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18 March 2020
By Maynard Paton
Recent market ructions have sent many shares tumbling — and perhaps created some buying opportunities.
Amid the mayhem, I devised a straightforward screen. I simply looked for decent-sized businesses that were still expected to grow, paid a dividend and were conservatively financed.
I applied the following criteria within SharePad to identify some respectable candidates:
- Forecast earnings per share growth of at least 10% this year;
- A market cap of £250 million or more;
- Must have paid a dividend last year, and;
- Net borrowings of less than zero (i.e. a net cash position).
I then ordered the shortlist based on how far each share price had fallen since its 52-week high.
I selected AB Dynamics because, of the names on my shortlist, I knew AB possessed a reputation for ‘business quality’ and its shares had fallen among the furthest.
Read my full AB Dynamics article for SharePad.
4 thoughts on “[SharePad] Screening For My Next Long-Term Winner: AB Dynamics”
I had a look at AB but it was a let down
I was hoping for a business with 2 attributes:
1) an installed base of testing equipment that would benefit from high levels of captive repeat revenue from the consumables requried to run these tests
2) large % of sales of testing software that delivered high margin saas recurring revenue.
Unfortunately this isnt AB
Thanks for the comment. Yes, ABDP has no/little recurring revenue. Factory shutdowns by customers is not encouraging. Can’t see development budgets for tomorrow’s cars being maintained when today’s cars are not being made. ABDP’s latest statement did refer to potential deferred orders. The long lead time for orders means the company has plenty of work in hand, but the pipeline may well dry up beyond that.
Despite its cash buffer it seems a fair weather stock.
I always think its a shame for small UK private investors that generally if you want stocks with high margin recurring revenues from an installed base of equipment as opposed to software that you have to look at the US market.
Thanks John. Fair point. The US market does offer a lot more variety (and quality) than the UK market.