This is one I have mentioned in passing in an earlier posting back in April entitled If greed is good then boring is... which featured Berendsen (BRSN) as one of the boring stock examples. They have today reported an update statement before entering its close period for the half year ending 30 June 2014 and prior to its half year results announcement, which will be issued on 29 August 2014.
In this they report that they are trading in line with expectations with a 3% rise in underlying revenues overall and in their core business at constant exchange rates. However, in common with many UK businesses with overseas operations, they have been hit by the rise in Sterling this year. This means that their actual reported revenues will be down by 1% in the period as a result. They do however talk about improved margins in their growth businesses and some improvement in their more mature cash cow businesses like work wear and flat linen (sheets and towels) in the UK from new business. In linen overseas they flag revenue gains from contract wins but lower profits due to lower pricing and start up losses for new operations. They suggest their interest costs were down thanks to strong cash flow and that their reported pre tax profits were ahead over the first five months. So it sounds like steady as she goes and the Company said in closing:
"Whilst our reported results will be influenced by the impact of currency translation, on an underlying basis, we have made good progress for the first half of the year in line with management's expectations, and the Board continues to expect to achieve further good progress for the year as a whole."
They seem fairly valued having come back recently with other mid cap stocks so at 983 pence they are on around 14 to 15x earnings with a well covered 3% yield which is expected to grow by around 7% per annum. Nothing in this statement to get upset or excited about either way but then that is what you would expect from a staid stock like this. But as I said before boring can sometimes be brilliant - see chart below and the link to my earlier post for more details and the file below to download a fact sheet on them.
Further to my recent post on House builders and the housing market in the UK. I note today that the Bank of England is expected to announce measures to curb the market. Robert Peston who often has the inside line on official things like this has put out a good summary piece of the measures he expects, which I guess may get updated once the announcement is out.
They also have a more general news piece which covers the North South divided in the property market and includes an interactive calculator to see where you could afford to buy a home these days if that's of interest.
Finally for a hat trick from the BBC there is the final programme in this series, Business Boomers, which featured Amazon in an earlier show which was quite good. So in an inspired piece of scheduling, given the recent debate about a Housing bubble in the UK and how a rise in interest rates might impact on the house builders, plus today's announcement from the B of E - it looks like this episode about the housing industry should be interesting. So don't forget to set your PVR for 9 pm on BBC 2 tonight or catch up on it on the i-player or you could just watch it if your bored with the World Cup and have nothing better to do. Talking of which I saw that some punters actually won some money after betting at odds of 175-1 that Luis Suarez would bite someone during the World Cup - tasty.
Plus500 Ltd (PLUS) was one investors were getting excited about earlier in the year when it went up like a rocket with talk of 1000 to 1200p price targets as it hit 700p having listed via a placing at 115 pence on AIM in July 2013. So with the stock having plummeted back to earth like a stick it is now sub 500 pence so perhaps it might present a buying / trading opportunity down here for Timmy trader types. I note they put out a Q1 update in early April - so I guess there could be Q2 update in early July which could be a catalyst? Failing that they reported maiden interim in August last year having only listed in July.
Given the fall in the shares (see chart below) I would have thought they might have to put out a statement anyway to either explain or state that they know of no reason to justify it. In addition I note it was down on big volume yesterday and that JP Morgan have announced today that they have gone above 14% in the stock having last announced at 12% on the 10th June. This suggests to me that a big seller / stock over hang that may have been driving the price down was perhaps cleared out yesterday. Certainly the price action with the stock up nearly 6% first thing this morning seem to support this argument.
So what is it - well you can learn more by clicking the highlighted name link above, but basically it is a competitor to IG Group (IGG) the spread betting firm which I have written up a couple of times. It is an Israeli based technology Company which operates a dealing platform for Private investors in the Contracts For Difference market (CFD's). It makes most of its money from the spreads and also generates revenues from overnight premiums, effectively a financing charge, on certain positions held by customers overnight and gains (offset by losses) on customers’ trading positions. The Group does not charge customers a commission on trades. They seem to have robust risk controls but I guess it is early days in their operation to know how robust these are. The Non Executives seem to have good relevant experience while the executives are the founders and are from Israel.
It has grown rapidly since listing last year and still has a couple of quarters of easier comparisons if it can maintain the run rate it achieved in its last two quarters. However, with the flatter markets recently perhaps the price is discounting a reversal in the recent growth rates as traders become less enthusiastic? It appears to be cheap on around 10x with a 5% plus yield, thanks to their policy of paying out 50% of net profits. It is more expensive though on other metrics like EV/EBITDA, Price to book and EV/Sales. The financial metrics seem exceptional (or too good to be true?) with ROE of 126% (according to Stockodpedia) and an operating margin of 58% (Source: Report and accounts).
Conclusion - a young Israeli stock listed on AIM which which makes its money off of mug punters which has fallen back to earth and is looking oversold in the short term after a big seller has perhaps been cleared out. There could be some news flow due which could either confirm the reasons for the price weakness and maybe send it down further or provide the basis for a sharp bounce from around these levels. I note the gap on the chart between about 333 pence and 400 pence, while the 200 day moving average is around 385 pence and 350 pence or so would be half the recent high and was a previous peak which could make that a good support level. So for the conservative trader you might want to wait and see if it approaches 350 pence before considering it or watch the news on this one to see if you want to jump in before. Of course you'll want to do your own research - so I have attached the latest Report and Account below to help with this.
Further to my posts on ISA's and DIY Income investing - if that's too Spicy for you and the graphic in my ISA post hasn't put you off then you could check out Nutmeg to see how it compares as an on line automated way to invest. Interesting also to read that Schroders has joined a few others in taking a stake in this fledgling venture.
Further to my post of ISA platforms, I got sent this from Citywire recently which is a useful review of how to find income stocks and some thoughts on portfolio construction. It also includes some stock tips from Fund Mangers in the last section. May be of interest if you are starting off down the Self Select ISA route on your own?