesses – in November 2024 for £338 million, at a 37% premium.
In the ever-shrinking UK technology sector, cybersecurity leader Darktrace was acquired by Thoma Bravo for nearly £4 billion in April 2024 at a relatively skinny premium of 20%, bringing to a close its short and tumultuous time on the stock market.
Darktrace became the target of short sellers after US hedge fund Quintessential Capital questioned the company’s accounts, although an independent investigation by consultancy EY found no evidence of any wrongdoing.
One of the most notable deals of recent years was the takeover of Hotel Chocolat in November 2023 by the Mars family, which paid half a billion pounds or a 170% premium to the company’s market value in an all-cash transaction.
SHARES STOCK PICKS
Morgan Sindall (MGNS)
Price – £37.50
Market cap: £1.76 billion
Regular readers may recall we tipped infrastructure and urban renewal group Morgan Sindall (MGNS) in May last year at £23.52 on the
basis the shares were trading too cheaply for the company’s growth prospects.
After a near-60% rally, the shares are no longer cheap, but neither are they expensive – we would consider them ‘fair value’ here, and to quote Warren Buffett it’s better to buy a wonderful company at a fair price than a fair company at a wonderful price.
Since the start of 2025, trading has been better than expected, and looking ahead the firm’s high-quality order book provides ‘strong confidence of delivering a full-year performance in line with our current expectations,’ says chief executive John Morgan.
The Fit-Out division in particular has seen ‘very strong’ trading momentum and is likely to beat its medium-term annual operating profit target of £60 million to £85 million.
Our confidence in the quality on offer here is underpinned by its 22% return on capital employed and 22% return on equity. [IC]
Source: LSEG
Earnings forecasts for Morgan Sindall look conservative
Telecom Plus (TEP)
Price – £20.65
On the face of it, Telecom Plus (TEP) is a dull utility business. So far, so boring. Dig a little deeper, however, and you’ll find a genuine diamond in the rough business.
Trading under the Utility Warehouse banner, the company runs a unique ‘multi-utility’ model that bundles core energy services with things like, home phone, mobile and broadband, and more recently home insurance and boiler cover.
The more services you take, the larger the savings, and there’s a cashback card too, with partners like Sainsbury (SBRY), Boots, Aldi, Primark and B&Q, with savings totted up each month and knocked off your utility bill.
Marketing costs are kept down by using its customers as sales partners, who get rewarded when friends and contacts sign up, making customers feel part of a growing family, many of whom become shareholders too.
With more than one million customers to date, management want to double that ‘over the medium-term,’ and why not, it’s a model that’s been working for years, and it’s been paying off for investors.
CAGR, or compound annual growth rates, have been 20% and 16% respectively for revenue and earnings over the past five years, compared to the single-digit growth of other utility companies.
Annualised total returns over the past decade come in at 12.5%, versus 6.7% of the FTSE 100 and SSE’s (SSE) 5%, a divergence which would make a big difference to investors’ portfolios over time. [SF]
Chart: e = estimated. *Confirmed but not announced, full year 2025 results due 24 June. • Source: Stockopedia
Trustpilot is looking to earn investors’ faith by executing on growth ambitions
Shares talks with finance chief Hanno Damm about the company’s strategy and business model
If you believe stories that London’s stock market, once the epicentre of global finance, is trapped in a new listings death spiral, then all the more reason to pay attention to the potential stars that have pulled the trigger on IPOs (initial public offerings) in the UK’s capital in recent years.
Online reviews platform Trustpilot (TRST), in our opinion, stands out for a few reasons. One, it is a
tech growth business, and most fast-growing tech firms list in the US, or so it seems. Two, its 2021 IPO created the sort of market excitement and noise more associated with Wall Street listings, and three, it was already a business of considerable scale, coming to the London market at a £1.1 billion valuation.
Getting an IPO away is high-pressure for any senior executive but Hanno Damm, chief financial officer of Trustpilot had to contend with Covid challenges too, navigating quarantine and travel restrictions. ‘We did a roadshow in late 2020, in Zurich, Switzerland, because that was a country that we could fly to without any quarantine restrictions,’ says Damm.
