The Stockopedia community is an important driving factor of new investment ideas and individual equity analysis on the site. Plenty of knowledgeable contributors provide key insights on stocks of interest, or in areas of expertise, across different markets and geographies on a daily basis.

To focus more on community-led ideas, and in view of expanding our editorial coverage, we’ve decided to create ‘Stock Briefs’. These are shorter-form articles that will hopefully allow investors to quickly digest some of the key info about a security.

We have used our more rigorous Stock Pitch format to guide us on this, and we hope that our new ‘Stock Briefs’ will help provide a useful starting point for investors to carry out further due diligence.

Here’s an example of what this framework will look like…


The Investment Case

Vertu Motors is a leading automotive retailer with 155 outlets across the UK. The company’s share price has climbed over 60% since the start of 2021, but could still have further to run after upping guidance for this year on the back of strong demand and supply shortages in the industry.

It seems that the market is still trying to work out how to value automotive retailers on the back of these excess levels of profitability, and herein is where the opportunity may lie. After upgrading guidance for the second time in two months in August, Vertu Motors expects to generate profits before tax in the region of £50 to £55 million. Now, it remains to be seen how long this level of earnings will last, but this is remarkably cheap when you take into account the current market capitalisation of less than £200 million, and the strength of the balance sheet.

The strength of the balance sheet is what really differentiates Vertu Motors from its peers. The company holds £182m worth of tangible net assets, worth the equivalent of 50.2p per share.

Vertu Motors’ financial position gives it a unique advantage. It may decide to pursue acquisitions to make the most of current market opportunities, but the balance sheet strength equally provides investors with a notable margin of safety in the event that market conditions suddenly change.


Profile

What are the company's principal business activities, how does it generate its revenues?

As an automotive retailer, Vertu Motors’ principal business activities involve the sale of…

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