Thursday, December 30, 2004
Christmas tipsters a-tipping Ben Bailey
I've written previously that small cap shares need newsflow if their market valuation is to move significantly. This news could be results announcements, trading statements or proclamations from peers.
Media comment can also create trading volume and generate price changes. This week my largest holding, Ben Bailey has received a leg-up from tipsters in the plethora of shares for 2005 articles.
Shares magazine, t1ps.com and MSN Money. The analysis and conclusions are nothing avant-garde to Artful Investing readers, the tips are no more sophisticated than necessary: Ben Bailey is too cheap when comparing the share price to profits.
Shares encapsulates my case for investment:
Financially, Ben Bailey looks in good shape. From 2000 to 2003 revenue doubled to £62.8 million, while earnings have leapt from 10.6p a share to 77.3p. Profits of 16.3 million and 97p EPS are expected to be unveiled for 2004 when annual results are published in March, rising to £17.6 million pre-tax in 2005. This implies very modest earnings growth to 103p a share, a target that may well prove too conservative.
Nick Louth at MSN Money postulates along similar lines:
Even in an industry offering bargain P/E ratios, Ben Bailey stands out. The East Midlands and Yorkshire-based company has for five years increased its earnings per share by an average 54% a year and its dividend payout by 37%, yet it still stands on a Scrooge-like forward P/E of 4.1.
Now of course everyone is expecting house prices to decline, which will undoubtedly bite into margins. What no-one knows is how sharply and for how long any price fall will last. If the downturn is milder than expected, the shares of housebuilders could bounce, and Ben Bailey is bound to be one of the beneficiaries.
Mark Watson-Mitchell at t1ps.com completes the research and evaluation process, including a price target for the incredibly undervalued Ben Bailey:
analysts at brokers Numis Securities have upped their full year profits forecast from £14.2 million to a massive £16.2 million (four years ago it was making £1.6 million).
Rival brokers, Corporate Synergy, expects £16.4 million or 99.2p of earnings. Further down the line for the year starting 1st January 2005 it has pencilled in £17.6 million pre-tax profits, worth a staggering 105.9p per share in earnings. Those estimates are excellent news and make the shares look incredibly undervalued....
Numis has a 540p share price target, a fair hike from the current 411.5p, or a ridiculous four times 2004 forecasts. At the time of the full year results in March the shares were nudging 500p but have drifted on profit taking.
I suggest a short term share price target of at least 500p looks easily achieved, thereafter a nudge through to 600p is very likely. The shares offer a reasonable yield of 3.6% (forecast). There is also scope for an increase in next year's forecasts depending on market conditions.
At the current share price of just 410.5p Ben Bailey is well worth buying, particularly given the likelihood of consolidation in the sector and the possible premium it could achieve if a bidder came forward.
These shares are a stonking BUY and must be added to any portfolio seeking capital growth.
The media attention wafted smelling salts under the noses of investors comatose to the opportunities existing in this bear mauled sector. Bailey shares are now on course to end 2004 higher than they started the year, albeit a mere 4p should the shares hold their price in tomorrow's final trading session. The recent close represents a 6% rise on my most recent purchase at 390p and looks set to reward me for holding onto the shares tighter than Paul McCartney's facelift when they fell to 365p.
Here's to tomorrow morning and the last trading session of the year!
The Arful Dodger
Media comment can also create trading volume and generate price changes. This week my largest holding, Ben Bailey has received a leg-up from tipsters in the plethora of shares for 2005 articles.
Shares magazine, t1ps.com and MSN Money. The analysis and conclusions are nothing avant-garde to Artful Investing readers, the tips are no more sophisticated than necessary: Ben Bailey is too cheap when comparing the share price to profits.
Shares encapsulates my case for investment:
Financially, Ben Bailey looks in good shape. From 2000 to 2003 revenue doubled to £62.8 million, while earnings have leapt from 10.6p a share to 77.3p. Profits of 16.3 million and 97p EPS are expected to be unveiled for 2004 when annual results are published in March, rising to £17.6 million pre-tax in 2005. This implies very modest earnings growth to 103p a share, a target that may well prove too conservative.
Nick Louth at MSN Money postulates along similar lines:
Even in an industry offering bargain P/E ratios, Ben Bailey stands out. The East Midlands and Yorkshire-based company has for five years increased its earnings per share by an average 54% a year and its dividend payout by 37%, yet it still stands on a Scrooge-like forward P/E of 4.1.
Now of course everyone is expecting house prices to decline, which will undoubtedly bite into margins. What no-one knows is how sharply and for how long any price fall will last. If the downturn is milder than expected, the shares of housebuilders could bounce, and Ben Bailey is bound to be one of the beneficiaries.
Mark Watson-Mitchell at t1ps.com completes the research and evaluation process, including a price target for the incredibly undervalued Ben Bailey:
analysts at brokers Numis Securities have upped their full year profits forecast from £14.2 million to a massive £16.2 million (four years ago it was making £1.6 million).
Rival brokers, Corporate Synergy, expects £16.4 million or 99.2p of earnings. Further down the line for the year starting 1st January 2005 it has pencilled in £17.6 million pre-tax profits, worth a staggering 105.9p per share in earnings. Those estimates are excellent news and make the shares look incredibly undervalued....
Numis has a 540p share price target, a fair hike from the current 411.5p, or a ridiculous four times 2004 forecasts. At the time of the full year results in March the shares were nudging 500p but have drifted on profit taking.
I suggest a short term share price target of at least 500p looks easily achieved, thereafter a nudge through to 600p is very likely. The shares offer a reasonable yield of 3.6% (forecast). There is also scope for an increase in next year's forecasts depending on market conditions.
At the current share price of just 410.5p Ben Bailey is well worth buying, particularly given the likelihood of consolidation in the sector and the possible premium it could achieve if a bidder came forward.
These shares are a stonking BUY and must be added to any portfolio seeking capital growth.
The media attention wafted smelling salts under the noses of investors comatose to the opportunities existing in this bear mauled sector. Bailey shares are now on course to end 2004 higher than they started the year, albeit a mere 4p should the shares hold their price in tomorrow's final trading session. The recent close represents a 6% rise on my most recent purchase at 390p and looks set to reward me for holding onto the shares tighter than Paul McCartney's facelift when they fell to 365p.
Here's to tomorrow morning and the last trading session of the year!
The Arful Dodger
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