Other roadshow meetings were conducted over Zoom. Damm was in New York during the teeth of winter, so when Trustpilot founder Peter Holten Mühlmann flew in for a series of Zoom catchups, the pair decided to jump on a plane to Miami, to escape the ‘Big Apple’ frost.
IPO ROLLERCOASTER
The float went off like gangbusters as thousands of investors piling in as stock trading began, seeing the stock surge from a 265p float price to 449p. But it proved a brief moment in the sun. By the end of March 2022, the stock had slumped to around 150p,
Continued bookings growth and improving profitability
CAGR21%cc
Source: Trustpilot
leaving many investors deeply underwater.
‘I think the main driver of share price decline was wider market volatility, with multiples given to many software companies have dramatically changed’, says Damm. That stacks up. Microsoft’s (MSFT:NASDAQ) price to sales multiple declined from about 12.5 to below 8 times during 2022.
Damm says investors that were complaining that the company wasn’t investing fast enough in growth were now demanding profits. ‘Where’s my returns?’ was a question Damm and others on the Trustpilot team where frequently facing.
Fund managers found their hands tied as global markets surged then sank with maddening regularity in what Damm calls ‘a low liquidity purgatory.’ There were even fund managers who understood the business and its long-term potential but couldn’t invest more in Trustpilot stock even when its price to sales multiple fell to two times, because their risk teams wouldn’t let them.’
Now, having pivoted to profitability, and making impressive operational progress, investors have been returning to the story. Over the past two years the share price has recovered considerably – from below 65p to 216p – and is closing in on IPO levels.
INVESTMENT RATIONALE
Today, the company hosts more than 300 million reviews and annual recurring revenues were running at $230 million at the end of 2024.
Or in other words, about 93% of $246 million 2025 forecast revenue is covered from day one, and around 80% for 2026’s $287 million consensus estimate, according to Stockopedia data.
Buying products and services online can be fraught with risk and a platform which helps consumers navigate this is invaluable.
Thousands of businesses now turn to Trustpilot for customer transparency and the underlying
consumer data analytics it provides. Crucially, this creates valuable network benefits, where the more consumers that use the platform and share their experiences, the richer the insights the company can offer business clients.
Done well, this creates a virtuous circle where consumers feel drawn to Trustpilot because it is where meaningful services are listed and reviewed, and the more consumers that use Trustpilot, the more businesses will feel they cannot afford not to be on the platform.
Expansion into new verticals is now being researched, but importantly, Damm insists this will not see Trustpilot venture into competitive spaces like hospitality, or pubs and restaurant reviews. ‘We are looking at financial services, travel, education, healthcare, markets where consumers really care where they spend their money,’ says Damm.
Some analysts have perceived this as a mediumterm risk. ‘The current valuation assumes perfect execution over a multi-decade time horizon despite near-term macro risks and medium-term business profile uncertainty,’ Liberum wrote in a recent note (9 June). Yet even this seeming damning research still put a 200p valuation on the shares, not even 10% off current levels.
If that’s a worst-case scenario, what’s the upside? According to Stockopedia data, the consensus share price target for the next 12-months or so stands at 344p, or nearly 60% higher than where it is today.
This will be supported by an ongoing share buyback programme, bolstered to the tune of an extra £20 million in March 2025.
BALANCE BETWEEN RISK AND REWARD
On that basis, we suspect plenty of investors will be intrigued by the balance between risk and reward, especially Damm’s medium-term ambitions for 30%-odd operating margins on mid-teens revenue growth. Last year’s operating margin was 1.8%, according to Stockopedia.
Time will tell which ways these winds blow. In the meantime, Trustpilot isn’t going to be one of the seemingly endless list of UK-listed companies shifting to the US stock market.
‘I spent quite a bit of time in the US meeting with investors, and we’ve been able to attract about 40% of our shareholders from the America. But on a market valuation of less than £1 billion, a US relisting is understood not to be on the agenda. ‘We have a very supportive shareholder base, in the UK, US and across Europe,’ says Damm.
That Advent International, a major US tech investment firm, is one of its largest shareholders (approximately 5%), seems to prove Damm’s point.
