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Digital and logistics businesses offer growth at fair value

Growth businesses are thin on the ground and buying them at cheap valuations is near impossible.
December 7, 2020
  • Smaller FTSE All Share companies aren't necessarily cheap when considered according to their size.
  • Digital and logistics businesses occupy top two FTSE All Share positions

There is cross-over between the FTSE All Share index and the FTSE Small Companies index. We run different growth at a reasonable price (Garp) criteria against the two indices, with the tests run on the FTSE All Share designed for large companies. Some smaller companies in the FTSE All Share may score well on the large cap tests but do worse on the small cap tests.

This month’s top-ranking FTSE All Share company is Clipper Logistics (CLG). The value-added logistics solutions and e-fulfilment business gets 8/8 against the large cap tests but fails our small cap screen’s basic value criteria. Our large cap screen requires the company to be cheaper than the median company against our version of the price-to-earnings growth (PEG) ratio, but the small cap screen requires companies to be in the bottom quartile.

The other FTSE All Share company that scores 8/8 on the large cap screen is IT infrastructure services business Computacenter (CCC).

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