Paul Doyle, manager of the Threadneedle European Smaller Companies Growth, retains a positive outloo...
Paul Doyle, manager of the Threadneedle European Smaller Companies Growth, retains a positive outlook for growth despite volatility in the technology, media and telecoms sectors.
The Oeic fund is overweight in technology which Doyle said contains strong performing businesses across all areas, as far as both turnover and profits are concerned. Doyle highlighted Nokia an example of a telecoms stock which has shown considerable growth. He added: "Nokia was a wellington boot conglomerate in the 1980s. It transformed itself into the market leader in the 1990s."
Doyle favours Sat 1 a German media company which recently merged with another German media stock Pro Sieben. According to Doyle, Sat 1's profits should more than double over the next two years as a result of this corporate action.
Doyle said the recently merged security company, Group4Falck, which deals in alarms, emergency services and security guards is also an attractive stock. He said the group's yearly free cash flow will be 300m Danish krone this year and 600m next year with an internal growth rate of 10%.
Overall Doyle is confident that the environment is favourable for equity growth stocks in particular. He said there has been relatively attractive growth of 3.3% on the Continent this year and 3% growth is expected next year. He predicted inflation will be 1.4% next year compared with a rate of 1.9% for 2000.
Doyle said: "The investment environment has seen buoyant profits this year. We expect 20% growth this year, and 14% for 2001. The outlook is that the economy will be steady, interest rates will be stable and profits should be heady."
Doyle favours growth companies with certain attributes, defining his process as: "looking for companies which are cash flow generators, market leaders, price setters. They must have control over their own destiny and show a sustainability of growth."
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