Investment for February

Discussion of the proposed Cashback Investment Club

Moderator: CIC officers

I would like to invest in

Bakkavor
6
55%
Harworth Group
0
No votes
Johnson Service Group
3
27%
None of the above
2
18%
 
Total votes: 11

garindan
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Investment for February

Post by garindan » Mon Feb 03 2020 10:16am

All,

Further to my update a few weeks ago I'm happy to publish the selection of shares to vote on for our investment poll for February, taken from the last few weeks of tips on Sharecast news. I'm going to leave the poll open until this time next week to allow everyone chance to think about the options and make a decision to support or otherwise.

Due to Sharecast not having three tips this past Sunday I have added tips from the previous few weeks and made sure they are all "buy" tips and not hold or sell ones, the latter of which would be irrelevant to us.

So you have three options to support or decide against all - over to you!

Bakkavor
Harworth Group
Johnson Service Group
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garindan
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Re: Investment for February

Post by garindan » Mon Feb 03 2020 10:17am

Bakkavor
2 February 2020 - Joanne Hart at the Daily Mail said on Saturday that shares in food manufacturing company Bakkavor looked set to increase in price "this year and beyond".
Hart credited the "ambitious, experienced and highly innovative" group for its ability to create products that were "big earners" for supermarkets and its recently launched series of dishes for plant enthusiasts - such as butternut squash nut roast and mushroom stroganoff.

In her Midas share tips column, Hart acknowledged that the past few years had been "particularly difficult" for food manufacturers, with inflation being rife across the industry as prices of dairy products, meat, fruit and vegetables have steadily risen since 2016.

However, Hart said there were now signs of change, with food inflation seemingly beginning to subside and consumer sentiment appearing to be improving.

"Bakkavor has held its own through the hard times, using its scale to secure the best deals with suppliers, improving operations wherever possible and working with supermarkets to limit price increases for consumers. Looking ahead, however, the company is set to benefit as conditions improve," said Hart.

Hart also highlighted Bakkavor's expansion into America and China as another catalyst for positive change and noted that it should not be "overly affected" by the Wuhan coronavirus either, as China accounts for little more than 2% of annual profits.

"Bakkavor is a strong, established business, making food that consumers love. Rising consumer confidence should boost growth in the UK, the international operations offer long-term potential and the dividend provides a tidy income. Buy and hold."
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Re: Investment for February

Post by garindan » Mon Feb 03 2020 10:18am

Harworth Group
19 January 2020 - Over in the Mail on Sunday, Joanne Hart was looking at regeneration specialist Harworth Group, and its transformation of a gritty northern mining strike hotspot Orgreave into the much more contemporary Waverley.

She said that, gone is the colliery and coking plant that once employed 700 miners, and in its place were 850 new homes, a huge business park, and more than 2,000 jobs.

It was an exemplar of the kind of regeneration Harworth put its effort into - the kind of places in the Midlands and the North of England where Boris Johnson has signalled serious investment.

But the success of Waverley was no accident, either, given the company's track record of regenerating coal mines - it was initially spun out of UK Coal, and then listed in 2015.

Hart said chief executive Owen Michaelson had spent his career transforming neglected brownfield land into in-demand places, and recently had restructured Harworth's portfolio, by selling off farmland with limited potential and buying new sites in the Midlands and the North West.

It now owns 120 sites across the residential and commercial sectors, spread over 20,000 acres, and was "constantly" looking for new opportunities, making further expansion likely.

Hart said property developers often found they had a "bad name", but Harworth had been working in the North for a number of years, meaning local authorities trusted the business.

She noted that Michaelson had planning permission for 10,000 new homes, with another 10,000 in the permission pipeline, while there was also some serious commercial development underway for tenants ranging from Amazon and Lidl to hundreds of smaller businesses on a local scale.

The company's residential plots are sold to housebuilders once they had received planning permission and the sites were ready for building.

It did retain ownership of its commercial developments, however, bringing in income for the group once tenants take the keys.

That process could sometimes take years, Hart wrote, meaning political uncertainty made 2019 a somewhat challenging year for the firm, adding that Boris Johnson's election victory and promise to invest in the North helping to stoke the flames of confidence.

Harworth is due to release a trading statement on Tuesday, with the markets expecting an upbeat tone, and revenues of around £80m for 2019 and £86m for the current year.

And while Harworth did pay a nominal dividend - likely to be 0.9p in 2019 and 1p for 2020 - it remained mainly a growth stock, given its shares had doubled since listing.

"The UK needs more homes and it needs to boost productivity. Harworth helps on both fronts and its regional focus is a further plus.

