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Simon Thompson

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

20 August 2014

Simon Thompson

About Simon Thompson

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

Recent articles

  1. 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.’

  2. Cash rich small cap buy

    Cash rich small cap buy

    19 August 2014

    ‘Shares in an Aim-traded insurance sector investment company are oversold and a decent medium-term buy ahead of the forthcoming results’

    ‘Interestingly, the company’s board is now taking advantage of the share price drift to buy back shares. At the end of last week, the company bought back shares for cancellation at prices between 126p and 127p. This makes a lot of sense as it removes excess stock off the market, while giving a boost to book value per share. Remember for every share repurchased at these prices, the company is in effect buying net assets of 202p, so is getting 75p a share of assets for free. I would expect further share buy backs to follow as long as the shares are trading on such a deep (35 per cent) discount to book value.’

  3. High yield small cap play

    High yield small cap play

    19 August 2014

    ‘A small cap specialist finance provider provides a high yield and decent growth prospects too’

    ‘As a result of its presence in this niche market lending area, the company is now viewed as a preferred partner and is in discussions with a number of institutions on the provision of SME finance. The other benefit of the business model is that it offers opportunities for attracting funding across different platforms.'

  4. Try fast for gains

    Try fast for gains

    18 August 2014

    Shares in a distributor are worth buying ahead of a trading update next month

    'The release confirmed that "management is confident that it can continue to deliver another strong performance and current trading in line with these expectations." In other words, organic sales are still coming though. That gives me a fair degree of confidence too that the forthcoming trading update at the annual meeting on Thursday, 18 September could lead to another raft of earnings upgrades from analysts. It also makes me feel comfortable advising a buy on the shares on a prospective PE ratio of 15.'

  5. Making a very fair point

    Making a very fair point

    18 August 2014

    Shares in an Aim-traded debt management specialist look primed for a re-rating in the coming months

    ‘However, the real profit growth will come in the second half when all these acquisitions start to contribute. In fact, guidance is for second-half adjusted pre-tax profits to rise from £4.8m in 2013 to £6.7m, and it is this earnings momentum that makes the shares an attractive proposition. It also makes the 20 per cent pull back in the share price from the April high of 164p look like an ideal buying opportunity to me’

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