Interesting Shares: Suggestions And Ideas (pt. 1)

10th Jan '14 by ExpectingValue

2 comments 16350 reads

Since I'd been out of the loop for a little while, I decided in my last post to put together a little list of the stocks that were currently piquing my interest. That's not a huge list - I confess I'm a little short on inspiration at the moment - so I also put a call out on Twitter. Along with that, a touch of snooping around over the last few days and a few e-mails from readers, I have something of a list of stocks to get me started in the new year. Researching some of these - alongside catching up with the bits of my portfolio that need more analysis - should keep me busy for the next few weeks.

To keep the post relatively short but hopefully interesting, I'll list the stocks, along with a short description of what they do and my initial impressions. Most of these I haven't looked at before in any real detail, if at all. The list is in no particular order. Scattered like my thoughts, I might say.

The list

Finsbury Food (LON:FIF) - This bakery company, I recall, was recommended to me in an email by a reader a while ago - probably a year and a half. I turned it down then, and it's a little more expensive now, but it's also significantly less indebted, restructured and - probably more importantly - I try not to put too much stock in my past judgements given how my criteria evolve and analysis improves. At first glance, it looks relatively cheap on a P/E basis, and I like management's tone in the annual report. More negatively, the company still looks rather commoditised. I'm not sure where their competitive advantage is.

Pennant International (LON:PEN) - Looks profitable and has grown quickly. Seem to have their finger in a lot of pies, and it took me a little while to figure out where they make their money - mostly, it turns out, with 'specialist training systems' to the defence sector. This apparently includes 'software emulation', 'hardware simulation' and 'virtual reality', which all sounds rather exciting. They also develop public sector software; rather a 21st century business, by the sounds of it, and they won a massive contract last year - a good thumbs up. Looks like…

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TMFMayn

11th Jan '14

My 2p

Finsbury Food (LON:FIF) -- nothing special here. Carries not immaterial debt and is a low margin business. Best not to be tempted by a low P/E only.

Pennant International (LON:PEN) -- http://www.pennantplc.co.uk/investors/share_capital.php Powell family I think own 39%. Your 70%-plus figure probably stems from the annual report, or info based on the annual report, which indicates two Powell family members own 10m shares each (but which are duplicates). I like this business and own a few shares.

MS International (LON:MSI) -- I could never find any annual reports on its website, but the firm has recently moved to AIM which dictates under rule 26 that annual reports should be published online. Still, the very uncommunicative nature of the board during their main-market days is not a plus point. Has net cash though, and is a boring engineering business, and heavy insider ownership, so could be worth another look.

Caretech Holdings (LON:CTH) -- I too would be wary of government funded-dependent firms. All too often the politics change and such firms end up in trouble.

Games Workshop (LON:GAW) -- I would be wary of stating loyal customers here, as customers are often boys aged between 8 and 14. Quite a unique business though, and I recall the board no longer visits the City to undertake presentations and the boss often quotes Buffett, which I quite like.

I would look at PEN, GAW and MSI in that order. I am looking forward to the next five.

Me again

With MSI, you will have to look at director pay and general corporate governance and take a view whether the board is looking after the interests of external shareholders (or themselves).

Firm has two non-execs, both of which have worked at the firm since the 1980s. Plus, one of the non-execs retired from exec duties last year and was paid £250,000 for 'loss of office' and becoming a non-exec.

I suppose this fiefdom could be lived with if the board had delivered wonderful growth over the years, but the firm was first quoted in 1965, the current boss was appointed in the 1980s and the market cap is still less than £40m.

http://www.msiplc.com/downloads/2013%20Report%20and%20Accounts.pdf

Interesting Shares: Suggestions and ideas (pt. 1)

The list

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