Read a set of company results, and chances are you will spot a reference to Trustpilot. Examples of quoted businesses mentioning the popular review website include:
AJ Bell:“Our operational performance indicators have shown excellent levels of customer service as demonstrated by our high 4.5-star Trustpilot score.“
AO World: “Over 350,000 Trustpilot ratings, averaging an “Excellent” 4.6/5 stars.“
Big Yellow: “We have over 3,200 reviews from the independent review site TrustPilot. These reviews average a 4.7 out of 5-star rating, labelled as “Excellent” on the TrustPilot ratings scale.”
Procook: “We are pleased to have retained our excellent-rated Trustpilot score of 4.8.“
Redde Northgate: “Customer satisfaction is the cornerstone of our business success and the ‘excellent’ satisfaction scores achieved across our businesses from Trustpilot.“
Redrow: “We continue to be rated as ‘excellent’ on Trustpilot.“
ScS Group: “Improved Trustpilot rating to the maximum 5 stars, maintaining our ‘Excellent’ rating with over 370,000 reviews.”
Travis Perkins: “The experience with Toolstation remains best-in-class with the business achieving a 4.6-star rating on Trustpilot.“
With so many quoted companies trumpeting their Trustpilot reviews, is Trustpilot itself worthy of a 5-star investment rating?
***SharePad New Subscriber Special Offer*** Readers of my blog can claim one month of free data. Click here for details.
20 October 2022 By Maynard Paton
Difficult market conditions have led to depressed ratings for many asset-flush shares.
Hence a new screen to pinpoint companies offering cash-rich balance sheets and market caps below their book value. I have attempted to avoid ‘value traps’ by demanding the shares pay a dividend and offer a history of trading above book value.
The exact filter criteria I employed for this search were:
A price to net tangible assets of no more than 1;
A dividend being paid during the most recent year;
A 10-year average price to net tangible assets of at least 1;
Net borrowings less total leases of no more than 0 (i.e. a net cash position excluding IFRS 16 lease obligations), and;
A share price denominated in pounds sterling.
I applied the screen the other day and SharePad returned 22 matches:
I selected Redrow from the five house builders at the top of the list because the group’s recent results included very clear guidance:
Redrow’s own projections put its 400p shares on a P/E of approximately 4 and a yield of at least 8%
Combined with a net asset value of 554p per share that gives a price to book of 0.72, the FTSE 250 constituent is very much trading at the ‘deep value’ end of the market spectrum.
A trio of upbeat trading statements caught the market’s attention this summer.
The first occurred during June and referred to “strong margin improvements“:
“29 June: Shoe Zone is pleased to announce that since the publication of its interim results in May, the business has been trading well andhas also seen strong margin improvements and cost savings, in particular as a result of rent reductions and good supply chain management, which are expected to continue into Q4 of the Company’s financial year for the 52 weeks to 2 October 2022″.
The second update followed in July, and revealed “stronger than expected” trading:
“26 July: Shoe Zone is pleased to announce that since the publication of its trading update on 29 June 2022, trading has been stronger than expected due to higher than expected demand for summer products, particularly in the last two weeks. The Company has also continued to experience margin improvements as a result of good supply chain and cost management.”
And the third update occurred last month, and confirmed trading had “continued to exceed expectations“:
“31 August: Shoe Zone is pleased to announce that since the publication of its trading update on 26 July 2022, trading has continued to exceed expectations due to continued strong demand for summer and back-to-school products throughout August. The Company also continues to benefit from the margin improvements as outlined in recent trading updates.”
The remarkable run of RNSs also revealed the group lifting its current-year profit expectations from “not less than £8.5 million” to “not less than £10.5 million“.
The profit upgrades and share-price surge will of course be welcomed by shareholders, although the company’s longer-term performance could mean the positive summer may not be a persistent phenomenon.
The shares joined AIM at 160p during 2014 and, eight years later, the price stands at… 160p:
***SharePad 25% OFF Special Offer*** Use promo code mp25 to claim your 6-month discount. Click here for details. #ad
25 August 2022 By Maynard Paton
Another month and another round of ‘back to basics’ filtering.
Introduced earlier this year to identify James Halstead, this screen shortlists companies that offer cash-flush balance sheets, robust margins and dependable dividends. SharePad returned 19 matches:
I selected Cerillion because the shares were among the few on the shortlist to have moved higher this year. I passed on EMIS and Cardiff Property because the former was subject to a bid and the latter was too small.
Cerillion’s shares have actually five-bagged since the pandemic lows of March 2020 and remain very close to their £11 all-time high:
***SharePad 25% OFF Special Offer*** Use promo code mp25 to claim your 6-month discount. Click here for details. #ad
Difficult market conditions have prompted yet another bout of ‘back to basics’ filtering.
Introduced the other month to identify James Halstead, this screen short-lists companies that offer cash-flush balance sheets, robust margins and dependable dividends. SharePad returned 19 matches:
I selected Liontrust Asset Management because the shares were highlighted by ace fund manager Keith Ashworth-Lord within his latest Buffettology fund factsheet. Mr Ashworth-Lord wrote:
“Liontrust Asset Management (-15.5%) announced final results which showed substantial growth in average AUM (+43%), revenue (+41%), dividends per share (+53%) and free cash flow (+122%).
The reaction of Liontrust’s share price — which will be seen by the teenage scribblers in the City as high beta — is symptomatic of current market sentiment. As a result, the shares trade on a trailing free cash flow yield of 15% and a trailing dividend yield of 8%. Talk about ‘value’.”
I selected Focusrite because it was among the year’s worst performers, had not already been subject to my SharePad microscope and its operations were not obviously linked to stock-market volatility.
I added an extra column to the screening results to sort the 23 on five-year share-price performance.
I selected James Halstead because its shares had improved only 9% since February 2017. Of the three weaker performers, two had already been subject to my SharePad microscope while the third — an obscure Kenyan agricultural business — did not quite fit the ‘safe haven’ approach.
***SharePad New Subscriber Special Offer*** Readers of my blog can claim one month of free data. Click here for details.
15 December 2021 By Maynard Paton
Shares offering ‘Quality At a Reasonable Price’ have been hard to find during the last few years. But recent market conditions might be presenting a few fresh opportunities.
Specialist fund manager Ashmore could meet some QARP-type criteria. At present this £2 billion mid-cap offers:
Impressive financials, including a majestic 66% margin and ‘surplus’ capital of more than £600 million;
A reliable dividend history, with the payout never being cut during the banking crash and pandemic, and;
A reasonable P/E of 12-13 alongside a dividend yield of 5%-plus.
***SharePad New Subscriber Special Offer*** Readers of my blog can claim one month of free data. Click here for details.
21 November 2021 By Maynard Paton
Investors love ‘disruptors’. Find a pioneering upstart that is stealing market share from industry dinosaurs, and your portfolio may enjoy a huge stock-market winner. Amazon of course is the textbook example.
One company that could be a genuine disruptor is Aquis Exchange, a £180 million small-cap trying to revolutionise share trading and taking on the likes of the London Stock Exchange and Euronext.
“If something truly special is incubating, we may profit from our investment for decades.”
I am always up for profiting from an investment for decades.
Richard was writing about “pivots” — companies that are adapting to change by “incubating another better business“.
He highlighted four examples and today one of the quartet — Goodwin, a £277 million market-cap engineer — goes under my SharePad microscope.
Richard described these pivots as “decent but humdrum” businesses, but do not let that put you off. Goodwin has 30-bagged during the last 20 years and a heritage of family management could indeed lead to decades of further profit.
