MartinCo (MCO:AIM) 152.5p

Gain to date: 52.5%

Original entry price: Buy at 100p, 12 Feb 2015

Lettings agent Martinco (MCO:AIM) remains under pressure following chancellor George Osborne’s decision (25 Nov) to increase stamp duty on buy-to-let properties. Our bullish call on the company is still generating a healthy return but not nearly as healthy as it looked before Osborne’s move. We think the weakness is largely unwarranted.

Martinco is expanding its geographic reach through acquisitions and recruiting new franchisees. This will position the company to serve a greater proportion of the demand for rental accommodation. And we still expect this market to be strong given the continuing difficulties for first-time buyers in getting on the housing ladder. Forecasts have not yet been updated to reflect the buy-to-let changes but we do not expect too much divergence from Panmure Gordon’s existing numbers. These forecast a rise in pre-tax profits of 32.1% to £3.7 million for 2016 and a 6.7p dividend which translates into an attractive looking 4.4% yield.

The lack of post-Autumn Statement forecasts is a pain, but we still expect strong growth for MartinCo in 2016 as it builds on its 284-strong franchise network. (MD)