Tip of the month

My tip this month is Hornby, the toy specialist, which has built up a head of steam that should see its share price hit 200p by early 2009. In the year to March 31, 2008, the company made a pre-tax profit of £9m on sales of £56m, both 19 per cent up. Profits of £8.8m are anticipated for the current year.

Hornby's Airfix sales last year—at £5m—comfortably beat City forecasts. In May of this year, Hornby bought competitor Corgi, best known for its die-cast model cars, and its new acquisition looks likely to deliver much-improved sales. Another Hornby product, Scalextric, will launch a new James Bond-style digital slot car this autumn on the back of the next Bond film, Quantum of Solace.

Hornby's European operations delivered the best profits this year. The weak US dollar dampened revenues across the Atlantic, but Hornby should be able to improve market share given its innovative product range.

Buy Hornby at 143p with a trailing stop loss at 20 per cent to protect you against any major stock market falls.