By Steven Frazer News Editor
Network effect benefits Trustpilot
More consumers (who trust us)
More businesses (who are active)
Read and write reviews
Invite customers Showcase reviews
Source: Trustpilot
How our 2025 picks performed in the first half of the year
Tariffs, Trump and volatile stock market performance blight our picks
Our portfolio picks for 2025 haven’t fared too well in the first half of the year, returning 0.6% compared to a gain of 6.1% from the FTSE All-Share index as of 9 June.
It wasn’t all bad news, however, as stocks like defence technology group Cohort (CHRT:AIM), premium mixer-maker Fevertree Drinks (FEVR:AIM), airline and package holiday provider Jet2 (JET2:AIM) and infrastructure and construction services outfit Kier (KIE) all made double-digit gains.
BIG WINNERS
Defence technology firm Cohort is ‘top of the pops’ so far this year gaining more than 50% due to an increase in security spending by governments around the world, a trend which show little sign of slowing.
For the year to the end of April, Cohort posted strong revenue and earnings growth alongside a record new order book which already covers 80% of current-year top-line expectations, and with the UK strategic defence review set to increase government spending as a proportion of GDP the firm could see further benefits.
Shore Capital analysts Robin Speakman and Jamie Murray argue the long-term opportunity for the company ‘remains attractive, underpinned by rising western defence budgets and Cohort’s growing relevance within NATO supply chains’.
The next-best performer is premium mixer brand Fevertree Drinks, whose shares are up 26.1% this year thanks to strong growth in the US helped by its partnership with Molson Coors (TAP:NYSE) which has contributed to brand performance well ahead of its competitors.
The company is in expansive mood and has also started local production in Australia – a key strategic milestone – while at the same time returning cash to investors via a share buyback programme.
Panmure Liberum analysts Anubhav Malhotra and Wayne Brown comment: ‘We continue to believe the US partnership supercharges Fevertree’s ability
to capture the large US opportunity and ensures the long-term potential of the business is much more realistically achievable.
‘We estimate the group could return up to £135 million of excess cash over the next five years, over and above circa £145 million of expected dividends.’ Infrastructure and construction services outfit Kier has made a gain of 15.7% and the shares reached a five-year high (3 June) on a confident outlook and a margin target upgrade.
For the four months to 30 April, the company reported a further uptick in its already-hefty order book to £11 billion and raised its operating margin target from to a range of 4% to 4.5% from 3.5%-plus previously.
‘Bidding discipline and risk management embedded across the business has driven a higher quality order book, which combined with the recapitalisation of our property business has led us to increase our operating profit margin target to 4% to 4.5% in three to five years,’ said the Manchester-based firm.
Meanwhile, shares in airline and package holiday provider Jet2 have gained 19.5% so far this year, lifted by confirmation of its full-year 2025 financial targets and a £250 million share buyback reflecting its strong balance sheet.
The company’s ‘customer-first’ approach seems to be resonating strongly with consumers, and at
Shares' 2025 stock portfolio
Source: Shares, Google Finance. Entry prices taken 16 December 2024. Latest prices taken
the end of April it revealed it had launched new bases at Bournemouth and London Luton airports in response to ‘encouraging’ demand. .
IN THE DOLDRUMS
Unfortunately, only four out of our 10 picks are in positive territory, but just as they have little in common with each other, nor is there is anything to unite the six stocks which are down at the halfyear stage.
Least-bad of the six is analytics firm GlobalData (DATA), which reported in April it had received two unsolicited approaches from private equity firms consisting of cash and unlisted shares.
At the beginning of May, the group suspended its share buyback, before one of the potential acquirers, US firm KKR (KKR:NYSE), announced it was pulling out of the bidding.
GlobalData confirmed at the end of May it was still in discussions with the remaining buyer, related to ICG Europe Fund IX, but that wasn’t enough to
stop the shares slipping to a loss of 5.1% on the year.
Despite posting an increase in first-half revenue and profit ‘driven by strong uptake of value-added services and stabilisation in gross merchandise value,’ online marketplace provider Auction Technology (ATG) has seen its shares lag the market this year.
Analysts at Berenberg put the weak share price, which has fallen 22% in the past month, down to ‘investor concerns over a slowdown in its endmarkets and the size of the implied second half growth rate in consensus forecasts’.
Berenberg believes investors are questioning the company’s medium-term projections given that since full year 2022 organic growth has been no better than mid-single digit.
