How does a gain of 400% sound? What if it could be promised over a period of about seven months? ...
How does a gain of 400% sound? What if it could be promised over a period of about seven months?
Most investors today would be told by advisers to steer clear of such promises - depending, of course, on their attitude to risk. And yet, this is exactly what Filtronic's share price has managed since a 52-week low in mid-October last year.
And it is not alone.
A quick review of leading FTSE TechMARK 100 index performers over the past year shows that Thus is up 320% from its 52-week low, Spirent is up 313%, Telewest is up 238%, and Pace Micro Technology is up 213% - all according to Bloomberg data.
It is also the case that all of these stocks have made these gains since September or October last year, with most of the rush upwards squeezed into the past three months.
Even the worst performing stock in the index in these terms, Celltech Group, is up nearly 4% from its 52-week low.
So, is it the return of the tech boom all over again?
Well, not quite.
Filtronic is already being downgraded by analysts urging investors to take profits – the stock was down 22.5p to 115p on the morning of 14 May.
Then there is the question of whether the sorts of gains seen in recent months are simply reducing the pain of investors who bought into tech at the peak in 2000.
Filtronic is still 52% off its 52-week high share price; Thus is 15% off, Spirent is 82% off, Telewest is 77% off, and Pace is 57% off, meaning there is some way to go before investors who bought 10 to 12 months ago even see themselves breaking even.
The curse of Marconi still reigns too: its shares are 90% off their high in the last 12 months, and its share price dived to a new low of 0.92p on 14 May, with little hope of ever recovering to the £12.50 price recorded in September 2000.
Marconi currently has a market value of £25m, which is not bad for a small-cap technology firm, but hardly a laughing matter to those pension funds that bought in when it was a multi-billion pound conglomerate.
Many other TechMARK stocks are suffering similarly.
The outcome of this range of performances – from Filtronic to Marconi – is likely to be continued difficulties for managers of tech funds in attracting retail interest.
National Savings & Investments has pulled in more than £500m in each of the last three months from people buying products such as Premium Bonds, with promises of capital backed by the state.
The TechMARK 100 index is currently at 711 points, down from 5,743 in March 2000, and unless it can maintain a sustained recovery from its 3 ½ -year low of 558 points hit in March this year it is unlikely to start tempting the mass of punters into the tech sector again.
Advisers and clients should remember, however, that consumers are still buying mobile phones, cameras, and online services all over the world, and tech companies continue to make money, albeit not at rates previously forecast.
If a client is willing to take the risk, share prices may still be right despite recent gains, especially for companies that are generating good cashflows, are committed to dividends, and yet are still being lumped together with others that are not simply because they are in "technology".
For the time being the rewards remain high if the right stock is picked at the right time, although the risks continue to be equally as difficult to predict.
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