Harry Nimmo's 3 Stock Picks

Gold Rated Standard Life fund manager Harry Nimmo picks out three smaller companies which he thinks are the winners of the future

Emma Wall 17 February, 2015 | 9:50AM
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Emma Wall: Hello and welcome to Morningstar. I'm Emma Wall and here with me today is Harry Nimmo, manager of the Standard Life UK Smaller Companies Trust (SLS).

Harry Nimmo: Hello.

Wall: Hi Harry. So, you're here today to give three stock picks. What's the first stock?

Nimmo: Okay. Well, I like quality and I like to run winners and Ted Baker (TED) is a good example of this. This is a company actually we bought at Standard Life Investments when it listed in 1997 at £1 and it's now at £24.50 I believe. It's done very well but it's going to continue to do well.

Wall: High street retailers can be sorted into two piles, those that have dominated ecommerce and made that transition well such as Next (NXT) and those that haven't. Where is Ted Baker online?

Nimmo: Ted Baker has a very respectable online offering. They were perhaps a little late in getting involved in it, but they have come through sharply and it gives companies a reach, but I think it starts with the brand. I think that is very important they control the brand and the online business, which I believe is about 10% to 15% of sales gives them extra reach both in the U.K. and internationally.

Wall: What's the second stock today?

Nimmo: Second stock is a company called Workspace Group (WKP). They have around 100 managed work centers throughout London, particularly in Central London and these are buildings, probably older buildings that have been converted and are rented out to small businesses on a three-month cancellable whole services lease basis.

Wall: What's the third and final stock?

Nimmo: The third and final stock is a company called EMIS (EMIS), it is a healthcare software company. It specializes in providing the software that GPs, general practitioners, use in their office for booking appointments, for control of drugs, for all the accounts, everything you might need, rostering of staff, everything you might need within a doctor's practice.

Wall: How dependent are they then on local authorities continuing to sign on for another five years because obviously we are having cuts in local authorities or are they providing efficiencies that just can't be done without?

Nimmo: Well, they renewed the GPSoC contract as it's called, this is the overarching contract for the whole country that was renewed within the last six months and thus we can see…

Wall: Visibility for five years…

Nimmo: …getting on for five years of visibility and doctors are very reluctant to change. You don't want to pull out your software and learn from scratch something else. It's a nightmare for them. They like it, they want to keep it. So, actually the visibility is far longer than five years.

Wall: Harry, thank you very much.

Nimmo: Thank you.

Wall: This is Emma Wall for Morningstar. Thank you for watching.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Emma Wall  is former Senior International Editor for Morningstar