TRISTEL: P/E Reaches Stratospheric 48x As H1 Figures Reveal Profit Improving Up To 31% And Headcount Increasing 19% To Prepare For Future Growth

09 March 2021
By Maynard Paton

Results summary for Tristel (TSTL):

  • A satisfactory pandemic-assisted performance, with revenue up 14% and profit up between 12% and 31% depending on the adjustments made.
  • Sales were bolstered by Brexit stock-piling, which will unwind during H2, with underlying UK progress still difficult to interpret.
  • Overseas sales improved a useful 20% although the United States regulatory project and other ventures remain very slow burners.
  • The 21% operating margin seems impressive in light of “one-off” payroll costs and the headcount increasing 19% to prepare for future growth. 
  • The 48x P/E looks stratospheric, but permanently greater demand for hospital disinfectants, further expansion plus growing economies of scale may justify a lofty rating. I continue to hold.

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CITY OF LONDON INVESTMENT: H1 Figures Reveal Record $10.9b FuM And Astonishing 55% Margin But Client ‘Rebalancing’ Keeps P/E Stuck At 11x

24 February 2021
By Maynard Paton

Results summary for City of London Investment (CLIG):

  • Very buoyant markets alongside the Karpus merger helped funds under management (FuM) reach a record $10.9b and lift the dividend by 10%.
  • Client ‘rebalancing’ led to FuM withdrawals and, despite fledgling strategies attracting new money, overall fund flows remain frustratingly low. 
  • Recent leadership retirements have not led to any dramatic changes and shareholder information has remained reassuringly comprehensive.
  • The Karpus merger has raised the group margin to an astonishing 55%, but future bonus-pool arrangements could reduce such profitability.
  • The possible P/E is 11 and near-term yield might top 7%, although the shares have been valued modestly for years and a sustained re-rating remains very elusive. I continue to hold.

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[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

My Portfolio: Year In Review 2020

01 January 2021
By Maynard Paton

Happy New Year!

I trust you enjoyed the festive break and are now ready to battle the market for another twelve months!

This 4,631-word post provides a ‘year in review’ of my current portfolio holdings. I recap how each business performed during 2020 as well as provide a few remarks about valuation. 

These reviews are very useful to write — not least because they help ensure I am still invested for the right reasons! Any upsets I will suffer during 2021 will most likely be caused by the shares I already own rather than any new shares I will buy.

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Q4 2020: 2 Top-Ups And Up 16.9% For 2020

01 January 2021
By Maynard Paton

Happy 2021! I hope you survived last year’s volatile market and you continue to find my blog useful.

A summary of my portfolio’s 2020:

  • Total return of 16.9%*;
  • Eleven holdings recorded a gain while one holding recorded a loss;
  • Returns ranged from Daejan, up 43.5%, to System1, down 9.6%;
  • Two shares were topped-up: S&U and System1, and;
  • One share was sold entirely: Daejan.

(*Performance calculated using quoted bid prices and includes all dealing costs, withholding taxes, broker-account fees and paid dividends)

I publish a portfolio review after every quarter (Q1, Q2 and Q3), and this post recaps my October/November/December activity and my 2020 performance.

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SYSTEM1: Remarkable Q2 May Lead To 8x P/E And Potential Recovery Helped By ITV Progress, New Clients And Net Cash

11 December 2020
By Maynard Paton

Results summary for System1 (SYS1):

  • A pandemic-disrupted first half, albeit with headline numbers that disguised a remarkable return to profitability during Q2.
  • Revenue improvements within the Communications and UK segments suggest the tie-up with ITV is working.
  • A bold pricing structure, greater ambition clarity and even improved film-making may explain why adidas has become a client.
  • The accounts are in reasonable shape, with significant net cash, positive cash generation and perhaps a decent profit margin following various cost savings.
  • Extrapolating the Q2 profit leads to a lowly 8x multiple and intriguing recovery/upside possibilities. I have bought more shares.

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TASTY: Survival Rests On Landlords, Barclays, Vaccinations And Christmas Burgers After H1 Covid Cash Burn Implies June 2021 Receivership

09 December 2020
By Maynard Paton

Results summary for Tasty (TAST):

  • Revenue down 59% led to a £10m operating loss after the pandemic guaranteed an awful performance.
  • Cash of £3.2m and six-month cash burn of £1.6m implies TAST will run out of money by June 2021.
  • Immediate survival hopes seem dependent on landlord negotiations, CVA hints, a loan from Barclays, UK vaccinations and Christmas burgers delivered to your door.
  • One pandemic positive: management has been forced/allowed to instigate much-needed changes to an underperforming restaurant estate.
  • The £4m market cap could be a bargain, assuming government restrictions are lifted, rents are reset, competition is reduced and a recovery one day takes place. I continue to hold.

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MOUNTVIEW ESTATES: Significant Gross-Margin Improvements During Pandemic-Affected H1 May Underpin Possible NAV Of Up To £225 Per Share

04 December 2020
By Maynard Paton

Results summary for Mountview Estates (MTVW):

  • A pandemic-affected H1 that showed revenue down 23% and profit down 18% following procedural delays to property sales.
  • A maintained dividend, a lack for furloughed staff and rents up 1% did not signal inherent lockdown trouble. 
  • Significant gross-margin enhancements may reflect an underlying step-change in performance and have favourable implications for valuation. 
  • Expenditure on property purchases has picked up, with management hopeful of acquiring “exceptional opportunities”. Debt levels remain modest.
  • Book value inched to a record £98 per share, although new profit assumptions now point to a balance sheet possibly worth up to £225 per share. I continue to hold.

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[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

BIOVENTIX: Very Satisfactory FY 2020 Showcases Record 79% Margin, 5th Consecutive Annual Special Dividend And Webinar Remarks Of Troponin Sales Quadrupling By FY 2022

12 November 2020
By Maynard Paton

Results summary for Bioventix (BVXP):

  • Very satisfactory FY 2020 figures, although H2 growth subsided to mid-single-digits after the pandemic reduced demand for routine blood tests.
  • A 21% final-dividend lift plus a special payout for the fifth consecutive year underpinned a generally positive outlook.
  • Revenue from vitamin D gained 10% and may finally have “plateaued”, while troponin sales quadrupling within the next two years is apparently “plausible“.   
  • The books remain in excellent shape with record 79% margins, robust cash flow, a £5m cash buffer and no debt.
  • The ace financials and predictable customer income leaves an understandably lofty P/E of 32. I continue to hold.

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[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

TRISTEL: 20%-Plus Annual Growth, Odd UK Performance, Bumper Overseas Progress And Potential Pandemic Tailwind All Add Up To Possible 39x P/E

05 November 2020
By Maynard Paton

Results summary for Tristel (TSTL):

  • Revenue and profit reached new highs following very satisfactory 20%-plus growth, bolstered in part by the pandemic.
  • The UK performance appeared odd, given H2 sales were lower than H1 despite the Covid-19 boost.
  • Overseas sales surged 35% during H2, with the purchase of Ecomed during 2018 now proving to be a great success.  
  • The accounts remain in good shape with high margins, appealing equity returns, net cash and respectable cash generation. 
  • A possible P/E of 39 might be justified if the pandemic leads to permanently greater demand for hospital disinfectants. I continue to hold.

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