A quieter end to the week after the manic start on Monday. I have however noticed that the market is generally seeing more activity as M & A reaches levels last seen in 2009 as Melrose (MRO) went hostile on GKN this week. There has also been a flurry of placings as companies use the stock market for its purpose of raising capital and also take advantage of elevated share prices too. A couple of these were in the mobile advertising space where both Taptica (TAP) and XL Media (XLM) raised fresh funds to bolster their finances for further add on acquisition. Both stocks have fallen back as a result of these and Taptica is now trading below the placing price and actually comes out top of this weeks Compound Income Scores, so if they can keep the growth going and integrate their recent and any future acquisitions successfully then this could be a good entry point - perhaps.
Finally today and for this week we have had an AGM trading update from Character Group (CCT) which despite all the news flow noise of the finance director leaving and the Toy 'R' Us related warning has remained in the CISP despite this as it continued to score sufficiently well. Thus the portfolio didn't sell out at the bottom of this longer term holding and has benefited from the share price recovery since.
Today's update is of the in line variety, although they still see the current year being down on last year as previously flagged. They do however suggest that they will see a second half recovery and are confident that this will lead to a return to their growth trend in 2019. As the management here seem to have been pretty good at calling the trends in their business I would be inclined to take those comments at face value. If they deliver on that I guess that could mean say 50p of earnings in in 2019 with say the currently forecast dividend of 25p which at today's lower price of 432p (-5%) would leave them on a still cheap sub 10x rating with a 5.8% yield. So while they may not excite much in the short term & indeed could even drift off further, this one still looks like a reasonably well run business, albeit in a somewhat fickle industry. I also note in passing that some people seem to be upset by the levels of boardroom pay here so might be worth checking that out to make sure you are comfortable with that too if you are considering an investment here.
Any way that's it for this week and as I say the latest Compound Income Scores are out as usual today, so if you'd like to know how Character Group and the other 593 stocks in the Compound Income Universe score then head on over to the Scores page to learn more about them (if you're not already familiar with them) and to see how you can access them. Safe investing and have fun whatever you are up to this weekend.
...which is usually a busy day for announcements for some reason and today was no exception to that. So if you think that will be of any interest to you then click below to read more.
A surprisingly busy even manic Monday today, or maybe even Blue Monday as I see #bluemonday is trending on twitter today.
As far as the Compound Income Scores portfolio (CISP) goes we have had positive US tax related update from Bodycote (BOY) where they say it will add 5p or around 10% to this years earnings thanks to a one-off revaluation of US net deferred tax liabilities. In addition they said that Q4 trading had been strong & therefore the Board now expects full year 2017 headline operating profit to be towards the upper end of market expectations (company compiled analysts' estimates range: £117 million - £126 million). So continued good momentum in the business and the shares here, although this has left it looking poor on the value front as it approaches the upper end of my normal comfort range at around 20x with a circa 2% yield.
Also on the US tax cut front Ferguson (FERG) outlined the effects of this and the reduced tax charge they will have going forward. They didn't give explicit guidance as to the effects but I would expect we will see upgrades here too. This should help to continue their strong momentum where the price has broken out to new highs. While they are good quality and offer slightly better value than Bodycote.
Away from US related tax changes we had an operational update from Central Asia Metals (CAML) which saw production towards the top end of their expectations. For the coming year they affirmed expectations of similar production levels at this stage and confirmed that as of 31 December 2017, CAML had cash in the bank of $46 million.
Finally XL Media (XLM) announced the acquisition of a number of leading Finnish gambling related informational websites from Good Game Ltd for a total cash consideration of up to €15 million. The Acquisition is expected to complete during the first quarter of 2018 and to be immediately earnings enhancing in the current financial year following completion. Seems fine and a continuation of their acquisition strategy, although on this occasion it is not diversifying but bulking up their original core operations.
That's it for the CISP today so I'll leave you with some music appropriate to today's title to choose from and cheer you up if you need it or not as the case may be. Happy Investing & listening.
Today's update of note for the CISP is another of the portfolios longer term winners in the shape of XP Power (XPP) - which if you are not familiar with it (you can click the name link for more details) is a £700m United Kingdom-based developer and manufacturer of critical power control components for the electronics industry.
They had Q4 trading update today in which they said the Company had a good finish to the year, in line with the Board's expectations, as the strong order intake reported in the third quarter drove robust revenue growth in the final quarter. Other points of note were that they moved into a small net debt position following the acquisition of Comdel on 29 September 2017 for US$23.0 million (£17.0 million), net debt at 31 December 2017 was £10.1 million, compared with a net cash position of £3.6 million at 31 December 2016.
They also said that the 4th quarterly dividend is not expected to be less than 28 pence per share, representing a minimum total dividend of 77 pence per share for 2017, an increase of 8% over the total dividend of 71 pence per share paid for 2016. Furthermore on the outlook they said they are encouraged by the continued strong order intake experienced across the business during the second half of 2017 and the overall book to bill level for the year and that they enter 2018 with positive momentum and therefore expect to grow orders and revenue in 2018 above that in 2017. I would suggest you check out the full statement at their investor relations part of their website for full details if you are interested in researching this one further.
As far as the CISP goes it remains in the portfolio as it continues to score highly, although the valuation has got a bit higher than I would normally entertain for new purchases at 24 to 25x with a yield of just over 2%. However, having trimmed it late last year in a portfolio re-balancing, I'm allowing it to run as a winner while it continues to make the cut on the scores despite my reservations about the valuation, as it does seem like a good quality operation.
Finally talking of quality companies and winners, the latest Compound Income Scores are out today. So if you are not already a subscriber and would like to be able to sort the good form the bad and the ugly and pick some future winners for yourself, then check out more details about the Scores and how you can gain access to them by clicking here or in the Scores navigation tab on the site. Otherwise thanks for reading, have a great weekend and good luck with your investing and see below for a couple of tunes / videos on today's theme.
Another busy Thursday with a throng of results and updates as the New Year reporting season gets into full swing. Of interest to the Compound Income Scores Portfolio were trading updates from Jupiter Asset Management (JUP) and Hays Group (HAS) the international recruitment Company. While also of interest was a sponsored note from Hardman & Co. on Alliance Pharma (APH) - covering the background and benefits from their recent add on acquisitions which you can read or download from here if that is of any interest, or click below if you want to read more.