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Expert View special: Panmure's stock picks for 2014

Here are six shares Panmure Gordon is tipping for the year ahead.

In a special edition of The Expert View, we're taking a look at some of Panmure Gordon's top picks for the year ahead.

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Key stats
Market capitalisation£108m
No. of shares out42m
No. of shares floating33m
No. of common shareholdersnot stated
No. of employees57
Trading volume (10 day avg.)0m
Turnover£20m
Profit before tax£-4m
Earnings per share-11.20p
Cashflow per share-3.39p
Cash per share26.60p

*Correct as at 7 Jan 2014

Liontrust to reap the benefits of economic recovery

Increased fund flows and positive stock markets mean Liontrust Asset Management has ‘substantial capacity to grow’ over the next 12 months.

Liontrust may be small but it is ‘highly geared to growth in the context of the continuing equity bull market,’ said analyst Keith Baird, who put a target price of 336p on the shares. They closed yesterday at 253p

Baird expects assets under management (AUM) to increase and a pick-up in the UK economy to benefit the company’s flagship Special Situations fund, run by Citywire AA-rated Anthony Cross and Julian Fosh.

‘The Special Situations fund makes up 40% of AUM and has underperformed because of a tilt towards UK mid-caps, while the broad market has run up on larger cap banks and miners,’ he said.

‘The recovery in the UK economy will in our view benefit UK mid-caps.’

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Key stats
Market capitalisation£637m
No. of shares out87m
No. of shares floating83m
No. of common shareholdersnot stated
No. of employees1287
Trading volume (10 day avg.)0m
Turnover£189m
Profit before tax£11m
Earnings per share12.39p
Cashflow per share38.27p
Cash per share37.62p

*Correct as at 7 Jan 2014

Time for Dechra to put war chest to work

Dechra Pharmaceuticals (DECP.L) could go on an overseas acquisition trail in order to grow its business in 2014, said analyst Savvas Neophytou.

Neophytou put a 850p target price on the shares, thanks to its £150 million war chest, good cash flow and access to predictable, fast growing markets.

He said the supplier of veterinary drugs could even become a bid target itself.

‘Investment in Dechra Pharmaceuticals allows investors access to large and fast growing markets which are relatively predictable without much economic cycle volatility,’ he said. ‘The company commands a 9.1% market share of the UK veterinary pharmaceutical market. With good growth expected in coming years, we expect Dechra to offer good capital appreciation from current levels.’

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Key stats
Market capitalisation£257m
No. of shares out19m
No. of shares floating8m
No. of common shareholdersnot stated
No. of employees800
Trading volume (10 day avg.)0m
Turnover£56m
Profit before tax£5m
Earnings per share27.91p
Cashflow per share45.42p
Cash per share10.88p

*Correct as at 7 Jan 2014

First Derivatives to become a ‘big data player’

A strong 2013 for financial software provider First Derivatives (FDP.L) showed it stake its claim as a ‘genuine big data player’ that sets it up for an even better 2014, said analyst Adam Lawson.

Last year the company secured big deals, including one with the New York Stock Exchange, and Lawson said the next 12 months will see the company benefit from its hard work.

‘These deals created ripples in underlying customer markets, and we fully expect these ripples to turn into a flood of demand in 2014,’ said Lawson.

Lawson placed a target price of £14.58 on the shares as he believed ‘positive share price momentum’ will be achieved in the next 12 months as First Derivatives continues to talk to big players in Silicon Valley. The shares closed 4.8% higher at £13.55 yesterday. They have spiked 28% in the past month.

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Key stats
Market capitalisation£369m
No. of shares out518m
No. of shares floating502m
No. of common shareholdersnot stated
No. of employees3776
Trading volume (10 day avg.)1m
Turnover£340m
Profit before tax£9m
Earnings per share1.70p
Cashflow per share12.04p
Cash per share0.04p

*Correct as at 7 Jan 2014

Speedy on the fast track to success

Vehicle rental company Speedy Hire (SDY.L) performed well in 2013 but the shares have further to go despite accounting irregularities in its Middle East operations and the resignation of the chief executive.

Speedy Hire shares have a target price of 69p, according to Paul Jones. He said the company ‘is a consistently improving UK story, with cost reductions from depot consolidation and increasing levels of efficiency as a result’.

The company has forged closer links with larger customers and longer contracts that will ‘increase visibility’ and provide ‘additional contract wins as recovery progresses’.

‘We believe there are green shoots in a number of areas that could be very beneficial for Speedy as the leading player in UK asset rental markets,’ said Jones. The shares closed 2.5% up at 70.75p.

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Key stats
Market capitalisation£387m
No. of shares out240m
No. of shares floating226m
No. of common shareholdersnot stated
No. of employees8122
Trading volume (10 day avg.)0m
Turnover£668m
Profit before tax£22m
Earnings per share8.84p
Cashflow per share23.13p
Cash per share48.85p

*Correct as at 7 Jan 2014

M&A activity to help Xchanging in 2014

Technology provider Xchanging (XCH.L) will ‘step up the pace’ this year and could also benefit from mergers and acquisitions.

Panmure analyst Mike Allen placed a target price of 190p on the shares and said the company had ‘come a long way’ since problems in 2011 and had used 2012/13 to ‘get fit again’. He expected earnings per share to deliver at least 15% growth from 2015.

‘Due to the on-going divestment of a number of legacy businesses/contracts, it’s been difficult to assess the underlying growth in the business,’ said Allen. ‘We are assuming 2014 is a year of investment for the company, but from 2015 the business should be capable of earnings per share growth of at least 15% with niche acquisitions also likely to underpin this growth.’

The shares closed yesterday, up 3p at 162.75p.

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