Rich pickings in energy stocks

Continental European smaller cap share prices traditionally begin each year energetically, yet 2008 was distinctly different.

"There was no anticipation of upbeat trading statements from company managers as the impact of the credit crisis lingered" said Crispin Longden, manager of the European Assets Trust. "European economic data was better than feared, at least for quarter one, whilst there were few negative surprises following annual results. However, concerns persist over rising energy and food prices stimulating underlying inflation and sabotaging economic growth".

Unsurprisingly, the energy sector bucked the downwards trend but the smaller company universe also has rich pickings. "Our Continental European small cap portfolios have recently benefited from holdings such as oil drilling component specialist Schoeller Bleckmann of Austria, who appreciated 13.4%," said Longden.

Whilst uncertainty prevails, caution over companies with a limited trading history is prudent says Longden. "It's easier to arrive at a valuation for stocks whose longevity through the economic ups and downs allows forecasts to be accurately modeled rather than simply guessed at".

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