It’s a sensible approach to build in a healthy ‘margin of safety’ into the price you are willing to pay for shares in any company, especially in the current economic environment. The investment risk can be mitigated further when the company is sitting on a hefty cash pile and net cash backs up half the share price of the company in this report.
It also pays to focus on businesses that have potential to grow through the economic downturn. It may seem counter intuitive to consider shares in a company that specialises in consumer credit at this point of the cycle, but one small-cap company that’s well under the radar has strong potential to deliver enhanced shareholder returns to investors taking a 12-month view.
Of course, there are risks with any investment and it is important to read the risk assessment in this report and more importantly, you should never invest more than you can afford to lose, especially in such uncertain times. It's also a drawback that the free float of shares is small, meaning there is less liquidity and share price moves can be accentuated.Download PDF