"The company is well managed, finances are sound and prospects are fair.

"At 154p the shares are a buy."
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Re: Investment for February

Post by garindan » Mon Feb 03 2020 10:21am

Johnson Service Group
18 January 2020 - Peter Egan was a student on the west coast of Ireland when he took a summer job as a nightshift worker, sorting hospital linen. Today, 27 years later, he is chief executive of Johnson Service Group, one of Britain's top laundering firms.

Egan is a laundry man through and through. He has been at Johnsons since 1998 and his commitment is yielding results.

The group has made impressive progress since Midas recommended the shares at 19p in 2010. They had soared to £1.14 when we looked again in 2017. Now they are £2.06 and there should be further gains.

The company provides uniforms for 1.3million workers at firms including Jaguar Land Rover, Morrisons and several big food manufacturers. There is a thriving hotel, restaurant and catering division too.

Each week the group supplies 8.5million towels, linen, napiery and uniforms to customers ranging from the Premier Inn chain to Wembley stadium to the fashionable Wolseley restaurant in Mayfair, west London.

All these customers need to know that their items will be delivered on time and ready for use and Johnson prides itself on service.

The company has invested heavily in equipment and IT, so kit is state of the art, water and energy use is minimised and automation is on the rise, including machines that can iron shirts and fold napkins.

Egan is highly focused on Johnson's 6,000 employees too and an award-winning training academy helps staff to learn new skills, feel part of the company and move up the ladder.

Johnsons is not the cheapest in the market but it tries to be the best. Customers rarely leave and the group is steadily winning new business.

A recent trading update was optimistic and brokers forecast a 10 per cent increase in 2019 profits to £46million, rising to £49million this year. A dividend of 3.4p is expected for 2019, moving to 3.6p in 2020.

Midas verdict: Johnsons has grown organically and through acquisition and that trend should continue, as Egan snaps up smaller operators. Given the more than tenfold increase in the share price since 2010, investors may want to sell some stock and bank profits at £2.06. But, as we suggested in 2017, they should not sell out completely as this business has further to run.
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Re: Investment for February

Post by BeautifulSunshine » Tue Feb 04 2020 5:36pm

I wouldn't want to prejudice the vote, any thoughts members?
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garindan
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Re: Investment for February

Post by garindan » Tue Feb 04 2020 7:42pm

I think this is probably the most difficult decision yet in terms of which are up for a vote. I'd say two things to all members (and non-members if they want to chip in):

- delve into the specifics and report back to help everyone make a decision
- if you are not comfortable with all of these then remember we don't have to buy any of them

If we do end with no outright winner then I will look for some more options for another poll.
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Re: Investment for February

Post by BeautifulSunshine » Fri Feb 07 2020 9:55am

At present, total votes is five.

Perhaps the Chairman could send a "reminder to cast your vote" PM?
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Beachboy
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Re: Investment for February

Post by Beachboy » Sat Feb 08 2020 5:21pm

I have been away so only just had a proper chance with this. Really struggling as all the suggestions are close to their year highs and can't find anything through (albeit quick) research to indicate why any of them will rise significantly. Anyone else found anything worth reading?
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garindan
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Re: Investment for February

Post by garindan » Sat Feb 08 2020 5:43pm

Beachboy wrote:
Sat Feb 08 2020 5:21pm
I have been away so only just had a proper chance with this. Really struggling as all the suggestions are close to their year highs and can't find anything through (albeit quick) research to indicate why any of them will rise significantly. Anyone else found anything worth reading?
Yes, they are a more difficult bunch for sure. I wrote off Harworth Group for the reason you gave. I didn't see the kind of upward scope for Johnson Service Group I'd like to see for the kind of investments we are making now, so wrote them off too.

I like the sound of Bakkavor due to their business basis as the tipster mentioned - especially the plant based stuff which seems to be heavily penetrating supermarket shelves at the moment. I also like the fact the trajectory is upwards and potential of price growth matches what I'd like to see for our investments. The high is a little way off yet. It might only be 15-20% gain I'd look for in this one before an exit but i see reasonable chances of that and if they are more successful than the analyst hints at then it could be a better return.

I haven't found any *specific* information about any that would help make a choice though, which is what you asked :lol:
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garindan
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Re: Investment for February

Post by garindan » Tue Feb 11 2020 11:30am

I have concluded this poll after a short extension for a few late voters.

Thanks to everyone who voted - this purchase has now been made, as follows:

Bakkavor Group

Quantity 711
Buy price 138.79p
Commission £6.91
Stamp duty £4.93
Total £998.64

Actual cost per share including charges = 140.46p
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