[SharePad] Screening For My Next Long-Term Winner: ASOS

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28 July 2021
By Maynard Paton

One of my favourite screening strategies is to hunt for attractive growth companies with unloved share prices.

The criteria I use for these searches are:

  1. A negative share-price performance since the start of the year;
  2. A compound 5-year earnings growth rate of 10% or more;
  3. A forecast 1-year earnings growth rate of at least 0%, and;
  4. Net borrowing of zero or less (i.e. a net cash position).

The other day the filters returned only 14 matches:

(Source: SharePad)

I selected ASOS because the company:

  • Had the largest market cap on the list;
  • Boasts an incredible growth story, and;
  • Recently issued a trading statement that wiped 18% off the share price.

Read my full ASOS article for SharePad.

Maynard Paton

[SharePad] Small-Cap Spotlight Report: CALNEX SOLUTIONS

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15 July 2021
By Maynard Paton

Warren Buffett admitted the other year that he had not bought shares at an IPO since 1955.

They’re picking the time to sell to you; I like it when I am picking the time to buy“, the investing master warned when asked about flotations.

Mind you, every great share went public at some point… and who would not want to have bought, say, Microsoft, at its IPO? (a 3,717-bagger since).

SharePad shows 47 companies joined the UK market during 2020:

(Source: SharePad)

I suspect Mr Buffett’s warning would apply to the majority of those 47 names. But maybe not to small-cap Calnex Solutions, which at first glance appears to be one of the more appealing new issues of last year.

Immediate highlights include:

  • A track record of profitable expansion;
  • Prospects of future double-digit growth;
  • A founder chief executive with a significant shareholding;
  • A competitive position based on in-house technical research, and;
  • Accounts that display high margins and net cash.

Could Calnex become a long-term IPO winner?

Read my full Calnex Solutions article for SharePad.

Maynard Paton

[SharePad] Screening For My Next Long-Term Winner: IMPAX ASSET MANAGEMENT

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14 June 2021
By Maynard Paton

Everybody loves shares that keep going up.

SharePad lists 167 names that have consistently delivered 15% or more annualised returns during the last five years:

(Source: SharePad)

The shares of fund manager Impax Asset Management have certainly kept going up; they have almost tripled during the last twelve months and have 20-bagged since 2016.

The winning combination appears to have been:

  • Impressive profit growth driven by favourable long-term trends;
  • A ‘scalable’ business that could service extra customers without a commensurate increase to the workforce;
  • A shareholder register dominated by company insiders and a key client, and;
  • A modest valuation that gave scope for a significant P/E re-rating.

Let’s take a closer look.

Read my full Impax Asset Management article for SharePad.

Maynard Paton

[SharePad] Small-Cap Spotlight Report: WANDISCO

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21 May 2021
By Maynard Paton

The market is home to many companies with ground-breaking products that boast credible growth stories told by persuasive management…

…but which also need a bit more money from shareholders to see them through to profitability.

Sometimes they get the money they need and things work out.

And sometimes they get the money they need and, well, keep coming back for more.

WANdisco is one of those companies that keeps coming back for more.

Investors have handed $217 million to this software specialist since 2012…

…and yet customers, sales and profits remain extremely elusive.

But could WANdisco finally come good during 2021 after signing milestone deals with Microsoft and Amazon?

The directors are naturally optimistic, although they appear reluctant to help fund the company themselves.

Read my full WANdisco article for SharePad.

Maynard Paton

[SharePad] Screening For My Next Long-Term Winner: VENTURE LIFE

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23 April 2021
By Maynard Paton

I like companies that boast significant net cash. My reasons include:

  • Limited risk of funding difficulties should trouble strike;
  • Management might be sensible by holding ‘rainy day’ money;
  • The cash position may have resulted from superb profit generation, and;
  • The share price could be less volatile (especially if the cash position represents a large part of the market cap).

I therefore applied the following filter criteria within SharePad to identify some reasonable cash-flush businesses:

  • Trailing twelve-month net borrowings of no more than zero (i.e. a net cash position);
  • A market cap of at least £50 million;
  • Net cash of at least 10% of the market cap, and;
  • A trailing twelve-month operating margin of at least 1% (to include only profitable companies).

I found 38 matches, and Venture Life attracted my attention because the company:

  • Carried a significant 28% of its market cap as net cash;
  • Operated within the generally favourable healthcare sector, and;
  • Published impressive results last month.

Read my full Venture Life article for SharePad.

Maynard Paton

[SharePad] Small-Cap Spotlight Report: NORCROS

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24 March 2021
By Maynard Paton

Let me start by confessing this article covers pension deficits.

What follows may not be that thrilling and does require you to concentrate. But please stick with me, especially if you have ever fallen victim to a ‘value trap’.

A burdensome pension scheme is a common reason why companies trade on permanently low ratings. The market essentially believes too much of their future profits will have to plug a retirement ‘black hole’ instead of being paid out as dividends.

A good example is Norcros, a £214 million manufacturer of bathroom showers, taps and tiles.

This share has stubbornly traded on a single-digit P/E for years…

Source: SharePad

… and studying the group’s pension situation goes some way to explain why.

Read my full Norcros article for SharePad.

Maynard Paton

[SharePad] Screening For My Next Long-Term Winner: BEST OF THE BEST

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10 March 2021
By Maynard Paton

One of my favourite SharePad screens identifies good-quality companies that have grown without acquisition. The screen uses the following filter criteria:

  • Positive five-year turnover and operating profit growth;
  • A minimum 15% for both return on equity and operating margin;
  • Net borrowing of no more than zero (i.e. a net cash position), and;
  • A five-year acquisition spend of zero.

