My SharePad Articles

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10 May 2019
By Maynard Paton

For this SharePad search I re-used the screen I employed to pinpoint Victrex.

The filter focuses on two ratios favoured by ‘quality’ investors — operating margin and return on equity (ROE).

This time I selected Abcam, a £2.6 billion AIM company that develops and sells antibodies.

Abcam boasted a super 30% operating margin and a robust 20% ROE.

Read my full Abcam article for SharePad.

Maynard Paton

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27 April 2019
By Maynard Paton

For this market trawl I employed two ratios favoured by ‘quality’ investors.

The first measure was operating margin, which represents the percentage of sales converted into profit.

The second measure was return on equity, or ROE, which is calculated by dividing earnings by the shareholder equity used to produce those earnings.

I used SharePad to identify a suitable company, and selected Victrex — a £2 billion specialist manufacturer of high-performance polymers — for further investigation.

Victrex offered a wonderful 39% operating margin and a robust 23% ROE.

Read my full Victrex article for SharePad.

Maynard Paton

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15 April 2019
By Maynard Paton

I am convinced the very best shares to own are often led by executives who truly act in the interests of ordinary shareholders.

In particular, bosses who:

• do not dilute investors by issuing shares willy-nilly;
• create dependable returns through a rising dividend, and;
• own a lot of shares themselves…

…should deliver better profits than ‘salarymen’ directors who care more about their wages, options and bonuses.

I employed SharePad to identify a suitable company — and selected Renishaw for further investigation.

Read my full Renishaw article for SharePad.

Maynard Paton

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27 March 2019
By Maynard Paton

I recently employed SharePad to identify a strong R&D-based business.

The exact SharePad criteria I used were:

• An R&D-to-turnover ratio of 10% or more;
• An operating margin of at least 10%, and;
• Dividend growth for a minimum of five consecutive years.

SharePad returned only four matches.

I selected Craneware because, among those four shares, the company was the largest and offered the longest dividend record.

I was also vaguely aware of the business being renowned for some quality financials.

Read my full Craneware article for SharePad.

Maynard Paton

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15 March 2019
By Maynard Paton

I found Accesso Technology after screening for companies that offered an attractive growth history as well as respectable future prospects.

To narrow the field down further, I looked for share prices that had fallen since the start of the year and balance sheets that carried net cash.

The exact SharePad criteria I used were:

1) A negative share-price performance since 31 December 2018;
2) An average 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).

I noted Accesso’s share price had fallen a hefty 43%, while the forecast P/E of 15 did not look too demanding given the group’s past and expected earnings growth.

Read my full Accesso Technology article for SharePad.

Maynard Paton

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28 February 2019
By Maynard Paton

For this SharePad search I screened for companies that exhibited an extended history of high margins and high returns on equity (ROE).

To narrow the field down further, I required my shortlisted companies to possess cash-positive balance sheets.

The exact criteria I used were:

1. An average 10-year EBIT margin of 20% or more;
2. An average 10-year ROE of 20% or more, and;
3. Net borrowing of zero or less (i.e. a net cash position).

I selected Hargreaves Lansdown from the 24 matches because this company:

• was the largest on the shortlist;
• offers services used by many private investors, and;
• prompts different opinions from quality investors Terry Smith and Nick Train.

Read my full Hargreaves Lansdown article for SharePad.

Maynard Paton

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11 February 2019
By Maynard Paton

Being able to analyse international shares — at no extra cost! — is a wonderful feature of SharePad. You can take your pick from several US and European indices.

One overseas share attracting my attention of late is Apple. The US company has appeared on my radar because:

• I know billionaire investor Warren Buffett owns the shares;
• I see the Apple P/E on SharePad is a reasonable 13.7, and;
• I own three Apple devices.

When the world’s richest investor buys a share, finding out why can often pay off.

At the end of September 2018, Mr Buffett’s Berkshire Hathaway investment vehicle owned 255 million Apple shares with a then value of $58bn. At the time the investment represented 8% of Berkshire’s assets.

During the first nine months of 2018, Mr Buffett acquired Apple shares at prices I estimate to average $170 — a level similar to that seen today.

Should we now join Mr Buffett as Apple shareholders?

Read my full Apple article for SharePad.

Maynard Paton

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31 January 2019
By Maynard Paton

For this SharePad search I demanded companies that offered a history of fantastic earnings growth alongside a relatively reasonable valuation.

To narrow the field down further, I wanted only cash-rich companies that paid a dividend.

The exact criteria I used were:

• Annualised earnings per share growth of at least 25% during the last five years;
• A forecast P/E of no more than 20;
• Net borrowing of zero or less (i.e. a net cash position), and;
• A dividend yield greater than zero.

I added a fifth criteria to exclude house builders:

• Not a member of the Home Construction sub-sector.

I don’t really class house builders as super-growth businesses, and no doubt they will crop up in future screens anyway. (Eight house builders were excluded from this search.)

Games Workshop stood out among the 23 matches.

I chose this company because:

• I bought the shares at £8, and;
• I have visited the company’s HQ and spoken at length with the executive management.

