Time to hold us to account

We get to write about a lot of different investment ideas throughout the year.

As much as possible we try to introduce you to investment ideas and opportunities that you might not hear about from the mainstream media.

That’s because we think outside the box, we often operate on the edges of the proverbial bell curve, and we don’t follow mainstream convention.

But sometimes when you sit on the fringes, you can get things wrong. Very wrong. That’s because the ideas we look at typically also come with a lot higher risk than what you get in the mainstream. That’s why the mainstream is the mainstream, and we’re not.

Also, we can get things very right. And when you might think conventional thinking is the way to go, thinking outside the box can often be quite rewarding.

For all the content we do publish though, it stands that if we point you in the direction of an idea that we think is worth more research and consideration for investment, we should revisit those ideas to see just how right (or wrong) we are and be held to account for that view.

In today’s world not too many people are prepared to make predictions, to take a stand, hold an opinion they defend… and freely admit where they might have been off the mark, or also be congratulated for when they’re right.

Today, I want to wind the clock back to March 2022 and see just how wrong or right we were in relation to three situations.

Three stocks in 2022

Each year we typically put together a special report that identifies three stocks to consider for the year. These are stocks we think are worth a bit of further research, investigation and consideration for the upcoming 12 months.

They’re stocks you won’t hear much about in the mainstream. They are firms that certainly aren’t household names but examples of the interesting companies that exist on the London stock market.

And in 2022 we highlighted three:

1. NCC Group
2. XP Power
3. Smart Metering Systems

Here’s a bit about what we said about them…

1. NCC Group

NCC is a leading global cybersecurity adviser.

NCC helps to secure cloud migrations, mobile networks and even cryptography (data transfer secured by immutable code). In each case, NCC provides assurance and testing capabilities that ensure a strong line of cyber defence.

The company has a notable commercial partnership with Microsoft, in which it supplies threat monitoring and detection services to Microsoft Azure customers, a cloud computing service. Established relationships with some of the world’s biggest companies is testament to NCC’s credibility in this space.

Cybersecurity is big business – and growing. And NCC lies at the heart of this trend. It’s definitely worth keeping an eye on for the future as the cybersecurity industry grows.

2. XP Power

XP Power is establishing itself as a global provider of power solutions.

According to the company, it offers the world’s largest selection of power supplies, including AC-DC power supplies, DC-DC converters, and high voltage power supplies. In total, the company offers more than 6,000 products.

XP Power serves a number of key industries that are undergoing fundamental change.

For example, XP Power manufactures the parts that power a number of medical technologies – ultrasound imaging, ventilators, X-rays and AI-based patient monitoring systems.

Heading into 2022, XP Power could become the go-to provider of power solutions for many fast-growing industries, so it could be one to keep an eye on.

3. Smart Metering Systems

Smart Metering Systems (SMS) specialises in providing what can be described as intelligent energy systems. In particular, it provides metering, data management services and infrastructure solutions to help create more sustainable and transparent outcomes.

Smart metering systems automatically log energy consumption, allowing for efficient and accurate billing.

SMS builds green energy infrastructure too.

Notably, SMS builds battery storage systems, which are an essential component in the UK’s transition towards renewable energy sources.

By 2025, SMS anticipates it will provide 470MW of energy storage. That’s the equivalent of powering roughly 374,289 homes for a year, showing the significant contribution that SMS is making in providing sustainable energy to the UK.

SMS is establishing itself across many areas of the renewable energy boom.

As such, SMS should be near the top of your watchlist as we progress through 2022.

How did they do?

Now for the fun part…

How did these stocks do in 2022?

We published the report on those three on the afternoon of 15 March 2022. So, let’s look at the closing prices of all three on that date:

1. NCC Group (LSE: NCC) – 185 GBp
2. XP Power (LSE: XPP) – 3,495 GBp
3. Smart Metering Systems (LSE: SMS) – 716 GBp

Now we’ll take the closing prices of these three from 6 January 2023:

1. NCC Group (LSE: NCC) – 206 GBp
2. XP Power (LSE: XPP) – 2,200 GBp
3. Smart Metering Systems (LSE: SMS) – 820 GBp

That means since our report, NCC is up 11.35%, XP Power is down 37% and Smart Metering Systems is up 14.5%.

That is a mixed bag, but overall, not horrendous. That is particularly so when you consider the general market turmoil that the mainstream media was talking about for much of 2022.

And therein perhaps is the key point to why we continue to look at companies like these and others each year.

The markets are never really as bad as you might think when they are deemed to be “bad” by the media. We’ve just identified two companies that since March last year are actually showing a stock price increase.

It is also very unlikely that you’ll never get everything right all at once.

Further, it pays to have a diversified portfolio. This means having exposure not just to different assets, but also to different investment ideas. Here we’ve looked at cybersecurity, power and energy hardware, and green energy technologies.

This makes sure that you’re not “all in” on just one idea.

We’ll be looking again soon at more companies like these, as well as three more stocks worth keeping an eye on in 2023. Watch this space…

Until next time,

Sam Volkering
Editor, Exponential Investor