15 January 2015
By Maynard Paton
Legendary American investor Peter Lynch was always very keen on dull small-caps with dull names and dull operations. His theory was that such obscure businesses would not attract much industry competition or market enthusiasm, and so would be better investments for patient investors.
Electronic Data Processing (EDP) certainly has the dull name and the dull operations, but sadly its dull financial history has meant its share price has also been, well, rather dull.
But don’t stop reading just yet!
…because this small-cap dullard intends to pay a 5p dividend in future years — and shareholders such as me remain in line to collect a not-so-dull 8%-plus income.
Additional excitement comes in the form of EDP’s cost-saving measures, which I reckon could support an underlying P/E of just 6.
In fact, if you mix in contracted revenues, surplus assets, upfront customer payments — plus an intriguing shareholder register — then all of a sudden this £8m software supplier to builders merchants might not be that dull after all.
Read moreElectronic Data Processing: This Obscure, Dull Small-Cap Should Pay Me An 8% Income