Good morning!

I'm starting early today, to catch up on the backlog from yesterday.

There's only one trading update (and no results statements at all) in my universe of stocks this morning, a rather pleasing update from BOTB, so let's start with that.

Best of the Best (LON:BOTB)

Share price: 212.5p
No. shares: 10.1m
Market cap: £21.5m

(at the time of writing, I hold a long position in this share)

Trading update - covering H1, the 6 months to 31 Oct 2016. This sounds encouraging;

Best of the Best plc, which runs competitions to win luxury cars online and at retail locations, is pleased to announce that trading for the six months ended 31 October 2016 has been strong with profits before tax generated ahead of management expectations.

Revenues have been in line with management expectations and the proportion of online sales continues to increase.

Operating margins have improved and marketing investment in customer acquisition during the period was slightly lower than originally anticipated.

Ahead of expectations is always good, although it's an important distinction to note that this seems to have been achieved by containing costs, rather than top line out-performance.

Broker expectations have increased this morning. FinnCap has increased its EPS estimate for the current year from 9.1p to 11.3p. With the share price currently at 212.5p (before the market opens - I expect it will rise maybe 10% today, at a guess?) that makes the PER 18.8 times.

Next year's FinnCap forecast has gone up from 10.7p to 12.4p, giving an FY18 PER of 17.1 times. Although FinnCap does indicate that they've been conservative, giving scope for upgrades.

My opinion - this is a long term holding of mine. The reason I bought the shares, is because I see this as a unique business. It's built up a strong reputation from operating at airports for about 15 years. However, business is increasingly moving online. Therefore the PER could shoot up at some point, if the market recognises that there could be much more impressive growth in future from internet sales really taking off.

Imagine what sales could rise to, if a larger gambling company were to acquire BOTB, and put some serious marketing spend behind it? I sometimes wonder if management are being too cautious - they've created something special, but arguably haven't exploited its full potential yet.

Anyway, the advantage of a cautious approach is that it's profitable, very cash…

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