Another of our tips, which recently reported strong double-digit growth in revenue and EBITDA (earnings before interest, tax depreciation and amortisation), but has also seen its shares underperform so far this year, is specialist advisory
and restructuring firm FRP Advisory (FRP:AIM)
Despite a growing need for its services, the firm noted delays in decision making and an adverse impact on business confidence in the three months to the end of April due to the ‘marked increase in macroeconomic volatility, driven predominantly by US announcements regarding global trade tariffs’.
Chief executive Geoff Rowley said FRP remained ‘well placed to continue to serve its clients across the entire economic cycle. The mediumterm outlook for our markets remains positive and we have sufficient resource flexibility to respond to an increase in demand for our services.’
Somewhat surprisingly, US tech darling Alphabet (GOOG:NASDAQ) makes an appearance towards the bottom of our picks with a loss of 9.2% so far this year.
The Google-owner’s first-quarter results were better than feared, showing resilience in its core advertising business despite a tough macroeconomic backdrop.
advertising and app store all declared unfair monopolies and the Department of Justice arguing for a break-up.
There are also concerns Open A’s ChatGPT could undermine Google’s search business, which generates close to $200 billion in annual revenue.
IN THE DOGHOUSE
Languishing near the bottom of the table is spirits maker Diageo (DGE), whose shares are down 23.5% due to concerns over the robustness of US demand and the potential impact of tariffs on some of its signature products.
The company owns several iconic brands such as Johnnie Walker whisky, Smirnoff vodka, Captain Morgan rum and Guinness stout, not to mention the Casmaigos and Don Leon tequila brands, and derives half its profits from the US.
The group admitted in May that tariffs could hit profit by $150 million this year, although fund manager Nick Train, who manages the Finsbury Growth & Income (FGT) investment trust, which includes Diageo among its holdings, believes there may be ‘light at the end of the tunnel’ for investors.
Search revenue rose 10%, ahead of expectations, driven by strong engagement and artificial intelligence integration across key sectors like insurance, health and retail.
Chief executive Sundar Pichai commented: ‘Search saw continued strong growth, boosted by the engagement we’re seeing with features like AI Overviews, which now has 1.5 billion users per month.
‘Driven by YouTube and Google One, we surpassed 270 million paid subscriptions, and Cloud grew rapidly with significant demand for our solutions.’
However, the company has been a casualty of the White House’s antitrust policy, with its search,
Train believes Diageo could gain market share as a result of the tariff turmoil, and if the White House succeeds in cutting taxes for US citizens then ‘Diageo’s exposure to US consumer would be seen as a strength, not, as currently, a weakness’.
Bringing up the absolute rear is tea and coffee manufacturer Treatt (TET), with shares down nearly 40% after the firm cut its full-year profit forecast citing weaker US consumer confidence and high raw material costs.
Treatt now expects revenue for the year to be below 2024, and analysts have been busy taking the axe to earnings per share forecasts.
‘The situation around US trade tariffs remains fluid, and we are following developments closely to better understand the extent to which Treatt will be affected, both directly and indirectly,’ the company said in May.
By Sabuhi Gard Investment Writer
Is the US treasury market about to go on tilt?
The White House may be hoping to inflate its way out of the debt burden
The White House’s trade policy hokeycokey continues, with new duties on steel and aluminium, even as the 9 July deadline for the nation-by-nation reciprocal tariffs draws ever closer.
Stock markets are still assuming we are past the worst, given the furious rally from the lows on 8-9 April, barely a week after the Liberation Day bombshells, on the basis deals will be done, economic growth will continue, inflation will remain benign, and interest rates will dribble lower.
However, as discussed two weeks ago, the government bond market remains unconvinced, and the longer the maturity of the paper the more obvious those doubts become.
A nice, simple proxy for the performance of longdated US government bonds, or treasuries, is the iShares 20+ Year Treasury Bond Exchange-Traded Fund (TLT:NYSE).
This passive instrument is designed to mirror and deliver the performance of a basket of treasuries which have a lifespan of more than twenty years, minus its own running costs.
It also pays out the coupons received on a monthly basis. At the time of writing, the ETF owns 42 different US government bonds, comes with an average coupon of 2.88% and offers an average yield to maturity of 5.06%.
