Do you already have a good set of solid dividend-paying stocks in your ISA, laid down in previous years ahead of the new £15,240 allowance coming our way on 6 April? And do you fancy a few higher-risk possibilities that might get you some handsome recovery profits? Here are three that could do the trick:
French Connection
Fashion chain French Connection (LSE: FCCN) suffered badly during the recession and recorded big losses in 2013 and 2014, which wiped out any thoughts of dividends. And in response to results for the year ended January 2015, the shares dipped 13% to 53p — that’s down 52% from a peak in February 2011, so what went wrong?
Actually, the latest figures give reason for hope. There was still an operating loss, but it was much smaller at £0.8m (against a £4.4m loss the previous year), and chief Stephen Marks told us that “…these results show that we have made another step towards returning French Connection to profitability“.
It’s very hard to put a value on the shares with just a tiny profit forecast for 2016, but this year will surely be a pivotal one and you could do well if you’re brave enough to take the risk.
Lonmin
With so many miners to choose from, why go for Lonmin (LSE: LMI)? Well, Lonmin shares are down 90% over five years, but they’ve perked up 11% today to 123p, so what’s happening? The firm has been beset by the falling price of precious metals and has been lurching between profit and loss in the past few years, but there’s a strong recovery in profit forecast for the year to September 2016 which would drop the P/E to only around 11 — and dividends are expected to be reinstated this year, albeit at a modest yield.
The reason for today’s price uptick was the news that Ben Moolman has taken on the role of Chief Operating Officer. Mr Moolman, previously head of the Platinum Division at Glencore, has been at Lonmin previously, and the appointment led CEO Ben Magara to enthuse that “This is an outstanding appointment for Lonmin“.
SOCO
A selection of recovery candidates wouldn’t be complete without an oily, and I’m going for SOCO International (LSE: SIA), whose shares are down 67% over the past 12 months to 140p — and that takes in a 34% plunge when 2014 full-year results were released on 12 March.
Earnings per share fell 86%, though the firm did announce a 10p-per-share dividend. The big shock, however, was a severe downward reappraisal of the firm’s oil reserves due to the falling price of the black stuff — commercially viable reserves previously estimated at 125mmboe have been slashed to just 41m.
The question is, are the shares oversold now? I can’t help feeling they might be. I don’t expect much recovery in the short term with cost-cutting on the cards, but again this might turn out to be a turnaround year.