This week’s addition to the portfolio is giftware firm IG Design. This company was until recently known as International Greetings.
As with last week’s addition, IG Design meets both my screening criteria and those of the Jim Slater ZULU Principle screen. It also qualifies for the Value-Momentum Screen and the Robbie Burns-inspired Naked Trader-esque Screen.
I was interested to see that while each of these three guru screens uses different criteria, they have all delivered annualised returns of about 18% since their inception. Another point worth noting is that these three screens all have broadly similar ethos.
All look for fast-growing stocks with good fundamentals, at a reasonable valuation. Such high flyers and super stocks can continue growing far longer than expected. The kind of stock that can beat the market over long periods.
A potentially big market
IG Design also scores well with Stockopedia. At the time of writing, the company has a StockRank of 97. Paul Scott was also impressed in his latest write-up.
Although it may seem odd to add another stock from the Containers & Packaging sub-sector to the SIF portfolio alongside Macfarlane, I think the two companies are different enough to make this acceptable.
Whereas Macfarlane makes postal packaging for consumer goods companies, IG Design is focused on giftware and in markets all around the world. IG Design sells through a portfolio of its own brands, alongside licensed ranges such as Thomas & Friends and Disney’s Frozen.
Another attraction is that less than 40% of IG Design’s revenues come from the UK:
Although the weaker pound will make dollar-denominated imports from China into the UK more expensive, IG Design said in its recent results that it’s “well hedged into 2016/17”. Earnings in the US and Europe will also translate more strongly into sterling than before the referendum.
Overall, I’m confident that IG Design is relatively safe from Brexit fallout, unless the economic impact becomes much more serious than currently seems likely.
Well-timed acquisition could boost growth
IG Design shares have risen by 133% since the start of 2015, which might suggest that most of the upside is in the price. But earnings rose by 13% last year and are expected to climb by 23%…
