Which Stocks to Buy?
So, we have been deliberating over which stocks to buy this month, and there are quite a few. There are several great companies that were highlighted by the screener results in our most recent monthly watch list. However, there are also a couple of companies that are not on that list, because they are small-caps (and we only screen the FTSE350), and a third potential investment which I have been waiting for is a micro-cap startup company. Read on for an overview of each of these potential purchases for March. Don’t forget to leave me a comment with your thoughts below! Here are the 3 main contenders:
- Bloomsbury Publishing;
- St. Ives;
- giftgaming.
1. Bloomsbury Publishing
A straightforward media company, BMY as they are known on the FTSE publish books in the UK and the USA, including the Harry Potter series. Now, I am not a fan of Harry Potter, but there are oodles of people who are, so I’m sure they are not going to disappear overnight. However, I know Bloomsbury through their academic publishing side, which is highly respected and growing.
A quick overview of the numbers from Investorease:
| Shares in Issue | 74,713,778 (Ord 1.25p) | SEAQ/Epic | BMY |
| SEDOL | 3314775 | Dividend Yield | 3.8808 |
| Annualised Dividend | 5.8600 | Dividend Cover | 1.8 |
| Latest Pay date | 04-12-2014 | Latest Ex-Div date | 05-11-2014 |
| EPS | 10.57 | Floated | Jun 94 |
| Market Capitalisation (£m) | 112.818 | Enterprise Value (£m) | 144.829 |
| Sector | Media | % of Sector by Cap | 0.120 |
| Industry | Publishing | % of Industry by Cap | 0.327 |
| Last RNS Announcement | 03-03-2015 | Listing | FULL |
| Last Annual Results | 20-05-2014 | Last Interim Results | 23-10-2014 |
| Total Assets (m) | 158.084 | Total Liabilities (m) | 42.048 |
| Total Equity (m) | 116.036 | Cash & Equivalents (m) | 10.037 |
| Net Gearing (%) | 20.249 | Gross Gearing (%) | 26.599 |
| Net Assets (m) | 116.036 | Op Cash Flow (m) | 11.112 |
| Debt Ratio | 3.563 | Debt-to-Equity | 0.102 |
| Assets/Equity | 1.362 | Cash/Equity | 8.650 |
| Quick Ratio | 1.770 | Current Ratio | 2.437 |
2. St. Ives
This is essentially an alternative to Bloomsbury, although they are involved in printing services, so they are technically support services I guess.
Quick overview, again from the wonderful investorease website:
| Shares in Issue | 126,209,682 (Ord 10p) | SEAQ/Epic | SIV |
| SEDOL | 0768900 | Dividend Yield | 4.0390 |
| Annualised Dividend | 7.2500 | Dividend Cover | 1.19 |
| Latest Pay date | 08-05-2015 | Latest Ex-Div date | 09-04-2015 |
| EPS | 8.60 | Floated | Oct 85 |
| Market Capitalisation (£m) | 226.546 | Enterprise Value (£m) | 388.812 |
| Sector | Support Services | % of Sector by Cap | 0.200 |
| Industry | Business Support Services | % of Industry by Cap | 0.292 |
| Last RNS Announcement | 10-03-2015 | Listing | FULL |
| Last Annual Results | 07-10-2014 | Last Interim Results | 10-03-2015 |
| Total Assets (m) | 318.919 | Total Liabilities (m) | 174.602 |
| Total Equity (m) | 144.317 | Cash & Equivalents (m) | 12.336 |
| Net Gearing (%) | 50.880 | Gross Gearing (%) | 54.748 |
| Net Assets (m) | 144.317 | Op Cash Flow (m) | 25.907 |
| Debt Ratio | 34.530 | Debt-to-Equity | 0.436 |
| Assets/Equity | 2.210 | Cash/Equity | 8.548 |
| Quick Ratio | 0.933 | Current Ratio | 0.991 |
I am not liking how low that dividend cover is! I have seen this company crop up here and there on various small cap sites. It recently caught my eye again, due to this article on Interactive Investor – who also happen to be by NISA broker. Make of it what you will, but I think they are a grower and could be worth investigating further.
3. giftgaming
I have some close connections to the startup community in Cambridge. giftgaming is one startup company that I feel is really promising and will make some significant changes in the gaming industry. You can find out more about giftgaming here, but essentially, they are involved in the monetisation of games in a non-intrusive manner. I think it’s a fantastic idea, and I hope that it will change the way that games are monetised forever. I know how dedicated the CEO is and, in fact, I know his whole team – and they’re excellent. I’m rooting for them to do well, and I think they’re making great headway along the right tracks.