The yield is so much higher than the coupon on the underlying bonds because their prices, and therefore the price of the ETF, have collapsed since 2020, when inflation started to emerge and force the US Federal Reserve into interest rate hikes and quantitative tightening. Indeed, the ETF has halved from its peak, a loss which wipes out any coupons accrued and then so much more.
US long-dated treasuries ETF has halved from its highs
Source: LSEG
The key now may be where the ETF, and thus long-dated US treasury yields and prices, go next. The passive tracker has never closed below $80. At the time of writing, it trades at $84, so if that historic floor gives way, then bond vigilantes may be well and truly in charge and the rout may be on.
THE DEVIL AND THE DEEP BLUE SEA
The US long bond market seems torn between two different worries. On the one hand, it fears president Trump’s Big Beautiful Bill and the way in which the US federal deficit continues to gallop higher. This will mean more Treasury issuance and, in crude terms, may oblige the US Government to offer higher yields to lure in buyers even as supply rises.
iShares 20+ Year Treasury Bond ETF ($)
On the other, it fears a sustained upturn in inflation, thanks to tariffs and onshoring, which come at a time when unemployment in the US is low and workers may have more of a say in negotiations over pay and conditions than they’ve had since president Ronald Reagan took on the air traffic controllers, and US unions more generally, in the early 1980s. Both concerns seem legitimate, and they are probably inter-linked. Trump’s apparent determination to drive down the oil price is potentially helpful, and right now Saudi Arabia seems to be playing ball as OPEC increases output at a time of economic uncertainty. But his indifference to a weaker dollar and calls for lower interest rates suggest oil may be part of a bigger plan (assuming there is indeed a coherent plan).
Weaker oil prices may appease bond vigilantes
Kenneth Rogoff.
It is also the most appealing, relative to the others, which are austerity, default, inflation and a war. Yet is the hardest to achieve, though a dash of inflation can mean nominal GDP grows faster than government borrowing, and, in that case, the debt-to-GDP ratio starts to fall.
Inflation also means a government effectively pays back its lenders and bondholders with a devalued currency.
The American macroeconomics writer Luke Gromen takes this to an extreme in one of his recent articles and social media posts.
Gromen posits that America’s debt-to-GDP ratio fell from 2020 to 2022, thanks to inflation and how government revenues were boosted by capital gains taxes on a surging stock market.
He therefore pushes the numbers to suggest that double-digit inflation, another boost to capital gains tax takings from a roaring S&P 500 index and some quantitative easing to hold down treasury yields would slash the debt-to-GDP ratio in half in a handful of years.
The Trump administration continues to wrestle with a hefty debt-to-GDP ratio
Source: LSEG
Put together a lower oil price (which is good for consumers’ spending power and corporate margins across many industries), a weaker dollar which helps exports, lower interest rates (if Trump can prise them out of Jay Powell and the US Federal Reserve), and extended and new tax cuts with a desire to go on a deregulation drive to match that of Reagan over 40 years ago, and this could just be a recipe for rapid economic growth – especially in nominal terms, which encompasses inflation.
HOT STUFF
Rapid nominal growth is one of the five ways out of a crushing debt, and debt-to-GDP burden, as discussed in many papers and books by Carmen Reinhart and
Source: FRED – St. Louis Federal Reserve database
Maybe this is what long-dated treasury owners really fear, a new version of the Roaring 20s, a hundred years after the last version.
Even capital gains from a new round of QE would surely struggle to compensate for the real-terms losses imposed by lower yields and higher inflation. Such a scenario might also explain why gold and silver continue to shine.
The FTSE 100 shares outpacing the Nasdaq since 2000
Despite its spectacular performance there are some UK stocks which have beaten the US stock index
The Nasdaq 100 index has been one of the best performing indices of the last 25 years, returning 8.8% since January 2000. To put that in pounds and pence, £10,000 invested in the index would now be worth £84,473, even throwing some shade on the broader US stock market in the form of the S&P 500, which is itself no slouch on the performance front.
