Investment: Buy now, or regret it later

No pain, no gain: our man's portfolio

WITH THE stock market enduring one of its periodic bouts of depression many investors are naturally nervous about adding to their portfolios.

Often they are happy to buy when shares are riding high, even challenging new peaks. Yet when the going gets tougher some find irresistible the temptation to sell, perhaps desperate to lock in profits. But, as I have stressed, investment is a long-term exercise and the occasional squalls should be ignored. Many institutional investors regard them as buying opportunities.

Fear is a major influence in any market. Unfortunately, there is a substantial well of commentators who feel more at home adopting a pessimistic stance and piling on the agony. This time last year, as shares retreated in the wake of the Asian and Russian crisis and the Long- Term Capital Management fiasco, there was wild talk that another 1987 style crash was unavoidable.

Subsequently Footsie and the two main supporting indices hit new peaks and those panicked out of shares were left to rue their rashness. It's the same this time round. There is yet more talk of 1987; even 1929. But investors should not allow themselves to be steamrollered into selling - they should be looking for buying opportunities.

And they are still there, particularly among the small- cap shares. Last week an obscure little business called, rather unimaginatively, Ring, produced an effective 23 per cent profit advance to pounds 3.2m. Its shares failed to respond and they are bumping along at a subdued 32p, selling at less than eight times earnings, and offering a dividend yield of around 6 per cent.

Yet prospects look bright. Tim Sedgwick at stockbroker Henry Cooke Lumsden, who describes Ring as a "cracking little company", is looking for profits of pounds 3.5m this year and pounds 3.9m next.

The present group is largely the creation of John Hall, the chief executive, and Tony Welham, the financial director. Over two years, they have transformed a tired old metal basher that had exper-ienced dramatic changes even before the engineers arrived. Ring is a splendid example of how the same share quote can go round and round, embracing a variety of interests.

The company was originally a confectionery maker, It then dabbled in foods, hotels and publishing. In the early Nineties it became Graystone, largely a distribution and engineering group. Messrs Hall and Welham, helped by the experienced non-executive chairman Ken Jackson, have sold off most of the ragbag of activities to concentrate on distribution.

Now the company is split into three divisions - lighting, automotive products and a consumables operation supplying niche lines to fitters, installers and plumbers.

The latest results reflect the group's first complete year as a focused distributor. The three divisions each made headway and further progress is expected, Lighting is the largest profits centre. It also supplies do-it-yourself sheds, and B&Q, the Kingfisher off-shoot, is its biggest customer. It also sells to wholesalers and independent shops.

Although Ring has its own in-house design operation it gets its products from overseas, mainly the Far East. It uses a wide array of suppliers, reducing the danger of production problems and allowing it to display a large degree of nimble-footedness when faced with competition from much larger groups.

The group last year splashed out pounds 2.4m on two bolt-on acquisitions for its consumables division. With cash in the bank, it is on the look out for further buys. But it is, more or less restricted to cash deals.

This is because the nominal value of the shares, the lowest consideration at which they can be issued, is 50p. So a 32p share price - it was above 160p a few years ago - leaves a yawning, but, I am sure, not unbridgeable gap. Mr Hall's options, running as they do until 2,005, are priced at 127.5p.

I believe one influence which has held back Ring's shares in recent months is selling by Edinburgh Fund Managers. It has unloaded possibly all its 14 per cent shareholding.

Some was picked up by other big Ring shareholders including Melton Medes, the investment and manufacturing group run by entrepreneur Nat Puri. He now has 29.4 per cent.