The BIG warning: Investing in startups is very, very risky – which is why the government have schemes such as SEIS which allow you to get huge tax breaks on your investment, as well as it being free from capital gains tax if you hold it for at least 3 years. This is a great way to save tax and also to support baby companies as they take some of their first steps in the world of raising finance to grow their companies. giftgaming is raising this round through SEEDRS*, which they also used last time in November, when they were the most oversubscribed company that month. May I just say again, that it is very very risky to invest in startups. I am not a financial advisor. Do your own research!
What do you think? Would you invest in any of these companies? Which stocks are you planning to buy this month? Let me know, leave a comment below!
photo credit: freedigitalphotos.net/bplanet
Hello what does dividend cover mean? And how does the annual dividend differ from the yield?
Thank you
Claire
Hi Claire
thanks for your questions. The annual dividend is the amount (usually in pence) that is to be paid out in the year. The yield is that amount divided by the share price, so as the share price fluctuates every day, the yield will change accordingly. Therefore, the moment you buy the, you’re locking in the % yield at that exact time.
The dividend cover is how many times the dividend can be covered by the company’s income (net earnings). So if there’s a dividend cover of 2, that means the company could pay the dividend twice before they ran out of money. A dividend cover of 2 or more is considered safe, although I look to shares with a 1.5 or above. In America, they use a similar ratio, but it’s called ‘payout ratio’. A payout ratio of 50% is the same as the dividend cover of 2, it means they’re paying out 50% of their net earnings as a dividend. So the lower the payout ratio the better, but the higher the dividend cover the better,
Cheers
TV,
Giftgaming is a pretty interesting new concept with lots of potentials. You have the advantage of investing there as you already now the people inside and the risk involved in startups. I would definitely be interested if I have the connections but still proceed with caution. Best of luck!
FFF
Thanks for stopping by.
I absolutely agree with you. It is extremely risky, but then my portfolio is very conservative to say the least, so a minuscule investment into a startup wouldn’t irk me. The overwhelming majority is in ultra-safe inflation-linked certificates, if I don’t count our pensions.
Cheers
I’m thinking of buying some TNA: it’s the 3x leveraged ETF for the Russell 2000. Since I think that stocks still have some room to run, I’m buying the most volatile U.S. stock market ETF
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I want to buy into the Russell 2000 too, but I have not been able to find a fund or ETF trading on my platform here in the UK. Gutted.
Can’t say I know any of these stocks that you mentioned but the numbers look interesting. Would be interesting to see what the PEG ratios are for these companies.
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Interestingly, I couldn’t find out what the PEG ratio was… Bloomsbury is definitely a favourite of mine right now
Thanks for stopping by, as always
Hi tv,
I’m very interested in reading about how you make decisions on where to invest as I’m, rather boringly, mainly sticking with funds at the moment until I have more experience and knowledge (reading blogs such as yours will help with this.)
I’m pretty heavily invested in the world of the physical book in my job and, as you say, I don’t think the book is ever going to lose it’s place in the market. People love books in a way that they would find it hard to love a download.
Cerridwen recently posted…Divesting and the Carbon Bubble
Hi Cerridwen, thanks for popping over.
I think you’re totally right in the fact that the physical book can be a beloved object, whereas a download just isn’t likely to cut the mustard in that respect. The book has always had a kind of mystical, treasured status, especially for the English I think.
With regards to investment decisions, I tend to run my screener and see what might be good value to invest in. If I haven’t got any or much money invested in a particular sector, that could be an attraction. I like to invest in slightly boring, necessary/useful companies which I think will stand the test of time. I take out gambling and tobacco stocks, as I don’t want to support those industries, but most other industries would be acceptable to me. I was interested in your recent highlight of renewable energy investing and I still want to invest in something like that too.
I also like to consider investing in/loaning to SMEs and startups, as I know how difficult it is for them and I want to support them. It can also be really profitable e.g. p2p lending to SMEs through sites like Funding Circle, and SEIS tax breaks for investing in startups.
Never heard of giftgaming or SEEDRS so thanks for those links, I’ll have a little read.
There was a claim by Waterstones earlier this year that physical books are making a comeback against ebooks, so that could be good news for Bloomsbury. I love my Kindle but I still like to read ‘real books’.
Oh, and I’m a fan of Potter!