The Nasdaq 100 index is comprised of the biggest stocks listed on the Nasdaq stock exchange, which
tends to have a heavy weighting to technology companies. Technology stocks currently make up 50% of the index. So what’s particularly impressive about the Nasdaq’s incredible 25-year returns is they have been generated despite the dotcom crash of the early 2000s. Between January 2000 and March 2003, the Nasdaq 100 index fell by a stomach-churning 72% . But returns from the technology sector in recent years have more than made up for that disastrous performance. Over the last 10 years, the Nasdaq 100 index has returned an astounding 19.8% a year
FTSE 100 SHARES OUTPERFORMING NASDAQ Since January 2000, the FTSE 100 has returned
How the Nasdaq compares against other indices
Source: FE, total return in GBP 01/01/2000 to 19/05/2025
FTSE 100 stocks which have beaten Nasdaq
Company
Annualised total return since January 2000
Source: FE, Refinitiv total return to 19/05/2025
4.6% per annum. Pedestrian by comparison to the Nasdaq 100, but actually not a bad result seeing as this period began with one of the biggest market meltdowns in history. What’s perhaps surprising then, is that almost half of the current FTSE 100 members (48 to be exact) have outperformed the Nasdaq 100 since the turn of the century.
The top 10 performers are listed in the table below. At the top of the tree is DCC (DCC), which has returned a compound 26.1% a year since the turn of the century. It’s not a household name, but the energy, healthcare and technology company has some characteristics in common with Warren Buffett’s Berkshire Hathaway (BRK.B:NYSE), having started life as venture capital investor which became a conglomerate of operating businesses.
More familiar names will be JD Sports (JD.) and Next (NXT), which have performed exceptionally well despite having to navigate a shift in retail from physical to online sales. Games Workshop (GAW) has also experienced fantastic growth from selling fantasy miniatures to a devoted customer base of
£10,000 invested in January 2000
collectors and gamers. On a very different theme, shares in the London Stock Exchange (LSEG) have provided extremely agreeable returns to long term investors. Stock trading now actually makes up a minority of its revenues, with data analytics and benchmarking proving to be lucrative business lines.
HOW HAVE SO MANY FTSE 100 SHARES BEATEN THE NASDAQ 100?
The fact so many UK shares have outperformed the Nasdaq, some by a considerable margin, shows that it’s perfectly possible for businesses to perform exceptionally well in the long term. But on the face of it, it’s puzzling to see so many shares in the FTSE 100 beating the Nasdaq 100, when the FTSE 100 index itself has fallen so far behind. Partly this comes down to the fact that within any index, there will always be a spread of performance from the companies within it; some good, some bad. But partly it’s also a result of the fact that indices themselves aren’t static.
We tend to think of the FTSE 100 as one constant thing, but actually it changes regularly as companies are relegated from the index and others are and promoted into it, depending on their share price performance. Looking at the top ten performers since January 2000 in the table above, none of them were actually in the FTSE 100 index in January 2000. In other words, these were more modestly sized companies which have done so well that they have pushed their way into the blue-chip index, either through organic growth, or mergers and acquisitions, or both.
There are some stocks which were in the FTSE 100 in January 2000 which have outperformed the Nasdaq 100 though. Diageo (DGE), the drinks giant, has returned 9.1% per annum since the turn of the century, ahead of the 8.8% provided by the Nasdaq 100. Meanwhile the consumer goods giant, Unilever (ULVR), has returned 9.9% over this period. The defence and aerospace company BAE Systems (BA.) has returned 10.2% per annum, the mining company Rio Tinto (RIO) has returned 10.6%, and the data analytics firm RELX (REL) has
returned 11.8%. And despite the fact smoking has become much less popular in many countries, British American Tobacco (BAT) has returned a compound 15.2% a year for investors since January 2000.
This data shows that individual UK-listed companies both big and small have delivered some spectacular returns to investors over the long run, offering some reassurance for investors who have invested in UK stocks and funds, and have perhaps watched the gains provided by the US stock market from the sidelines. However, while 48 stocks in the current FTSE 100 have outperformed the Nasdaq 100 over 25 years, if you look at the last decade, this number falls to just three. So, as well as exhibiting some nifty stock picking skills, investors also have to exercise patience to harvest their rewards.
By Laith Khalaf AJ Bell Head of Investment Analysis
• The Fund seeks capital growth and a growing income stream
• It invests with high conviction and discipline in high-quality companies
• Together, its managers have over 40 years’ European investment experience
• Guinness Global Investors was established over 20 years ago
• We focus on identifying sustainable profitability which is under-priced by the market
• Our experienced team of senior employees and fund managers have worked together for many years
Visit guinnessgi.com/wseeif or call 020 7042 6555
Scan the QR code to find out what is the fastest speed achieved by a snail in the Guinness Gastropod Championship.
