Companies: DGG    FDL    HBG    IDS    LMSO    MNGS    MNZS    OIL   

‘Platinum Picks’, KBC Peel Hunt’s annual offering of non-client recommendations designed to outperform the FTSE All-Share and Small Cap indices, boasts good pedigree, having outperformed both benchmarks in 2004 and 2005.

The broker in charge of this ‘portfolio’, David Hawkins, says ‘the focus of our recommendations is growth, since the market has a tendency to attach ever-higher value to this commodity.’ He points out each of the stocks ‘has a degree of “special situation” about it, a necessary ingredient given our view that small caps will be battling a headwind of downgrades this year’.

Two broad categories define most of the selections: ‘those whose continuing business model development we expect to be recognised and rewarded with better ratings – Homebuy, Oilexco, Domestic & General, Punch and Ideal Shopping – and those which we anticipate will bring pleasant surprises this year – Manganese Bronze and London Merchant Securities.’

For the latter, analyst Daniel Horwood expects ‘a watershed year’ in 2006, as the investment property company demerges/floats its venture capital business and ‘accelerates its development programme into a rising London office market’.

There are also three retail sector picks KBC Peel Hunt considers will be ‘net winners in the fight for business’. Ideal Shopping and Findel have ‘50 per cent upside from the current level’ as both capitalize on burgeoning internet sales, while John Menzies is ‘underpinned by strong capital and cashflow’ making it attractive in the light of recent sector acquisition activity.