Tip of the month

My tip this month is Renishaw, the maker of high-tech electronic measurement equipment, for four reasons that should see its share hit 400p during 2009.

First, the company has delivered uninterrupted yearly sales growth, along with high operating margins of 18.5 per cent, solid dividend increases and good cash generation, without incurring debt.

Second, it has returned latest-year pre-tax profits of £43.1m on turnover of £201m. Broker Numis Securities forecasts 2009 profits of £44.3m on sales of £223m.

Third, the price is cheap yet the company has all the qualities that frequently kept its shares on a multiple of 20-times earnings as against just over half that now.

Finally, Renishaw benefits from a weak pound—most sales come from Europe (38 per cent) and Asia Pacific (30 per cent).

Buy Renishaw at 330p, with a 20 per cent stop loss to protect you against fallbacks.

Stockmarket and alternative investments can fall as well as rise in value. Readers should consult their own professional advisers.