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  Watching for Value and Growth Stocks

  •    Focused on the Mid-250 & Small Cap

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 My weekly column can be viewed every Tuesday afternoon at the Cambridge News website either direct or via the link here.

For those unfamiliar with my style or the kind of things I tend to look for, there are a few past articles to view from last year. 

BANGO was a subject from January 2012 and the shares have gone on to do very well.

Article penned January 15th 2012  

Those of you who are of a similar age to myself, will no doubt recall the early days of the mobile phone. You know the sort of thing, something which not only resembled a brick, but often felt like one too.

Fast forward to the present day and perhaps you are as amazed and maybe a little baffled as to what is now on offer as I am.

And, as a whole new industry has emerged from those early products, it has enabled a number of opportunities for fledgling company’s to grow.

Here in Cambridge, Ray Anderson founder and CEO of Bango had the foresight some years back to see where things were heading and thus pitched his business in a somewhat sweet place. In a nutshell, Bango provides the technology to enable the payment for apps and retail purchases on and via the mobile phone. In fact, it is the company behind providing the mobile payment platform that powers Blackberry app world app store, which is in itself a solid endorsement for its products. Additionally, it also provides the platform for the Opera app store, along with partnerships that include a number of major blue chip names such as Yahoo and Fox Mobile.

But, recent excitement here within the investment community would appear to have been the announcement last month of a deal with online retail giant Amazon. This saw the shares jump an impressive 17p in one day and the shares now stand at 74p.

However, at this point it is worth noting that no financials on the deal were announced, although this may well be down to binding confidentiality agreements. Indeed, this one deal may not yet be transformational for the company, but rather, serve as a further endorsement of its ability to deliver services for a market that looks set for continuing exciting growth.

As for deciding whether or not to Buy the shares here, or as to when, is no easy decision. Such Company’s can move quickly on new deals and alliances with big players, but equally fall on delays or failing to meet market expectations. In its case, Bango has thus far enjoyed mixed fortunes, the shares having once been up to £2.00, while also dropping below 50p. And while earnings have grown from £10M back in 2007 to last years £19.6M it has failed to deliver any meaningful profits.

And with a current market cap of £28M some may prefer to remain on the side lines. However, I have not put pen to paper here to argue against the investment case for Bango, rather the opposite. Much of the hard work and foundations has been done and laid, while growth prospects here look as exciting as ever. 

Apart from solid news on new business, the company is expected to deliver some sound pre-tax profits for the year ending 2011, with a Broker consensus for a figure of £2.1M.

That equates to a forward PER of 12 which would appear hardly expensive for a stock that could be on the verge of potentially exciting future growth.

The balance sheet looks to be in good shape too with cash of £2.8M,

While it is also interesting to see Liontrust and Legal&General increase their holdings recently to 12 and 3% respectively.

 

A more recent subject was St Ives which I covered in September of last year.

 

 I STUMBLED across an old financial page last week dating, way back to the sixties. While it goes without saying that I was understandably absorbed and while I might add the obvious, that things have certainly changed, what really intrigued me, was just how much the sectors and players have altered.

No more sectors such as Drapery and Stores, or for that matter some of the now defunct company names that were so familiar back then.

But, enough of this nostalgia, as it got me thinking about just how Company’s need to continually re-invest and sometimes re-invent in order to keep in the game. And certainly today, with the ultra competitive and ever changing global economy, businesses need to keep both eyes on the ball. Hopefully, in the case of fully listed St. Ives Group (SIV), there could be a case of actually shutting the door, before the horse has had time to bolt. 

With its roots firmly entrenched in printing, such a company as SIV was certainly going to suffer more than most over the last few years.

With a growing media migration to the internet along with the advent of the likes of kindle, operators in such a market find themselves squeezed from both falling sales along with decreasing margins. But, while some smaller players may well follow others before them into the financial wilderness, SIV just might be worth a look at the current price.

That, as I write, is 77p per-share which values the whole business at £95m.

 With sales for last year coming in at £297m along with pre-tax profits of £16.9m it is clear to see that SIV remains a decent sized operation. That is, despite a decline in annual turnover from the £400m of a few years back, along with the disposal of a number of businesses. However, the offloading of a number of printing interests over recent years should prove to be a good move and was surely a necessary step in the company’s transition to a greater presence in the publishing market services area.

One of the first to go was its loss making German Johler Druck printing plant, culminating in the more recent closures of plants in Blackburn, Crayford and Westerham. Collectively, these sites now on the market should recoup more than £7m for SIV, with Crayford due to complete any time. What remains, is a more focused business that should be boosted by recent acquisitions. These provide services such as market data for new and existing clients, along with tailored market research products.

The result, should see a new chapter for the company and prove to be a good mix ensuring that SIV is no longer reliant on its printing arm which still provides the bulk of income.

Full year results are due any day now and expectations are for pre-tax profits of £23.9m giving EPS of 15p. That implies a PER of only 5, which together with a yield of 4.6% looks attractive. Major shareholders include Standard Life with 7.6% along with Schroders holding more than 4%.

TWO TO WATCH.

  1. Back in April I took a speculative look at N. American Oil player Nighthawk, then 3.6p. While recent positive newsflow has seen the share price gush to a current 6.4p, they could have further to run.

  2. Shares in Construction companies and suppliers have perked up a bit of late.

    Marshalls, the paving and specialist products group may be worth a look as a longer term recovery play at the current 86p.

 

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