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It's not often you get the chance of buying into a cash-rich company rated on a modest 10 times earnings estimates, and with the risk to earnings firmly skewed to the upside. Moreover, with capital expenditure accounting for a small proportion of annual profits, cash generation from the business is mightily impressive, so much so that the board of this £85m market cap company has repurchased over 60 per cent of the issued share capital at a total cost of £41.4m since commencing a buy-back programme nine years ago.

It certainly makes financial sense to do so as buying back shares on an equivalent current earnings yield of 10 per cent (the reciprocal of the PE ratio) is smart business with cash deposit rates so low. It not only takes excess stock off the market, and enables larger shareholders to take some profit off the table without holding back the share price, but it's significantly earnings enhancing too.

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