If you're looking for income, you might want to consider furnishing your portfolio with a few shares in ScS Group (ScS). This purveyor of sofas and flooring, which operates nearly 100 stores nationwide, is new to the London Stock Exchange, having listed in January at 175p. It's enjoying a tailwind from the cyclical upswing in the housing and improving consumer credit market. What's more, thanks to a highly cash-generative operating model, the shares promise to pay a 7 per cent yield while the company continues to pursue growth.
- Generous yield
- Cash-rich
- Cyclical upswing
- Low rating
- Broadening appeal
- Interest rate rise risk
- House of Fraser roll-out risk
ScS has certainly made a comeback. In 2008 it was bought out by private equity firm Sun Capital for just £1. At the time, the retailer was in a real jam. The financial crisis caused the housing market to collapse and consumer confidence plummeted. And the freezing over of the consumer credit market proved a lethal blow for a company that sells most of its goods on tick. Moreover, credit insurance was withdrawn as the economy flat-lined. Since most of ScS's suppliers were using invoice discounting to fund working capital, they couldn't operate without credit insurance. But now, things look different.