Small Cap Value Report (15 Jul) - AMO, THT, FIF

Monday, Jul 15 2013 by

Good morning! Two articles on economics caught my eye this morning, and this reinforces my view that the UK economy is now recovering, and hence portfolios should be positioned accordingly (i.e. more in reasonably priced cyclical & growth stocks, rather than defensives).

So share price upside is now most likely to be found at companies which manage to exceed broker earnings forecasts, as their operational gearing kicks in from growing sales in a recovering economy.

The Telegraph highlight a surge in UK business confidence to a level not seen since Jan 2008. Begbies Traynor (LON:BEG) also issue their interesting quarterly "Red Flag" report for Q2, entitled the "UK recovery accelerates", which is always worth a read.



Amino Technologies (LON:AMO) is an interesting company, whose shares delivered a roughly 75% gain for my portfolio over about six months (I banked the profit & moved on a few months ago). I last reported on it here, when they issued a positive trading update on 6 Jun 2013. Amino is a Cambridge-based maker of internet TV set-top boxes. I imagine this is a potentially good growth area, as faster broadband is rolled out globally. Their two largest markets are the USA and the Netherlands, and they supply globally to other markets too.

I find Stockopedia's graphical history an excellent way to instantly glean lots of information about any company, and reproduce the graphs for Amino below:

These five charts tell me that;

  • Growth has been uneven, and most recently seems to have gone almost ex-growth.
  • As with most companies, there was a plunge in profitability at the time of the financial crisis in 2008 onwards, but profits have now returned to £3-4m p.a..
  • Normalised EPS seems to have levelled off around 5-7p
  • The shares have been getting cheaper on a PER basis in the last three years.
  • Dividends were resumed in 2012, and it now has a good yield.


Amino's interim results today look to be as expected. The most striking thing from the P&L is the strong improvement in gross margins, up a whopping 10.8 points to 46.2%. That's very impressive, but had been previously flagged (I recall a friend mentioning that gross margins were rising strongly after…

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Amino Technologies Plc is engaged in providing Internet protocol (IP)/Cloud video software and device solutions. The Company develops a range of products and solutions designed to help broadband network operators deliver entertainment and associated connected home services to the consumer. It operates through the development and sale of broadband network software and systems segment. The Company and its subsidiaries specialize in Internet protocol television (IPTV) software technologies and hardware platforms that enable delivery of digital programming and interactivity over IP networks. It is also engaged in the sale of IPTV set-top boxes and associated customer support services. Amino Communications is a wholly-owned subsidiary of Amino Technologies PLC. Its other subsidiaries include Amino Holdings Limited, Amino Communications LLC and Amino Technologies (US) LLC. more »

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Finsbury Food Group Plc is a United Kingdom-based bakery manufacturer. The Company is engaged in producing a range of cakes, bread and bakery snack products for retailers and the foodservice channel. The Company's segments include UK bakery, Overseas and Group Operations. The Company's UK Bakery segment manufactures and sells bakery products to the United Kingdom's multiple grocers and foodservice sectors. The UK bakery segment primarily includes the operations of Memory Lane Cakes Ltd, Lightbody Group Ltd, Campbells Cake Company Ltd, Johnstone's Food Service Ltd, Fletchers Bakeries Ltd and Nicholas & Harris Ltd. The Overseas segment is engaged in the distribution of the Company's product manufactured in the United Kingdom along with the sale of third party products primarily to Europe. Kara is the Company's foodservice brand. Its licensed brands include Disney, Thorntons, Weight Watchers, Vogel's, Village Bakery and Cranks. more »

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

2 Comments on this Article show/hide all

mikelevie 15th Jul '13 1 of 2

Hi Paul, regarding the stock report do you review the Margin of Safety calculations? I notice that AMO has a 26% Graham MoS which, to me, indicates there is still some headroom for the share price to grow. Thanks, Mike.

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Paul Scott 15th Jul '13 2 of 2

In reply to post #75184

Hi Mike,
I haven't really looked at the Margin of Safety calculations on Stockopedia, is that something I should look into do you think?
I agree, the share price of Amino Technologies (LON:AMO) could well rise further, if they deliver good growth. I just don't feel qualified to judge their growth prospects. There doesn't seem to be any recurring revenue from what I can gather, so who knows? In that type of situation you really need to do a lot of research on their products, competition, etc, in order to make an informed judgment. I'm not able to do that, so for me it was a sell when I'd made my profit on the original bonkers undervaluation at 50p to 90p. At 90p it's done what I thought it would do, hence I sold.

Cheers, Paul.

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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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