Read my full Games Workshop article for SharePad.

Maynard Paton

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17 January 2019
By Maynard Paton

I have been trawling SharePad again with another back-to-basics search.

For this screen I demanded:

• A forecast P/E of no more than 12;
• An operating margin of 15% or more;
• Net borrowing of zero or less (i.e. a net cash position);
• A yield of 4% or more, and;
• A market cap of £150m or more.

One share that stood out within the 16 matches was Plus500.

I remembered this company had issued a positive trading statement just after Christmas:

“Accordingly, with the year ended 31 December 2018 almost complete, the Board anticipates the financial performance will be ahead of current market expectations.”

If Plus500’s recent progress has been better than expected, why then is the forecast P/E just 6.1?

Simply click here to read my Plus500 article for SharePad.

Maynard Paton

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03 January 2019
By Maynard Paton

I am going back to basics with this SharePad trawl. I simply want to identify a quality company trading at a modest valuation that I can hold for the long term.

Given recent market conditions, I am hopeful SharePad will unearth a few likely contenders!

For this screen I demanded:

• A forecast P/E of no more than 12;

• An operating margin of 15% or more;

• Net borrowing of zero or less (i.e. a net cash position);

• A yield of 4% or more, and;

• A market cap of £150m or more.

SharePad immediately found 20 shares that matched my criteria.

The name that stood out was Somero Enterprises. I was vaguely aware of this business having some prominence within its particular field — the glamorous world of concrete floors.

Simply click here to read my Somero Enterprises article for SharePad.

Maynard Paton

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11 December 2018
By Maynard Paton

Perhaps the most spectacular share collapse of the year has been that of Patisserie Holdings, the owner of the Patisserie Valerie chain of cake shops.

I am sure you already know the grim story.

To recap, during October the firm confessed to “significant, and potentially fraudulent, accounting irregularities and therefore a potential material mis-statement of the Company’s accounts.”

The shares — which had traded at 429p and supported a £440m market cap — have been suspended ever since.

An emergency £15m was then raised by shareholders at 50p a share, while a further £10m was loaned to Patisserie by group boss Luke Johnson.

Before the fraud came to light, Patisserie said its net cash was £28m. Now the group estimates net debt might be £10m.

So, the obvious question:

Could we have spotted Patisserie’s fraud using SharePad?

Simply click here to read my Patisserie Holdings article for SharePad.

Maynard Paton

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07 December 2018
By Maynard Paton

Many years ago, one of my favourite sources for investment ideas was the Financial Times.

However, the FT’s articles did not interest me, and nor did the Lex column.

Instead, I studied a small table that was tucked away on those pages that listed every share price.

You see, this table named the shares that traded at a 52-week low — and I wanted to learn more about the companies that the market disliked.

Indeed, I hoped a decent business would occasionally fall out of favour, join that table and become worthy of investigation.

These days, SharePad can do all of this 52-week-low screening — and much more besides — in an instant.

Let me now explain how I employ SharePad to scan for shares hitting fresh lows. I will then provide a case study using Mattioli Woods outlining what I then check.

Simply click here to read my Mattioli Woods article for SharePad.

Maynard Paton

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23 November 2018
By Maynard Paton

One of my favourite ways of assessing companies is by calculating their turnover per employee.

The theory is simple: companies that produce high sales from few people are often simpler to manage and grow than businesses that produce low sales from many people.

In fact, if you can find a business that can expand significantly without needing to take on huge numbers of extra staff, then perhaps you have found a business with a product that actually sells itself.

Suffice to say, companies blessed with products that sell themselves are generally good for us investors!

Let’s now use SharePad to investigate Warpaint London — a cosmetics business with high sales per employee.

Simply click here to read my Warpaint London article for SharePad.

Maynard Paton

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10 November 2018
By Maynard Paton

You might recall from the other week that I decided to unearth the market’s most reliable dividend payers.

My theory was simple — companies with illustrious payout records should provide much more reliable returns during market setbacks than a collection of more speculative shares.

I therefore employed SharePad to identify companies that had lifted their dividend every year for at least the last ten years… and by a compound average of 5% or more.

I also limited the search to companies that offered a forecast payout yield of 4%-plus.

My initial screening pinpointed PayPoint — although my SharePad trawling did reveal another interesting name: Zytronic.

You see, this particular small-cap also boasted an extended history of rising dividends…

…but in addition, offered a 5.7% forecast yield and net cash that represented a substantial 22% of its market cap.

Simply click here to read my Zytronic article for SharePad.

Maynard Paton

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26 October 2018
By Maynard Paton

I don’t know about your shares, but my portfolio was thumped during this month’s market sell-off.

The drubbing prompted me to consider whether I should remain invested in my racy growth stocks and contrarian recovery plays — or seek out some alternative opportunities instead.

My latest SharePad trawling has therefore centred on dividends — which for many of us are the gold standard of investing dependability.

I mean, employ the right directors at the right business, and shareholders can sit back, relax and enjoy consistent payout advances…

…regardless of what happens to the stock market, the economy and just about everything else!

Simply click here to read my PayPoint article for SharePad.

Maynard Paton