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Three ways to short-term gains – MoneyWeek

Thereal-estatesectorhasbeenafavouriteofoursforseveralyearsnow,andwehavebeenwellservedbynicheplayerssuchasNHP(nursinghomes),UniteGroup(studentaccommodation)and,morerecently,BigYellow(selfstorage)。

AnotherstockwelikeatpresentisWichford(WICH),whichfocusesonbuyingpropertyoccupiedbyGovernmentagencies。

Thefirm’smanagementiscurrentlyexpandingitsportfolio,followingafund-raising,andit’swellplacedtocapitaliseonthetrendtowardsoutsourcingbycentralGovernment。

Thestockisquiteilliquid,butshouldappealtoincomeseekerswithaninitialyieldinexcessof4。

5%。

Thestrongperformanceofsmallerfirmsoverthepastfewyearshasclearlybeenexcellentnewsforbrokersspecialisinginthisareaofthemarket。

NumisCorporation,forexample,hasenjoyedafivefoldgaininitssharepriceoverthepastthreeyears,whileEvolutionGrouphasrisenfourfoldoverthesameperiod。

Theirsuccesshasbeendrivenbyincreasingthenumberoftheircorporateclientsandbytakingadvantageofimprovingmarketstoraisemorefundsforthem。

Whilewewouldnotexpectthemarketfornewissuesandacquisitionsnecessarilytoremainasactiveoverthenextthreeyearsasithasbeen,wedothinktherewillbeopportunitiesforwell-runbrokinggroups。

PanmureGordon(PMR)isonetofollow。

It’satanearlierstageofdevelopmentthanNumisorEvolution,butwethinkitwillgainmarketshareoverthenextfewyears。

Ourthirdtipcomesfromarathermorematureandlessvolatileindustry:tobacco。

Theattractionofthissectoristhestrengthofitsunderlyingcashflowsandthepotentialforexcesscashtobereturnedtoinvestors。

Werecognisethatsharepricesinthesectorarealreadyhigh,butwouldarguethatthereisfurthertogo。

WeparticularlylikeImperialTobacco(IMT)。

Themanagementhasagoodtrackrecordofdeliveringreturnstoshareholdersandthefreecashyieldof7。

5%isattractivegivencurrentlowinterestrates。

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