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