One of the characteristics of a screen-based approach to investing is that it may sometimes be difficult to find stocks which satisfy all of your criteria.
My Stock in Focus screen is a case in point. Only a few weeks ago, there were around 20 stocks qualifying for the screen at any one time. Since the EU referendum, that total has fallen dramatically. As I write on 26 July, the screen has hit a new low -- just four stocks qualify, three of which are already in the SIF portfolio.
The one stock remaining is Trifast. It’s an attractive enough stock but would push the number of Industrial stocks in the portfolio to 4/12. This seems too high to me, especially as Trifast isn’t massively cheap and forecast growth is relatively modest.
Instead of adding a new stock this week, I’m going to look at two other companies.
IG Design placing
Last week’s portfolio addition was packaging and giftware firm IG Design. No sooner had the virtual ink dried on my article than the firm announced a £5.25m placing. With a lot of companies this would be a cause for concern, but in this case I think it’s probably fairly prudent.
The cash will be used to help fund the recently acquisition of US firm Lang Companies (which I discussed here). The remainder will be used to fund investment in new manufacturing capacity in the UK and to increase the group’s capacity to make further acquisitions or investments.
The placing of 3,000,000 shares was done at 175p, which IG Design says was a 5.1% discount to the average mid-market closing price for the 5 business days preceding the announcement. That’s a pretty small discount. It’s encouraging to see that both new and existing institutional buyers were keen to take part.
The new shares represent dilution of 5%, which is fairly modest. The recent increase of 1.7p per share to earnings forecasts is being left unchanged following the placing, as management believes it can deliver this level of earnings per share despite the increased share count.
Overall, I share commenter Gus’s view that IG Design is fixing the roof while the sun shines and making the most of strong demand for its stock. The placing certainly doesn’t change my view on the IG Design, which will…
