20 shares for the future

The big news is: it's probably not the news we're reading that matters.

I'm writing this article on Wednesday, the day of the chancellor's autumn statement. It's a big news day for most financial journalists. It's Philip Hammond's first, and the government's first major statement on tax, spending and the economy since the vote to leave the European Union.

By the time you read this, it will all be over, and you will know what the headlines were. In all likelihood, most people will have forgotten them well before the next big set piece, the Budget in 2017.

In Harry Potter and the Philosopher's Stone (the first HP film), an owl delivers Harry a letter inviting him to attend Hogwarts (the wizard school), but his cruel muggle (non-wizard) guardian Vernon Dursley destroys it.

As with the Budget, the detail is often buried in really big documents that take months to considerMore letters arrive, but Dursley burns them. One day, squadrons of owls deliver a blizzard of letters, thousands of them, down the chimney (Dursley's blocked the letter box), just to make sure Harry gets the message.

Journalists feel like Harry when the chancellor makes his speeches, except there isn't one message repeated a thousand times, there's thousands of messages repeated a thousand times; by public relations people, think tanks, companies, fund managers, politicians and pressure groups.

Many of them are trivial. There's much misdirection. There's so much noise in the news on days like this all of the hooting owls in Harry Potter wouldn't be able to drown it out.

In some ways, the half-year or quarterly statements put out by companies are like the chancellor's statements. A company publishes some headlines about how it has performed financially, and maybe what it is doing to improve. We may get the news many times over, respun by analysts, and journalists.

But, as with the Budget, the detail is often buried in really big documents that take months to consider. For companies that document is the annual report. Often the significant stuff is in there.

Not much to say for itself

Dewhurst is not a company that has much to say for itself. Even so it published its annual report in January, it has published a statement coinciding with its Annual General Meeting in February, a half-year report in June, a trading update in August and another earlier this month.

In February, it issued a classic profits warning. The strong pound had sucked in cheap imports from foreign competitors and it reported an unexpected decline in demand for one of its product ranges, ATM keypads.

The company reckoned a recovery would happen, but couldn't say when and warned that revenue and profit would be well below the level achieved in the year to September 2015 (revenue was a shade under £46 million).

Occasionally the cacophony does reveal something fundamental about the business itselfThe half-yearly report contained little to suggest a recovery was nearer, but the trading update in August did. It also said the devaluation of the pound after the vote to leave Europe meant overseas sales are now more valuable.

November's trading update reported full-year revenues of over £47 million, more than in 2015, though we'll have to wait for the full-year results in December, and then the Annual Report, for the full story.

Long-term investors wouldn't be long-term investors if we acted on noisy information like this, but occasionally the cacophony does reveal something fundamental about the business itself.

News is a seductive distraction for long-term investors and so we need to restrict how much we dwell on it. I read the news relating to the shares I follow once a month, when I update and publish the top 20 shares ranked by the Decision Engine. Here they are:

I'm looking for information that might change my opinion about what makes these companies good long-term investments. In particular, the five criteria the Decision Engine uses.

I should be succinct, then:

In a trading update, Science said it's a beneficiary of the devaluation of the pound, since nearly half its revenues, consultancy fees, are earned in euros and dollars, yet most of its employees, research scientists in the UK, are paid in pounds.

Batteries are a relatively small part of Solid State's diversified line-up of productsSolid State confirmed that Creasefield, a manufacturer of battery packs acquired in May, will make a contribution to profit in its first year as part of the group, bringing its battery division back to life.

Production of batteries had almost ground to a halt because of a collapse in demand from the oil industry, its main market, but demand is reviving now and Creasefield sells a wider range of batteries in other industrial markets.

The combined battery business is also operating more efficiently, which, along with the opportunity to sell new products to existing customers and acquire new customers for existing products, is one of the rationales for Solid State's acquisition policy.

Batteries are a relatively small part of a diversified line-up of products, but they should be a more reliable contributor in future. Solid State is probably a stronger company, therefore.

I swept into my local Next store last month and kitted myself out for the winterUncharacteristically, Next has cut prices to boost revenues, which it expects to be flattish for the full-year to January 2017, but the company says its restricted any decline in profit to low single digits due to cost savings. On the plus side, that should mean it is still highly profitable.

I swept into my local store during a three-day sale last month and kitted myself out for the winter. Compared to other fashion retailers, it remains a nice place to shop (I took my daughter with me for a second opinion on the clothes and the store!).

There's been no news from XP Power, but it comes highly recommended!

Big setback for Castings

In a typically terse statement, Castings reported revenue and profit down significantly in the first half of its financial year. Profit fell 26%, due, the company says, to a softening in demand and the end of a major contract.

Varying demand is a fact of life for Castings, which manufactures components for cars and vans, and it hasn't stopped the company growing profitably over the years despite the odd setback.

With Brexit, fluctuating currencies and Trump, FW Thorpe says it's 'keeping its fingers crossed'.This is a big setback though, and comes at a time of uncertainty for Castings which, like many exporters to Europe, is waiting to hear what kind of Brexit the government will achieve.

It's highly rated by the Decision Engine, partly because the market ascribes it a low valuation, so the Decision Engine's recommendation is contrarian, based on confidence in the firm and its management.

Although chief executive David Gawthorpe is leaving, the company remains in the hands of chairman, Brian Cooke, a former chief executive and significant shareholder, who has been with Castings since 1960! He will be joined by Adam Vicary as chief executive, an internal appointment.

At FW Thorpe's AGM, the stalwart lighting company reported a "pleasing start" to the year. What with Brexit, fluctuating currencies, and "The Donald", the company says it's "keeping its fingers crossed".

Aren't we all!

Animalcare also held its AGM last week. I trekked up to York for it, and will write it up in a forthcoming article.

Contact Richard Beddard by email: richard@beddard.net or on Twitter: @RichardBeddard

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.