I ran the screen the other day and found 28 matches. I studied Best of the Best — or BOTB as it now calls itself — because I was already aware of:

  • Some very remarkable financials;
  • An extraordinary share-price performance, and;
  • Management deciding not to sell the business despite “extensive talks with a range of parties”.

Read my full Best of the Best article for SharePad.

Maynard Paton

[SharePad] Small-Cap Spotlight Report: ARGO BLOCKCHAIN

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24 February 2021
By Maynard Paton

Let’s start with a wealth warning:

  • This article covers bitcoin miner Argo Blockchain;
  • I am not a bitcoin expert;
  • The bitcoin price is highly unpredictable;
  • Argo’s share price is highly unpredictable, and;
  • Argo issues frequent updates.

Still, Argo is a company worth studying… not least because the shares have soared 25-fold in just two months:

(Source: SharePad)

Let’s find out what is happening.

Read my full Argo Blockchain article for SharePad.

[SharePad] Screening For My Next Long-Term Winner: IG Group

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11 February 2021
By Maynard Paton

For some time now IG Group has been flashing on my SharePad filters.

According to my screens, the spread-betting firm offers:

  • High margins;
  • Decent returns on equity;
  • Cash-rich accounts;
  • Attractive five-year growth;
  • A lack of past acquisitions, and;
  • A modest P/E.

Those characteristics are an unusual mix in a market presently bereft of obvious quality bargains.

Let’s take a closer look.

Read my full IG Group article for SharePad.

Maynard Paton

[SharePad] Small-Cap Spotlight Report: LoopUp

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29 January 2021
By Maynard Paton

I have started a series of occasional articles for SharePad in which I shine an investigative spotlight on particular small-caps.

My aim is to demonstrate how to analyse companies in SharePad and beyond to help you become a more informed investor.

I start with LoopUp, a £44 million developer of software for remote meetings and conference calls.

The other month the company issued a sales warning that caused a 50% share-price crash.

LoopUp should have been a pandemic winner last year selling its remote-meeting systems… so why has the company disappointed?

Read my full LoopUp article for SharePad.

Maynard Paton

[SharePad] Screening For My Next Long-Term Winner: Avon Rubber

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21 January 2021
By Maynard Paton

Happy 2021!

I trust SharePad will help bring you good fortune in what could be another twelve months of financial thrills and spills.

As usual I plan to trawl the market for interesting shares that I hope assists your company analysis and stock-picking.

I start the year with Avon Rubber, a FTSE 250 member that has rewarded shareholders handsomely since 2009 but recently experienced a trading wobble.

Read my full Avon Rubber article for SharePad.

Maynard Paton

[SharePad] Screening For My Next Long-Term Winner: Manolete Partners

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20 November 2020
By Maynard Paton

I am always looking for ‘multi-baggers’ — investments that can double, triple, quadruple or more.

And here’s some very good news: I have stumbled on a company that can find them for me.

Not just the occasional five-bagger or ten-bagger mind, but 20-baggers.

It’s incredible stuff, especially as the track record of success extends for many years and the gains are typically realised within twelve months.

The company behind these multi-baggers is Manolete Partners, which I discovered by employing a very straightforward SharePad screen.

Read my full Manolete Partners article for SharePad.

Maynard Paton

[SharePad] Screening For My Next Long-Term Winner: Jarvis Securities

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05 November 2020
By Maynard Paton

Today I have returned to one of my favourite SharePad screens.

This screen applies two ratios favoured by ‘quality’ investors — operating margin and return on equity (ROE).

The main filter criteria are:

  • An operating margin (latest and 10-year average) of 20% or more, and;
  • An ROE (latest and 10-year average) of 20% or more.

Any business with a margin and ROE consistently above 20% is probably quite special.

I ran the screen and decided to study Jarvis Securities, a small stock-broker best known for x-o.co.uk.

Read my full Jarvis Securities article for SharePad.

Maynard Paton

[SharePad] Screening For My Next Long-Term Winner: Polar Capital

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30 September 2020
By Maynard Paton

I am not a great fan of the fund-management industry.

I cannot think of another sector where the employees collect enormous salaries while the customers pay hefty fees and sometimes get nothing in return.

Quite often us amateur investors are better off with simple index trackers rather than falling for the industry’s persuasive advisers and glossy brochures.

Yet here I am about to study Polar Capital — a fund manager that might actually exhibit ‘pandemic proof’ qualities given its investment bias towards technology and healthcare.

Read my full Polar Capital article for SharePad.

Maynard Paton

[SharePad] Screening For My Next Long-Term Winner: Fuller, Smith & Turner

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10 September 2020
By Maynard Paton

First, a wealth warning.

The last price-to-book ‘bargain’ I looked at for SharePad was Hammerson.

Back then investors were in theory able to purchase £1 of assets for just 30p. The share price has since lost 75%.

A few tweaks to the same stock screen now leads me to Fuller, Smith & Turner

This pub group has suffered during the pandemic, but sleuthing via SharePad reveals substantial freehold assets that the balance sheet may significantly undervalue. 

This property backing may limit further downside as the group re-opens its pubs and aims to recover.

Read my full Fuller, Smith & Turner article for SharePad.

Maynard Paton