'Beating the bears'
Broker Fairfax has armed clients with advice on how to go about ‘beating the bears’. Investors need to be ‘ultra selective’ and only choose stocks satisfying certain criteria: liquidity, visible repeat demand patterns, ultra strong balance sheets, cash generation, potential for well-covered, significant dividend growth and, finally, a proven management team to steer the company through troubled waters.
Select companies passing these tests include website domain name specialist Group NBT, which has built a ‘strong brand’ in a growing market. The broker forecasts good levels of cash flow from Group NBT for the current year to June and, based on a price-to-cash flow ratio of eight times (a discount to the sector average of 15), sets a 300p price target for shares recently swapping hands for 221.5p. Furthermore, ‘with dividend cover of seven times and increasing cash generation, there is scope for significant dividend growth going forwards.’
Healthcare Locums deserves ‘a complete rerating’, trading on a bargain price-to-earnings ratio of sub-seven times and offering defensive and visible earnings in markets with ‘sustainable long-term growth drivers’. Fairfax also predicts that margins will ‘increase dramatically’ over the next two years as the business mix changes and the cost base lowers.
With similarly strong drivers, fully listed support services group Tribal is another buy, based on ‘solid earnings growth, a comfortable dividend and a strong balance sheet’. Offering ‘a degree of assurance’ since it derives 96 per cent of sales from the public sector, the current rating fails to do justice to a business offering ‘sustainable double-digit earnings growth’.
Cheaper fund investing has arrived at The Share Centre.
We don't believe it's fair to charge you extra just for holding funds.
So we don't. Find out more.
Capital at risk.
Since 2008, our share tips outperformed the benchmark by 281%. Take a free trial and get access to our recommendations today. Start free trial now.
This annual guide provides a comprehensive overview of cash shells on the Main Market, AIM and PLUS landscape. The guide is available to order in PDF format for £350 (+VAT). More info
The most comprehensive review of AIM directors' pay available, and this year includes a record sample of 1,044 AIM-quoted companies. The full report is available to order for £365 + VAT. Click here for more info
In-depth coverage of selected AIM companies within the small-cap and fast growing company sector including AIM and PLUS Markets shares and listed stocks. Company research and analysis from GCI analysts updated daily.
Be the first to receive our independent analysis and research, designed to help you generate more wealth for you and your family over the long term. Subscribe and save.
Sara Williams investigates what can be ascertained from the actions of a number of AIM listed company’s directors.
David Thorpe enters the mind and methodology of Mike Prentis.
Ben Jaglom contemplates how it would feel to be the recipient of a sovereign wealth fund.