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Simon Thompson

Time to make the link Shares in a technology business specialising in the delivery of high quality video and data are in the frame ...

26 August 2014

Simon Thompson

About Simon Thompson

Winning stock and trading ideas from the creator of the Bargain Portfolio

Recent articles

  1. Funded for acquisitive growth

    Funded for acquisitive growth

    21 August 2014

    Shares in a retail property company are trading unfairly on a hefty discount to book value

    ‘With the benefit of a clean balance sheet, the company is now far better positioned to take advantage of market opportunities both for direct investment and joint venture asset management. I estimate that the company has a pro-forma EPRA net asset value of £53.5m, or well over 50 per cent above its current market value, a harsh valuation given that the balance sheet has been de-geared and the company is well placed to take advantage of acquisition opportunities’

  2. Running small-cap profits

    Running small-cap profits

    21 August 2014

    An Aim-traded investment company looks well placed to benefit from any improvement in investor sentiment towards small caps

    ‘I can start to see recovery potential in the shares of chocolate maker Thorntons if the company delivers the 30 per cent EPS growth analysts predict in the current fiscal year to end June 2015. On this basis, the forward PE ratio drops from around 13 to 10. Another core holding is Tribal, a company providing schools and universities with student management systems, inspections and surveys. The shares are rated on a modest 13 times earnings estimates and are a live IC buy tip.’

  3. Glimmers of light for PV

    21 August 2014

    ‘A solar-wafer manufacturer has issued a mixed set of results, but the future looks far brighter’

    ‘It’s never ideal for a company to rack up a chunky operating loss, but more important is the cash implication. In this regard, the net cash position declined from €39.2m to €35.4m (£28.2m). Based on 160m shares in issue, net funds were 17.7p a share. Add to that next month’s cash payment of €8.7m, or the equivalent of 4.4p a share, and proforma net cash is around 22p a share. In other words, the shares are priced well below the level of the cash pile.’

  4. Communicating a break-out

    Communicating a break-out

    20 August 2014

    Shares in a small-cap marketing services provider are primed for a re-rating

    ‘The company currently has 195m shares in issue and a market capitalisation of £132m. Factor in a year-end net debt of £40m, and this gives an enterprise value of £172m, or 6.3 times cash profits. Apply the same earnings multiple to next year’s cash profit forecasts gives an enterprise value of £199m. From this sum deduct estimated net debt of £29m at the end of next year and if investors maintain their rating on the shares then the equity would be valued at £170m, or 87p a share. That’s almost 25 per cent above the current share price.’

  5. Pledged for recovery

    Pledged for recovery

    20 August 2014

    Shares in a small-cap pawnbroker and money lender are worth buying ahead of an earnings recovery

    'I see potential for the company to cherry pick distressed profitable pledge books off rivals now that its own pledge book has stabilised at around £38.3m. Furthermore, the interest component of the pawn service charge was only down from £15m to £14m in the first half of this year, indicating an increase in the yield on the pledge book and reflecting an improved ageing profile and higher rate of interest charged. And with borrowings accounting for only a quarter of the company’s £50m debt facility, there is ample funding available to boost lending through selective earnings enhancing acquisitions.'

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