Slow Trader

Author: Buzz Lightyear

  • Domino”s Pizza UK & IRL plc (DOM)

    The UK’s leading pizza delivery company, Domino’s has been a favourite for some time. Whether you eat the product or not – just ask a university student what they order in – it is still a simple and profitable business model. From a high of nearly £7 a few months ago they dropped to £5.50 and are presently available at about £6. Not yet trending for a slowtrader spread bet, but a great opportunity for the longer term share purchaser. A very consistent company in terms of growth and at about 30% of future value, based on past growth, they are a good buy. A turnover of about 241 million, that is a lot of dough! Very little debt, and few overhead costs with no R&D. So what they earn goes to the bottom line. Operating margin has been 19%, with the last 6 months down to 17%. Inventory (stock) increased by 75% in their last report, possibly due to new stores opening in Germany and Switzerland.

  • Aggreko PLC (AGK)

    For a long term share purchase AGK is worthy of consideration. They provide electricity generators for temporary power and temperature control solutions. Operating in about 100 countries with 194 service centres and offices in 47 countries. From their last report, military contracts reducing but indicating higher profits in the 2nd half of year. Presently graded hold by many analysts. They have an impressive board, soon to include the former CEO of SSE plc. From a high of £24 last year, they have dropped to, presently, about £15 – matching a previous low in 2011. We feel that they are about 25% of their future value if they can maintain growth which, to-date, has been excellent.  They have an acceptable amount of debt, however, their spend on assets has been high and consequently their cash-flow-growth has reduced. Last years profit margin was 24% and their first 6 months of this year they are reporting a profit margin of 19%. Depreciation slightly high at 31%, but probably not unusual for a company such as this. In terms of gross margin and spend on wages and admin the percentages indicate a well managed company. Importantly their treasury shares purchases,  or share buy back, will help to increase share price long term. Overall, an opportunity to buy a wonderful company at a discount price. In the short term, however, price is still trending down. So buy cautiously.  If it continues down further, it provides another buying opportunity. Again, this is a purchase for the longer term buyer, not, we would recommend, for the slowtrader spread better. At least not until the share is trending up in the medium term.

  • Advanced Medical Solutions Group plc (AMS) £0.95

    Advanced Medical Solutions Group plc provide advanced wound-care dressings sold globally (a $20 billion market). By next year they will have paid off their debt and will then be looking for acquisitions. Could this improve their growth potential? They have 2 years of negative EPS – a slow trader can accept one year – however, for AMS it was in the initial years and they have still managed 82% consistency of growth. Tax to income would normally be 20% to 30% paid. AMS has been negative tax, rising just recently to 9%. Next year (financial year end for AMS is December) we would expect a higher tax. Operating margin, before tax, 23%. They showed 22% operating margin at the mid-year point.

    Share price climbed rapidly from 90p to £3.11 in 1997. That was followed by a fast drop to 60p where they remained until 2007. Now at 95p can they move forward? If so, their tide chart is up. Maybe a good buy time.

  • Tracsis PLC (TRCS) £2.46

    Tracsis Plc is a United Kingdom-based company. The principal activity of the Company is UK and Australian transport industry labour scheduling software. Awarded small cap company of the year. Annual turnover of 9M. Emphasis on small cap. 8 years of figures, we normally prefer 10 years as a slow trader. However, those 8 years have given 80% consistent growth figures. A possible future value of £20.20 if the growth can be maintained. Remember this all depends on whether you think they have a moat (see above for explanation). They have no debt, or at least they have capital to pay it off. One blip in EPS growth 5 years ago, otherwise good value and growth charts. Current and quick ratios are a little high which is not a bad thing as it shows good capital but indicates that they are possibly not making the most of their money – not a bad place to be! End-of-year operating margin at 34% moving to 36% on mid year report. Share price has climbed rapidly in just over one year from 50p.

    As you would expect with this sort of share price rise, tide, wave and ripple are all up. A spread better should wait for a drop and therefore catch the next ripple. However, a long term buyer might buy now and accept a small drop if it comes in the near term.

  • Aggreko plc (AGK) £14.70

    Aggreko plc provides power and temperature control solutions to customers who need them either very quickly, or for a short or indeterminate length of time. Recently downgraded by Credit Suisse, they feel that demand will not be there for AGK in the 2nd half of the year. However, AGK say profits will be higher in this period! Share price has dropped from a £24 high last year. Price has bounced slightly just above £14, next drop would probably be down to £12. However, we like AGK’s board. The company also has a wonderful consistency of growth at 92%. We show long term share value of £64. AGK have some debt at 1.6 years of profits. And their capex to EPS is high, however, their value and growth charts are all good except cash flow growth which is reducing latterly. End of year operating margin was 24% and this has dropped the last reported 6 months to 19%. Depreciation sits at 31%, slightly high. They are buying treasury stock, a good sign for the future share price. 

    Tide is down, wave is also down and ripple currently showing a move to up. If this is the bottom then share price would be about £16.5 before the tide showed up. A short term buyer, or spread better, would need to wait for the tide. However, for a long term purchaser, this could be a good time if you accept price could fall to £12 before recovering. Your call.

  • Hargreaves Lansdown PLC (HL.) £9.79

    Hargreaves Lansdown PLC is a provider of investment management products and services to private investors in the United Kingdom. A high P/E at 41, even for the industry. However, they have a great 96% consistency of growth and we feel that if this growth can continue a value of £42.55 is possible long term. They have no debt, and all their growth and value charts are good, no blemishes. ROCE and ROE are high, as is there operating profit at 67%. Wow. Retained earnings is good but not buying treasury stock. Do you understand what they do? Is demand for their flagship vantage going to continue? I think, why not.

    Tide is up, wave is down slightly and the ripple is on the turn back up. Good buy time.

  • James Fisher and Sons plc (FSJ) £10.93

    James Fisher and Sons plc is based in Barrow-in-Furness and provides marine and specialist engineering services. We value this company at £17.54. The company could pay off all its debt in 1.3 years of profits. Only one blip in its EPS growth rate 7 years ago, all other values and growths are good. Operating margin is 10% increased to 11% last 6 months. Order book reported as increasing. Depreciation and inventory high at 36% and 17% respectively. However, they are buying treasury stock which is a good sign. Some share purchase by directors too.

    Tide is up, wave is down slightly and ripple has turned back up. Good buy signal.