Will be interesting to see which of these you end up investing in!
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Hey weenie, thanks for your comment. And may I just start by saying I am totally exciting to swap a bottle of the good stuff with you this Saturday!
As to Waterstones claim, yes it is true. Printed books are actually really stable in terms of sales right now, and they’re apparently the best they’ve been in years.
I’m personally philosophiocally against buying ebooks as there’s tax on them, whereas physical books are zero-rated for VAT. If the tax is removed, I might consider it. The other weird thing is that you can usually just get physical books for free from the library or for dirt cheap second hand. I use bookbutler.com to find bargains.
As to giftgaming, unless you’re really into tech it’s no wonder you haven’t heard of them, although I am slightly surprised you’ve not heard of SEEDRS – have you heard of crowdcube?
CHEERS
Aha, crowdcube I’ve heard of before and I’ve funded a project via kickstarter too in the past – just not seen that SEEDRS site before.
And yes, looking forward to meeting up and swapping brews with you this Saturday!
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I noticed that crowdcube advertise in the papers, but I guess unless you’re involved in entrepreneurship and/or startups then you might not have hard of SEEDRS.
I think it’s exciting to be able to invest in these kinds of companies, obviously way high risk, so need to be careful, but I guess it’s especially good for being able to invest in family or friends’ startups.
M,
Good post! Love that you’re drawing attention to startup and angel investing, even though hardly anyone seems interested in that.
Giftgaming is an awesome idea! The only thing that bugs me a little bit is the fact that it’s geared towards social and mobile games. On top of that, it’s not really-really integrated into the video games. It’s still a pop-up and the like.
As a gamer I’m not a big fan of that. Integrated advertising would be realistic billboards or something in games. Or items that have labels. Not another popup thingy that requires my active involvement.
Furthermore, I believe the business model is way too easy to copy. Just imagine how Google AdSense would wreck this start-up if it implemented something similar? That’s why I believe Giftgaming will be acquired before it can amount to anything big.
That doesn’t mean you won’t make a huge return on your investment though!
Are you going to take the plunge?
Best wishes,
NMW
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At this stage, I think they’re starting with the advertising model that already exists. I expect they’ll move towards an even less intrusive model as time goes on. As to their being copied, they actually have their system patented.
As to their being acquired before they get really big – yes, that is a possibility and I do not mind too much if they do get acquired, as if we do make an investment in them, it’s likely to have a profitable outcome, especially if using the SEIS method of investing.
As always, thanks for your thoughts and analysis,
Cheers!
As the Founder and CEO of giftgaming, I fully understand your concerns, NMW.
However, billboards do not always work — think fantasy/medieval games. A modern day billboard would just feel cringeworthy. Ditto if you had say a soft-drink branded armour. Cringe factor = over 9000.
The business model is easy to copy, yep. Although keep in mind to build a scalable platform does take some effort, as does designing plugins so they’re actually easy to integrate.
We have patents pending and earlyvangelists. It’s a start. Interestingly, Paul Graham — founder of Y Combinator — says that startups who are expected to be killed by a larger competitor’s pending product launch tend to do well; Dropbox was apparently one of them.
Also, we already have prototypes for NON mobile/social games. Check out this screenshot https://giftgaming.wordpress.com/2014/04/21/giftgaming-alpha-testing-begins/
We plan to attack the Desktop and Web market. Competing in mobile alone is a bit foolish and narrow-sighted, plus we’re massively underfunded in what is a very competitive space (mobile ads). But Desktop and Web in-game ads seem to be a bit more neglected, leaving it more vulnerable to be attacked by us.
Finally with giftgaming, the beauty is that you don’t see any ads unless you want a free powerup/coins. Personally, I’d take the free powerup. But it’s your call. A gift is never mandatory to be opened, though I daresay curiosity can get the better of us…
I hope my essay has earnt me a small investment
Kind regards,
Nick
—
Nick Hatter
CEO
giftgaming
Nick,
I really appreciate you stopping by! And most of all, thanks for your informative answer to NMW’s concerns. Investing in any startup is inherently a risky business – there are so many unknowns, and maybe even more ‘unknown unknowns’. I think it’s both wonderful to see, and a good sign of your business brain that you are anticipating and engaging with all of the concerns that NMW has about this area of monetisation.
So often, we see tales of startups going from boom to bust – hence the ca. 50%+ failure rate. But you are absolutely grabbing the bull by the horns, and I totally expect success to come of that kind of attitude!
CHEERS