SIF Folio: Wizard Bloomsbury could keep me ahead of the market

Tuesday, Jul 31 2018 by
23
SIF Folio Wizard Bloomsbury could keep me ahead of the market

It’s the end of the month, so it would normally be time for to review any stocks in the SIF Folio that were nine months old. But I didn’t buy any stocks in October last year, so there aren’t any to review this month.

Rather to my surprise, there is a new stock in my SIF screen that’s eligible for the fund. Bloomsbury Publishing is best known as the Harry Potter publisher. It’s a popular stock with readers of the Small Cap Value Report and also features in Ed Croft’s 2018 NAPS and SNAPS portfolios.

Despite the importance of J. K. Rowling’s schoolboy wizard, Harry Potter isn’t the only magical ingredient in Bloomsbury’s catalogue. The group also publishes non-fiction ‘coffee table’ books and has a growing academic publishing business. The latter is more profitable than you might expect, as community member Beginner explained in a comment on Paul’s piece in May.

Isn’t it too late to buy?

This is a stock I’ve watched for some time, but not got around to buying. This indecision has caused me to miss out on a 38% gain since the firm upgraded its profit guidance in March.

It’s a useful reminder of the benefits of a rules-based approach to investment. Buying and selling shares often feels uncomfortable at the time. But by following a pre-determined strategy, it’s often easier to force yourself to stick to a consistent approach.

Bloomsbury doesn’t look as cheap as it did six months ago, but I don’t think it’s necessarily too late to buy. May’s full-year results were pretty good. Sales rose by 13% to £161.5m and pre-tax profit was 10% higher, at £13.2m. Paul Scott reviewed the figures at the time and was impressed.

Stockopedia’s computers also liked the numbers. The company’s StockRank of 99 and StockRank style of Super Stock were maintained following May’s figures.

Alongside this, it’s worth noting the stock’s Balanced RiskRating. This is the second-lowest of Stockopedia’s five proprietary measures of volatility. According to Stockopedia’s research, stock market history suggests you can enjoy comparable returns from lower volatility stocks to those from more volatile shares. This contradicts conventional wisdom, which says that to achieve higher returns you must accept higher volatility.

You can read more about the RiskRating…

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As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>


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Bloomsbury Publishing Plc is a global publisher. The Company is involved in the publication of books and other related services. The Company operates through four publishing divisions: Adult, Children's & Educational, Academic & Professional, and Information. These divisions derive their revenue from book publishing, sale of publishing and distribution rights, management and other publishing services. It specializes in the humanities and social sciences, and publishes over 1,000 books and digital services each year. The Company's digital products include Berg Fashion Library, Bloomsbury Collections, Bloomsbury Fashion Central, Churchill Archive and Drama Online. The Company's subsidiaries include A & C Black Limited, Bloomsbury Publishing Inc, Bloomsbury Information Limited, Bloomsbury Professional Limited, Bloomsbury Australia PTY Limited, The Continuum International Publishing Group Limited and Osprey Publishing Limited, among others. more »

LSE Price
196.91p
Change
0.7%
Mkt Cap (£m)
147.3
P/E (fwd)
12.6
Yield (fwd)
4.2



  Is LON:BMY fundamentally strong or weak? Find out More »


4 Comments on this Article show/hide all

Archer 1st Aug 1 of 4
1

Thanks for your update on this stock it was very interesting. I too have tracked this stock for several years, it always seemed attractive but didn't seem exciting enough. I eventually decided to buy back in April 18 which turned out to be a lucky decision, I will hold as there seems to be some momentum building with this company.

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clarea 1st Aug 2 of 4
1

Great stuff as always Roland you always seem to unearth some extra features of Stockopedia I and I;m sure many others are unaware of.

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onybardia 1st Aug 3 of 4

Very insightful, thanks Roland. I would like to point out that about 63% revenues are generated overseas , so, not totally dependent on the UK economy as you point out.

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andrea34l 2nd Aug 4 of 4
1

Bloomsbury Publishing (LON:BMY) do have good ranks and financial measures, but I sold out a few weeks ago after this Q1 trading update:

Bloomsbury today announces its trading results for the four months ended 30 June 2018. Total revenues are up 3.7% year on year (up 7.1% at constant currencies*). Excluding the revenues of IB Tauris, which was acquired on 30 April 2018, revenues are up by 2.1% (up 5.5% at constant currencies*)

Although Q1 is the quietest month which "traditionally generates the smallest profit of the financial year" this strikes me as being very poor LFL revenue growth. I'd personally like to see another update, and perhaps the interim results, before getting involved again. The share price has been drifting since this announcement, so it hasn't set the market on fire. Perhaps it is just caught up in the general downward drift at the moment....

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About Roland Head

Roland Head

I'm a private investor and writer on stock markets, with a particular fondness for free cash flow, dividends and value. I also have a lingering interest in commodity stocks. In earlier life, I worked as an engineer in telecoms and IT. The rules-based approach required for this kind of work undoubtedly influenced my investing style. I also learned a lot from seeing the tech bubble deflate in 2000-1, when I was working for a large and now defunct Canadian firm.  My investment focus is increasingly on developing rules-based strategies such as my Stock in Focus portfolio. This reflects a significant part of my personal portfolio and is the subject of my weekly column here at Stockopedia. more »

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