Our Plays of the Week portfolio is presently delivering one of our best performances in many years. While a rising stock market does provide a good starting point, we have beaten the time-equivalent returns from FTSE All-Share by a simply enormous amount. Several our stock selections have provided gains well in excess of 100% gains this year.

In the past 12 months, our Plays portfolio has delivered an average gain of 18.3% versus 1.5% from the benchmark index on a trade-related, ‘time-exposed’ comparable basis. We measure the FTSE All-Share from the point at which we start each Plays trade until the present on a 12-month rolling basis. As a vanilla comparison, the FTSE All-Share without adjustment is up 11.9% over the past 12 months.

The table below illustrates some of our best performers that are still running trades. These include returns of 184% from software group Globo (GBO:AIM), 150.8% from pharmaceutical supplies-to-niche drug owner Clinigen (CLIN:AIM); and 93.8% from electronic repair specialist Regenersis (RGS:AIM). (Click on following image to enlarge)

Not included in the table are several trades over the past 12 months where we have locked in a decent profit. They include a 58% return from pharma group BTG (BTG), 59% from oil services provider Mycelx (MYXR:AIM) and 30.9% from FTSE 100 technology giant ARM (ARM).

Patience is rewarded

Of our open positions, many still have considerable potential. After an impressive start, North River Resources (NRRP:AIM) lost all of its gains and earlier this month dipped below our 0.62p entry level (see Plays, Shares, 17 Oct). Thankfully a hugely-impressive 129% resource upgrade (12 Dec) is putting new life into the stock. The next news will be a feasibility study due in the first quarter of 2014 on its Namib lead/zinc project in Namibia. The asset stands to have very attractive economics. It is a small project but has the potential to generate decent earnings.

We have had to be patient with Base Resources (BSE:AIM), highlighted at 24p (see Plays, Shares, 7 Feb) for its strong cashflow potential. The stock is finally on the move after confirmation production has begun at its mineral sands project in Kenya. The site is on track to start export shipments in January. House broker RFC Ambrian reckons Base will be the highest-margin global minerals sands producer. The project has a short lifespan but is forecast to throw off lots of cash, particularly in the early days when commodity grades are higher. RFC has a A$0.78 price target, which equates to 43p at current exchange rates. That implies 60% upside to the 26.75p price at the time of writing.

Surveillance expert Synectics (SNX:AIM) has been a great performer, rising 52% since we flagged it at 392.5p (see Plays, Shares 7 Mar). It has enjoyed several decent contract wins and also raised its dividend by 20% at the half-year results (24 Jul). It is has just undertaken one of its largest and most technically-challenging system projects ever. The next catalyst for the share price, in the absence of further contract wins, should be full-year results on 26 February 2014.

Silver screen

In November we highlighted price weakness in Cineworld (CINE) as an opportunity to snap up one of the best-quality stocks in the leisure sector. The shares have been marked down since September because the £562 million cap has tough comparative figures to beat in the fourth quarter. Last year saw an exceptional revenue boost from the James Bond film, Skyfall. Analysts are already factoring in a weaker October-to-December period into their forecasts and there is plenty of reason to be positive on Cineworld if you look at the cinema box office since September and also glance ahead at the forthcoming release schedule.

Three extremely popular films have been released since the £562 million cap last updated on trading (22 Oct). Looking at UK box-office figures up to 9 December, Thor : The Dark World has taken £19.6 million; Gravity has achieved £24.6 million; and The Hunger Games: Catching Fire raked in £26.4 million. These are hugely-impressive takings for non-summer releases. We expect this month’s key releases - the latest films in the Hobbit and Anchorman franchises and a Moshi Monsters movie - will also get masses of punters in front of the silver screen.

We have suffered a few disappointments this year including quantum dots technology developer Nanoco (NANO:AIM) and banking group Standard Chartered (STAN), both of which hit our stop loss. We always set stop losses at 20% below the entry price (or 20% above any ‘sell’ trades) in order to protect our capital. A stop loss acts as a trigger for your stockbroker to sell any holding. You can be guaranteed of exiting at the exact stop loss price with spreadbetting but this does not apply to normal share dealing accounts. The latter simply means your stockbroker will seek to get best price, yet if a share is in free fall and lots of investors all heading for the exit at the same time then you may find the shares can only be sold at levels below the requested stop loss.

Wealth preservation

Knowing when to lock in profit is a valuable skill for investors. We cannot emphasise enough the importance of wealth preservation. Always set yourself a goal when buying a share and then reappraise the stock if it hits the target. If the story no longer stacks up or the valuation looks too rich, taking some or all of the profit can be a wise move.

We published a plays update on Regenersis last week (see Plays, Shares 12 Dec), maintaining a bullish stance on the stock despite its substantial share price gains. We still think the story sufficiently compelling and valuation attractive enough to justify ongoing support yet there are several other high-flyers in the portfolio where action is required. We are taking profits on the following five stocks.

Inspired Energy (INSE:AIM) 9.12p

Gain to date: 97.4%

The energy broker trades on 13.4 times forecast earnings for 2014. That looks up with events so we are inclined to bank a 97.4% profit as this return far exceeds our original expectations at the time of entry (see Plays, Shares 28 Mar). One of our concerns is Inspired Energy (INSE:AIM) does not regularly update the market. The latest silence stretches back to August’s interims and investors may not get an update until late January. Five months without communication on trading is unacceptable, in our opinion, given growing competition in the sector. Full-year results in March will be a good time to reassess the story as fundamentally we still like the business. We need to know that growing competition is not hampering Inspired’s ability to keep winning new business at decent profit margins. (DC)

Aga Rangemaster (AGA) 162p

Gain to date: 94%

Increased consumer confidence and a housing market revival in the UK and US are the key factors behind the rally in Aga Rangemaster. We said two months ago (see Plays Update, Shares 31 Oct) to stick with the shares as there could be earnings upgrades to follow. These did come including big changes from N+1 Singer (18 Nov), which now carries a 175p price target. That does not offer a huge amount of upside from here, so now looks be a good time to bank a 94% profit. (DC)

APC Technology (APC:AIM) 32p

Gain to date: 92.2%

To nearly double our money in APC Technology (APC:AIM) inside three months is good going and much better than the 30% to 40% rise we originally expected within a six-month time frame. Formerly known as Advanced Power Components, the £35.3 million cap offers a strong investment case, as its Minimise arm helps cut energy bills. A landmark agreement with Morrison’s (MRW) is a great reference point, with other sizeable customers and expansion into the Americas both areas of potential upside. We would expect plenty of newsflow at the start of 2014 from APC but the opportunity to sell half of the position stake and ride likely upside from here for free is too compelling to ignore. (SFr)

Telit Communications (TCM:AIM) 169.5p

Gain to date: 54.1%

Fast gains are also the story on our seven-week old Telit Communications (TCM:AIM) pick, which is now 54.1% in profit. Again, this is a long-term story that could reap further rewards yet the tightly held shares tend to move in sudden bursts and then flatline for a bit. Having hit a record 196.5p just last month (27 Nov), many investors appear to have locked in gains leading to the recent weakness. It might pay to follow suit, with a view to watching for better entry points lower down. (SFr)

Volex (VLX) 116.25p

Gain to date: 18.9%

When updating on November’s dismal half-year results from Volex (VLX) we were inclined to tough it out, especially as the shares’ rapid slide lower offered little chance to make for the exit. The next six months will be crucial as the new management team tries to prove itself, but rally of the last four weeks provides a chance to get out with a profit and honour intact. The best plan now may be to watch the next stage of the Volex story from the safety of the sidelines. (SFr)