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…
