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December 18, 2012

Mark Slater, of Slater Investments’, Tips for 2013: From Dialight to Peppa Pig

By Spear's

Mark Slater, Chief Investment Officer of Slater Investments, is a man to listen to, which is why Spear’s went to find out which companies he’s most bullish on currently

Mark Slater, Chief Investment Officer of Slater Investments, is a man to listen to. Investing in his spare time aged 23, he made five times his annual salary in one week.

Since, he’s raised £500 million, topped Europe’s fund charts and, like his father Jim, author of the Zulu Principle, proven one of the best growth-stock pickers of his generation.

So, with hopes of an economic recovery stirring, Spear’s went to find out which companies he’s most bullish on currently.

‘Dialight is a lighting company,’ says the 43 year old. ‘Although lighting is usually a highly competitive space, they are strongly positioned, selling LED solutions into regulated, niche markets which cheap Chinese competition can’t access.

‘Currently, they have half the traffic lights markets in the UK, Europe and America and they dominate the market for strobes for tall structures. Their products last for years and are very fuel efficient and customers enjoy a one year payback. They are moving into the much larger industrial and hazardous environment markets like oil refineries, oil rigs and mines.  

‘Their earnings are growing 30% per annum, making them a fantastic business with growth prospects for years to come. I started buying at £3 a share, but am still long at £11.

‘Another company I like very much is Hutchinson China. Its Chinese healthcare division sells prescription and non-prescription Chinese medicines and is supported by a big salesforce and strong branding. Some of their drugs are even on the essential-medicines list in China which, given massive government spending on healthcare, gives the company a wonderful tail-wind.

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‘In addition, the company’s separate R&D operation is loaded with intellectual property which is being commercialised with partners like AstraZeneca and Nestle. The healthcare division alone is worth more than the market capitalisation leaving the R&D operation, cash and consumer products division in for nothing. On a five year view, the stock could hit £10 a share.

Mark Slater, CIO of Slater Investments

‘My third pick is Entertainment One. A media business, they own a very large library of film and television content, and have recently acquired a company called Alliance. Combined, they will be the leading independent film distributor in the UK and Canada and cost savings will enhance earnings substantially.

‘They also have a very strong children’s business. Peppa Pig, who I highly recommend, is a great example. It outsells Thomas the Tank Engine in the UK and is now the No 1 pre-school product in the UK, Spain, Australia, and Italy.

‘Wherever Entertainment One launches Peppa Pig, it blows the socks off everything. It’s very special. The character is being launched in the US, with merchandising being in the shops in time for Christmas, and I expect it to do very well there in the coming years.

‘The stock currently trades at 8x next year’s earnings, and that’s great value.’
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