Stockopedia StockSlam - July 2019

Monday, Jul 15 2019 by
32

Last week we got a great crowd of retail (and professional) investors down to the Holborn WeWork to pitch their best investment ideas. It was a night of good fun, tasty pizzas, and great ideas.

If you’ve never been to one of our StockSlams, they are worth checking out. Retail investing can be a rather solitary pursuit, so these events are a great way to meet and swap stories with fellow enthusiasts.

We recorded the whole thing and have transcribed it below. Hopefully this gives you an insight into what to expect if you’d like to make it to the next one. Either way, reading through these pitches is sure to bring a couple of new investment opportunities to your attention.

Thanks to Damian Cannon for hosting the event and to all the speakers and listeners!

Topps Tiles (TPT)

When I’m looking at an investment for the first time I almost always start by looking at the Stockopedia StockReport. Here we have Topps Tiles, a retailer that is probably familiar to most of you. Now high street retailers are in a bad place, and have been for some time, but I think that there will be winners and losers. Topps Tiles is no exception and you can see here that earnings have been falling for almost 5 years now. However I think that there is room for some optimism at last.

For a start analyst forecasts point to a 25% improvement in earnings this year with further growth in 2020. Given a P/E ratio of around 10 and a dividend yield above 5% this suggests that we’re getting some cheap growth here. The business also has some reasonable quality metrics with ROCE above 20% although including lease obligations does bring this down to around 11%.

So what’s changed with the business? Well Topps has always sold into the retail and trade markets with sales roughly equally split between the two. Recently management have expanded into the commercial market on the back of an acquisition which opens up a whole new line of sales. In addition trade sales are increasing while the store estate is being carefully managed to optimise their retail exposure. With the average unexpired lease term coming in at around 4 years they are in a good position to close loss-making shops.

Then there’s the recent Q3 update where like-for-like sales were reported to…

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Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


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2 Comments on this Article show/hide all

Whitbourne 15th Jul 1 of 2
3

Thanks Jack and the team for organising such an enjoyable event, for this write-up and for adding the link to Geoff's article at https://www.stockopedia.com/co...

Thank you too to to the other speakers for such diverse and informative talks.

ON Kenmare Resources (LON:KMR) I didn't know the answer to the question on management shareholdings, so I have had a look online. The answer is that no individual owns more than 3% so there is no big management stake. The institutions that do own more are as follows (as at March 2019):

No. ordinary shares% of issued share capital
African Acquisition Sarl31,928,48029.1%
Prudential plc21,849,17019.9%
Miton Group plc8,410,8607.7%
European Investment Bank7,663,1327.0%
The Capital Group Companies, Inc. 5,157,8634.7%
FIL Limited3,464,0913.2%

It's unusual to see the EIB on the share register of a quoted company, I wonder how that came about? Anyway, these holdings account for just over 70% and the rest is with management, smaller institutions and individuals. Which is quite healthy for liquidity, I would say.

Finally, here is some better information than I was able to give on the company's main product, titanium dioxide:

Ilmenite and rutile are titanium minerals used as feedstocks to produce titanium dioxide (TiO2) pigment, which accounts for around 90% of global titanium feedstock consumption. TiO2 pigment is in turn used in the manufacture of paints and other coatings, plastics and paper as well as a number of other applications, including cosmetics, food additives, ceramics and textiles.

TiO2 pigment is favoured in many such applications for its brilliant whiteness, ultraviolet protection, non-toxicity, inertness, and its “covering power”, which results from its superior ability to disperse light as a result of its high refractive index. There is no economic substitute or environmentally safe alternative to titanium dioxide in consumer end use applications, such as paint, due to health issues related to lead toxicity.
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Jack Brumby 17th Jul 2 of 2

Thanks Whitbourne - the follow-up info is appreciated as well. Nice pitch, by the way. See you next time!

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