10 Shares Trading Near an All-Time High

LONDON -- Whatever the economic backdrop, there will always be some shares that are storming ahead.

Despite market fears over the eurozone and the global economy, some companies' shares are posting new highs. Even better, these success stories are not limited to a narrow group of industries. When trawling the market to find these successful stocks, I found winners from a range of sectors from the FTSE 100 (UKX) to AIM.

Don't think just because these shares are near an all-time high that they cannot move significantly higher. Every winning share posts new highs along the way delivering massive returns.

Here are 10 winning shares that could be on their way to becoming all-time greats.

Company

Price

P/E

Yield (%)

% Rise 12 Months

Market Cap (in millions of pounds)

Compass Group 715 pence 17.0 2.9 32.2 13,470
Delcam (LSE: DLC.L  ) 770 pence 16.1 1.0 86.7 61
Diageo (LSE: DGE.L  ) 1691 pence 18.5 2.6 49.9 42,272
Dialight 1091 pence 26.4 1.1 49.4 354
Intertek 2760 pence 22.0 1.4 49.2 4,432
Iomart (LSE: IOM.L  ) 163 pence 23.0 0.7 66.3 164
John Wood (LSE: WG.L  ) 813 pence 15.3 1.3 56.8 3,026
Paddy Power 52.9 euros 21.8 2.2 57.2 2,050
Prudential 797 pence 11.6 3.3 35.5 20,372
Wynnstay Group 405 pence 11.9 2.1 19.1 67

Four shares stood out.

1. Delcam
Delcam is proving that a company can thrive as a supplier to the manufacturing sector. Delcam's specialist design software is used by manufacturers designing footwear to false teeth.

Delcam has done this with considerable success. In 1998, Delcam reported record sales of 13.7 million pounds. Turnover has since increased year on year to reach 41.9 million pounds for 2011.

This morning, Delcam announced interim results. The company reported an increase of 15% in sales. This flowed through to a 77% rise in earnings per share and a massive 43% uplift in dividend.

The EPS at Delcam is expect to increase 12.4% for 2012, to be followed by a 10.3% advance again in 2013. This means that the shares currently trade for 16.2 times the 2012 forecast. However, if the split in earnings between the first and second half in 2011 is matched in 2012, then there is the real possibility of a substantial upgrade in profit forecasts.

Delcam has proved its business model can thrive even in recessionary conditions. As such, it probably deserves a premium rating.

2. Diageo
Shares in top-brand brewer Diageo have frequently been trading at all-time highs: 1,000 pence in 2006, 1,140 pence in 2010, and 1,400 pence in 2011. At the end of July this year, the shares breached 1,700 pence.

This morning, Diageo announced full-year results for 2012. These results again demonstrated the progress of the business that has supported the share price rises.

For 1998, Diageo paid shareholders 10.8 pence in dividends. This payout has since been increased every year, hitting 43.5 pence for 2012. In the last seven years, EPS has increased from 62.0 pence to 94.2 pence. Diageo even managed to grow earnings and dividends through the financial crisis. Further EPS growth is expected. The market is looking for an 11.8% rise for 2013.

Diageo reported strong growth in emerging markets. Of some concern, however, will be the 1% decline in sales volumes to European markets.

Some investors might think Diageo is priced for a fall. My belief is that the company's success has earned the shares a "quality of earnings" premium. Unless Diageo's business suffers a significant decline, I would expect the shares to continue to look expensive.

3. Iomart
The market has taken a shine to Iomart lately. In the last three months, shares in the data-hosting firm are up 27.3%.

This follows a strong set of final results announced in May. Iomart reported a 33% advance in revenue, a 96% increase in EPS, and a dividend hike of 38%. At the time, Iomart's chief executive, Angus MacSween, described data hosting as an industry that is still in its infancy. MacSween expects the sector to grow significantly in the future and for Iomart to thrive in that growth.

With more services moving into the cloud and data consumption ever increasing, it is hard to argue with MacSween. The Iomart share price suggests that the investor community agrees. As with many smaller companies, Iomart shares could step back significantly in a broader market decline. Such an outcome could present canny investors with an opportunity to buy a company with fantastic prospects at a reasonable price.

4. John Wood
John Wood is a provider of engineering services to the power production and natural resources sector. Many companies in this sector have seen their share price suffer recently. However, John Wood shares are up 56.8% in the last 12 months.

The company's recent interim results suggest what has led the share price to soar. In the first six months of 2012, John Wood delivered a 36% rise in revenues. The EPS increased 48% and the interim dividend lifted by 46%. Today, the market is expecting Wood to deliver $0.86 (54.4 pence) of EPS for the full year.

John Wood also has an impressive dividend record. The shareholder payout has increased from $0.065 per share in 2006 to $0.15 per share in 2011. Analysts expect that the company will increase dividends by more than 10% per year for the next two years.

The market has rewarded John Wood's operating success with strong share price growth. If you are looking for a cheaper alternative in the sector, Hunting (LSE: HTG.L  ) might be worthy of further research. Hunting trades on 13.8 times the 2012 consensus forecast, falling to just 11.9 times expectations for 2013.

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Further investment opportunities:

David does not own shares in any of the above companies. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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