POSITIVELY DIFFERENT
GLOBAL INVESTORS
Risk: Past performance is not a guide to future performance. The value of this investment and any income arising from it can fall as well as rise as a result of market and currency fluctuations. You may not get back the amount you invested. Guinness Global Investors is a trading name of Guinness Asset Management Ltd., which is authorised and regulated by the Financial Conduct Authority. Calls will be recorded.
Can I contribute proceeds from the sale of a property to my SIPP?
Answering a query about where the money you add to a pension pot in drawdown can come from
I am currently taking taxable income from a SIPP in drawdown. I will be completing on the sale of a property shortly. Am I able to contribute £10,000 of the sale proceeds from the property to my SIPP under the money purchase annual allowance? Rob
Rachel Vahey, AJ Bell Head of Public Policy, says:
There are a couple of aspects in your question which are worth unpicking for readers. The first is how much money can you pay into your pension (and receive tax relief), and the second covers which financial sources you can use for contributions.
The first question – how much money people can pay into a pension and receive tax relief –seems like a simple one. However, the answer can be quite complicated.
TWO DIFFERENT ALLOWANCES
There are two different allowances. The first is on the contributions an individual may make to their pension and that is a maximum of £3,600 or 100% of the pension saver’s relevant UK earnings, whichever is higher, including tax relief. (I’ll come back to what relevant earnings are below.) If someone pays in more than their 100% of their relevant earnings, they can’t receive tax relief on the excess, and the excess is usually refunded to them by the provider.
The second allowance is the annual allowance which covers any personal contributions, employer contributions and tax relief. The standard annual allowance is £60,000 but it could be lower if someone is a very high earner or has previously ‘flexibly accessed’ their benefits, usually by taking taxed withdrawals from their flexi-access income
drawdown plan.
Doing so would trigger the money purchase annual allowance (MPAA) which is £10,000. Once triggered, there is no going back; even if the individual paused or stopped taking taxed withdrawals the lower limit will still apply.
If someone pays in more than their available annual allowance, they will get a tax charge which effectively removes the tax relief received above this level.
If someone doesn’t use all their annual
Ask Rachel: Your retirement questions answered
allowance in a tax year, then it might be possible to carry it forward to another tax year to count against contributions paid in then. However, this doesn’t apply if the MPAA has been triggered. If that’s the case, unused MPAA will just be ‘lost’ once the tax year ends.
WHAT CONSTITUTE ‘RELEVANT EARNINGS’
I promised to come back to what ‘relevant earnings’ were. This should help you identify how much you can contribute and get tax relief on.
‘Relevant earnings’ are, generally, any earned income, and includes pay, wages, bonus, overtime and some commission. It also includes selfemployment income derived from carrying out a trade, profession or vocation.
If someone receives a redundancy payment, generally the first £30,000 is tax free and doesn’t qualify as earnings for income tax or tax relief purposes. But any money above this usually qualifies as relevant UK earnings.
However, there are some important sources of
income that are not counted as relevant earnings, including investment income, dividend income, pension income and some buy-to-let income. (Some rental income may be included if it’s in respect of a UK or EEA furnished holiday lettings business.)
Profits on a sale of assets, including a property, also wouldn’t count as relevant earnings. However, if you have other sources of income that do count as relevant UK earnings, you could certainly use the cash from the sale to make the contribution.
DO YOU HAVE A QUESTION ON RETIREMENT ISSUES?
Send an email to askrachel@ajbell.co.uk with the words ‘Retirement question’ in the subject line. We’ll do our best to respond in a future edition of Shares Please note, we only provide information and we do not provide financial advice. If you’re unsure please consult a suitably qualified financial adviser. We cannot comment on individual investment portfolios.
