Small Cap Report - SBRY, TED, GRG, ZTF

Wednesday, Jan 09 2013 by

J Sainsbury (LON:SBRY)

Sainsbury's (SBRY) is my favourite of the Listed supermarkets, simply because they seem to be executing better than the others. Also, it's intangible, but as a customer when shopping at Sainsbury's, I just somehow feel positive (maybe it's the colour scheme, store layouts, staff attitude, the product, who knows?). When I shop in Tesco, it feels the opposite - somehow more stressful and unpleasant. Can't explain it, but there has to be a reason for that.

With a positive Xmas trading update issued this morning, with LFL sales up 1.5%, it's put SBRY back on my shopping list at 329p, so have picked up a few. The forecast yield is almost 5%, and the PER 11, so those figures look attractive to me. Always the possibility that the Qataris, who own 26% might bid for the whole thing at some point, so I like SBRY as a nice each-way bet.

Ted Baker (LON:TED)

Fashion group Ted Baker (TED) once again shows how it's done, with an excellent trading update for the 8 weeks to 5 Jan. Retail sales rose 20.9% vs last year, and with sq footage up 13.9%, that means LFL sales are up roughly 7%, a remarkable performance in the current climate.

It just goes to prove what I've always said - if you get the product & the price right, it will sell, regardless of market conditions.

Profits at TED will be in line with expectations. The share price already reflects this strong performance, with a PER of just over 20. It's not for me, as it only takes one season's range to go wrong, and a profits warning, to trigger a 30% plunge in share price. So for me the potential reward does not justify the risk.
But I'll be the guy buying 30% lower if they do warn on profits at any point!

Market Makers

Today's rant has to be about market makers, and their ridiculous spreads again. Take Vianet (VNET), a share which I'm very keen on, as it's the ideal mix of value (fwd PER of 6.7 times next year's fc EPS of 17p, and 5% divi yield, with a sound balance sheet)…

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J Sainsbury plc is engaged in grocery-related retailing and retail banking. The Company's segments include Retailing; Financial services, and Property investments. The Retailing segment is engaged in the operation of supermarkets and convenience. The Financial services segment includes the operations of Sainsbury's Bank plc (Sainsbury's Bank). The Property investments segment includes the Company's joint ventures with the British Land Company PLC and Land Securities Group PLC. The Company has approximately 2,000 food suppliers and over 1,000 non-food suppliers. The Company offers over 15,000 own-brand products and has approximately 770 convenience stores. The Company offers groceries under various categories, such as fruit and veg, meat and fish, dairy, chilled, bakery, frozen, food cupboard, drinks, health and beauty, baby, household, pet and home. Sainsbury's Bank provides a range of products, including insurances, credit cards, savings and loans. more »

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Ted Baker Plc is a United Kingdom-based global lifestyle company. The Company offers a range of collections, including menswear, womenswear, global, phormal, endurance, accessories, audio, bedding, childrenswear, crockery, eyewear, footwear, fragrance and skinwear, gifting and stationery, jewelry, lingerie and sleepwear, luggage, neckwear, rugs, suiting, technical accessories, tiles and watches. The Company operates through three segments: retail, wholesale and licensing. It operates stores and concessions across the United Kingdom, Europe, North America and Asia and an e-commerce business based in the United Kingdom, primarily serving the United Kingdom and Europe, with separate the United States and Canadian sites dedicated to North America, and a separate site serving Australia. The Company's wholesale business in the United Kingdom serves countries across the world, particularly in the United Kingdom and Europe. The Company operates both territorial and product licenses. more »

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Greggs plc is a United Kingdom-based bakery food on-the-go retailer. The Company's products and services consist of a range of fresh bakery goods, sandwiches and drinks in its shop. The Company also provides frozen bakery products to its wholesale customers. The Company owns approximately 1,698 shops, 12 regional bakeries, one distribution center and one manufacturing center. The Company has approximately 105 franchised shops operating in travel and other convenience locations. The Company offers pastries and bakes, sandwiches, breakfast, sweets, pastas, salads and soups, bread, platters, drinks and snacks. The Company's Balanced Choice products offer choices, which have approximately 400 calories. The Company's sales are made to the general public, as well as to certain organizations. more »

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

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About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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