Wednesday newspaper tips: Hold on to Victrex for special dividends

Victrex’s plan to return cash to shareholders is prompting The Telegraph’s Questor to advise traders to hold on to the shares.

The FTSE 250 polymer and bio-materials solutions company announced its preliminary results for the year to 30 September on Tuesday.

Revenue rose from £252.6m in 2014 to £263.5m, driven by a strong performance in the first half of the year but relatively flat sales in the second half.

Gross profit rose 3% from £163.2m to £168.2m, and declared a 4% increase to the final dividend of 35.09p.

The company also revealed its new formal capital framework, which will give approximately 50% of net cash back to investors in the future through special dividends.

Questor said it has already started the trend with a 50p dividend paid in February on top of a 4% increase in the annual dividend.

It noted the sales of its lightweight plastic “Peek” were solid, with sales up 7% as it offsets a slowdown in the oil and gas sector.

Questor pointed out the company is “not immune to any cyclical slowdown in the economy” and the shares rate highly, trading on 18 times forecast.

However the company is well placed around the world and has an excellent product, which is why Questor rated it at ‘hold’.

Over in The Times, Tempus was having a bit of fun playing around with model and toy maker Hornby.

The AIM-listed company, which owns a number of model railway and slot car brands including Scalextric, Airfix models and Corgi die cast models, announced on Tuesday that it saw a dip in half year sales from £24.2m to £22.3m.

It also reported an underlying group loss of £3.4m, compared to a small profit of £0.2m in 2014.

That was due to a “significant disruption” to trading in July and August after it implemented its new Enterprise Resource Planning system in the UK.

The company also announced it pulled forward its reorganisation plan for its European operations, which also affect trading.

Tempus highlighted that Hornby is “one of those businesses you want to love, even if you’ve zero interest in model trains or kindly uncles pottering around in converted lofts and basements across Britain”.

But it questioned whether the emotional attachment makes it worth buying the shares, saying that emotional share-buying generally ends badly.

With the company in the middle of a transformational year, and earlier issues blamed for trading issues apparently resolved, a Tempus cited a broker at Numis Securities saying that the company has a decent platform for growth.

With that in mind and with a prediction of £2m in profits next year, Tempus said it is worth a small flutter as its “new drivers have a clear sense of direction and not much competition”.