24 JUNE 2025
MANCHESTER MARRIOTT HOTEL PICCADILLY
Registration and coffee: 17.15
Presentations: 17.55
During the event and afterwards over drinks, investors will have the chance to:
• Discover new investment opportunities
• Get to know the companies better
• Talk with the company directors and other investors
COMPANIES PRESENTING
CUSTODIAN PROPERTY INCOME REIT (CREI)
Custodian Property Income REIT aims to be the REIT of choice for private and institutional investors seeking high and stable dividends from well diversified UK real estate.
MAJEDIE INVESTMENTS (MAJE)
Majedie Investments seeks to deliver long-term capital growth at an attractive rate above inflation, while preserving shareholders’ capital.
POOLBEG PHARMA (POLB)
Poolbeg Pharma is a clinical-stage infectious disease pharmaceutical company, with a novel capital-light clinical model which enables to develop of multiple products faster and more cost-effectively than the traditional biotech model.
SOCIAL HOUSING REIT (SOHO)
Social Housing REIT primarily invests in newlydeveloped social housing assets in the UK, with a particular focus on specialised supported housing. These operational residential assets deliver long-term sustainable income and are managed by Approved Providers (regulated organisations in receipt of direct payment from local government).
WHO WE ARE
EDITOR: Tom Sieber @SharesMagTom
DEPUTY EDITOR: Ian Conway @SharesMagIan
NEWS EDITOR: Steven Frazer @SharesMagSteve
FUNDS AND INVESTMENT
TRUSTS EDITOR: James Crux @SharesMagJames
EDUCATION EDITOR: Martin Gamble @Chilligg
INVESTMENT WRITER: Sabuhi Gard @sharesmagsabuhi
CONTRIBUTORS:
Dan Coatsworth
Danni Hewson
Laith Khalaf
Russ Mould
Laura Suter
Rachel Vahey
Hannah Williford
Shares magazine is published weekly every Thursday (50 times per year) by AJ Bell Media Limited, 49 Southwark Bridge Road, London, SE1 9HH. Company Registration No: 3733852.
All Shares material is copyright. Reproduction in whole or part is not permitted without written permission from the editor.
Shares publishes information and ideas which are of interest to investors. It does not provide advice in relation to investments or any other financial matters. Comments published in Shares must not be relied upon by readers when they make their investment decisions. Investors who require advice should consult a properly qualified independent adviser. Shares, its staff and AJ Bell Media Limited do not, under any circumstances, accept liability for losses suffered by readers as a result of their investment decisions.
Members of staff of Shares may hold shares in companies mentioned in the magazine. This could create a conflict of interests. Where such a conflict exists it will be disclosed. Shares adheres to a strict code of conduct for reporters, as set out below.
1. In keeping with the existing practice, reporters who intend to write about any securities, derivatives or positions with spread betting organisations that they have an interest in should first clear their writing with the editor. If the editor agrees that the
reporter can write about the interest, it should be disclosed to readers at the end of the story. Holdings by third parties including families, trusts, selfselect pension funds, self select ISAs and PEPs and nominee accounts are included in such interests.
2. Reporters will inform the editor on any occasion that they transact shares, derivatives or spread betting positions. This will overcome situations when the interests they are considering might conflict with reports by other writers in the magazine. This notification should be confirmed by e-mail.
3. Reporters are required to hold a full personal interest register. The whereabouts of this register should be revealed to the editor.
4. A reporter should not have made a transaction of shares, derivatives or spread betting positions for 30 days before the publication of an article that mentions such interest. Reporters who have an interest in a company they have written about should not transact the shares within 30 days after the on-sale date of the magazine.
WATCH RECENT PRESENTATIONS
ATOME (ATOM)
Olivier Mussat, CEO
ATOME is the leading UK-listed developer of international green fertiliser projects, focused on addressing climate challenges in the food and agricultural sector through the supply of sustainable and efficient fertiliser alternatives produced in the heart of the largest food-producing region in the world.
Custodian
Property Income REIT (CREI)
Richard Shepherd Cross, Investment Manager
Custodian Property Income aims to be the REIT of choice for private and institutional investors seeking high and stable dividends from well diversified UK real estate.
Smithson Investment Trust (SSON)
Simon Barnard, Portfolio Manager
We aim to deliver strong, long-term capital growth by creating a concentrated portfolio of the world’s best small and mid-sized companies. Our analysts seek out exceptionally profitable small businesses, selecting those with substantial growth potential, capable of compounding in value for many years or even decades.
