You are here:

Piotroski update

Created:
4 August 2008
Written by:
David Stevenson

The overall profit on this portfolio has fallen back from 4.6% to 1.7% - not a massive decline, but not entirely unexpected either as it's dominated by small caps. Romag has fallen back a bit on profit taking while Psion has had a bad month, falling by more than 25 per cent.

Advertising

I have to admit being somewhat perplexed by the weakness in Psion's share price, especially as it recently released a trading statement that said order intake for the first four months of 2008 had been strong and that it sees first-half results "in line with its expectations".

Anyway, just one change in the portfolio this week:

• Buy Victoria . This UK and Australian carpet maker has done a great job of building a solid business in the last few years in what must be a very difficult and competitive marketplace. Both return on capital employed (Roce) and the operating margin have been consistently increasing (at 10.52 per cent and 6.82 per cent respectively), borrowings are now down to £7m, cash is building up on the balance sheet (net cashflow per share was 79p last year) and the shares trade at 6 times earnings with a yield of 6 per cent.

Victoria operates in a very tough market with tight margins, but trading has been strong – results from June showed full-year pretax profit rising 27 per cent as group revenues increased 11.3 percent. Victoria also hiked the final dividend by 12 percent to 14 pence a share. Carpet sales within the UK were up 6.8 percent in a market that it estimates was down by around 5 percent, while its Australian division grew 12.5 percent in local currency. However, Victoria admits that margins are under pressure due to cost increases, which have yet to be passed on to customers. I'm betting that this company is in good enough shape to survive a rather depressed UK market and be able to weather any big downturn. At current valuations, the shares are a buy at 232p

The state of play:

Name EPIC Close Return %
Vodafone Group  VOD 1.3495 -3.9
Tenon Group  TNO 0.5525 125.5
Romag Holdings  ROM 1.46 47.9
Wynnstay Group  WYN 2.65 23.5
Psion  PON 0.89 -20.4
Getmobile Europe  GETM 1.1875 7.3
Mwana Africa  MWA 0.385 8.5
Tinopolis  TIN 0.455 54.2
Microgen  MCGN 0.515 8.4
Gladstone  GLD 0.19 -20
Air Music & Media Group  AMU 0.62 -4.6
SOLD or TAKENOVER
JS Real Estate  JSRE 6.925 53.9
Basepoint  BNT 1.835 29.2
Blooms of Bressingham Holdings  BBR 0.8625 32.7
Spring Group  SRG 0.375 -19.4
Harvey Nash Group  HVN 0.36 2.9
Peel Hotels  PHO 1.45 -11
Luminar Group Holdings  LMR 2.0075 -39.5
Stylo  STYL 0.26 -10.8
SciSys  SSY 0.2825 -33
Carnival  CCL 17.97 -21.4
Smart (J) & Co (Contractors)  SMJ 5 -22.5
Real Good Food Company (The)  RGD 0.0912 -51
Impellam Group  IPEL 0.705 -30
ChoicesUK  CHUK 0.1025 -64
average 1.7
FTSE 100 UKX 5420.7

You can also track this portfolio online; we assume an investment of £1,000 in each company and make no allowance for stamp duty or dealing charges.

  • Back to top

Products and Services from Barclays Stockbrokers.

The UK’s No.1 Stockbroker

Stocks and Shares

Contracts for Difference

Financial Spread Trading

Gilts and Bonds

Funds Market

FX

Education Centre

Trading Simulator

Advertorial Feature

Spread your risks with spread trading

With so many big moves in the world's financial markets, there have seldom been more opportunities around for spread traders. Isn't it time you joined them?

by Dominic Piccarda