Long
Up Global Sourcing Holdings PLC (LSE:UPGS) - ISA Long/Medium
Up Global Sourcing Holdings PLC (LSE:UPGS)
Sector: - Consumer Cyclicals (so volatile with the market)
How found: - Screener for possible growth stocks using a Greenblatt approach, based on the book “little book that beat the market”. Also searching for consumer cyclical affected by Coronavirus.
Company Background: - Incorporated April 2005, listed March 2007. UP Global Sourcing Holdings plc is a United Kingdom-based, develops, designs, sources and distributes a range of consumer products, focused on 6 product categories: small domestic appliances (SDA), housewares, audio, laundry, heating and cooling, and luggage. Its owned brands include Beldray, intempo, Constellation and Progress, and its brands under license include Salter and Russell Hobbs. It also offers products under brands, such as American Originals, George Wilkinson, Giles & Posner, Inspire, Portobello, Prolectrix and ZFrame.
Ratios: - Div yield 6%, Div cover 2, Operating margin 7%, ROCE 75%, sect is twice net profit, so manageable.
Rough Technical: - The last year it has traded between 68p and 100p at its peak. Recent supply concerns have impacted the share price presently 60p. The management have stated that they have managed supply through previous viral outbreaks in China. I don’t personally see it dropping much past 60p as this is near the forecast balance sheet value (55.5p).
Liquidity: - Average 3-month share volume 103K, this is below my threshold (120k). Though I can pass this is the other factors indicate an opportunity. 29% of the shares are in the “open market” (so you are along for the ride) the remaining are held by 4% holders and above. The largest is Simon Showman (22%) COE and co-founder, followed by Schroders (17.5%), Andrew Gossage MD 9.8%, followed by other directors and Ennismore fund. So the people running the firm have “skin in the game.”
Brokers Opinion: - one broker opinion has UPGS marked as a sell. Bankruptcy warning filter marks this stock as of little concern.
Spread: - 92bps below my threshold of 400bps. Looking at the Level 2 this morning, small investors seem to be using this as a buying opportunity judging by the size of buy orders.
Beta: - In the last month it was 1.94 so reactive. Volatility in the last year has been 72%
Accounts: - Cashflow, generally slightly positive, operations generate around £6M a year. Turnover is 123M (07/2019), GP £27M, OP £8.8M. Balance sheet current assets are £10M greater than total liabilities, so reasonably sound.
Main Risks: - Consumer cyclical business, so subject to macroeconomics, exposure to Chinese supply chain.
Main Favourables: - The team have “skin in the game”, The team have traded through past supply chain disruption. Market sentiment presents a buying opportunity of a reasonably good quality stock at a good value price.
Declaration: - I have no holding at present but considering adding to my ISA as a long-term hold, or medium-term at worst. I am watching to see how the price moves over the next couple of weeks, with a limit order set at 55p. Stop loos will probably be at 49p with a get out quick at 52p (if things look bad).
Sector: - Consumer Cyclicals (so volatile with the market)
How found: - Screener for possible growth stocks using a Greenblatt approach, based on the book “little book that beat the market”. Also searching for consumer cyclical affected by Coronavirus.
Company Background: - Incorporated April 2005, listed March 2007. UP Global Sourcing Holdings plc is a United Kingdom-based, develops, designs, sources and distributes a range of consumer products, focused on 6 product categories: small domestic appliances (SDA), housewares, audio, laundry, heating and cooling, and luggage. Its owned brands include Beldray, intempo, Constellation and Progress, and its brands under license include Salter and Russell Hobbs. It also offers products under brands, such as American Originals, George Wilkinson, Giles & Posner, Inspire, Portobello, Prolectrix and ZFrame.
Ratios: - Div yield 6%, Div cover 2, Operating margin 7%, ROCE 75%, sect is twice net profit, so manageable.
Rough Technical: - The last year it has traded between 68p and 100p at its peak. Recent supply concerns have impacted the share price presently 60p. The management have stated that they have managed supply through previous viral outbreaks in China. I don’t personally see it dropping much past 60p as this is near the forecast balance sheet value (55.5p).
Liquidity: - Average 3-month share volume 103K, this is below my threshold (120k). Though I can pass this is the other factors indicate an opportunity. 29% of the shares are in the “open market” (so you are along for the ride) the remaining are held by 4% holders and above. The largest is Simon Showman (22%) COE and co-founder, followed by Schroders (17.5%), Andrew Gossage MD 9.8%, followed by other directors and Ennismore fund. So the people running the firm have “skin in the game.”
Brokers Opinion: - one broker opinion has UPGS marked as a sell. Bankruptcy warning filter marks this stock as of little concern.
Spread: - 92bps below my threshold of 400bps. Looking at the Level 2 this morning, small investors seem to be using this as a buying opportunity judging by the size of buy orders.
Beta: - In the last month it was 1.94 so reactive. Volatility in the last year has been 72%
Accounts: - Cashflow, generally slightly positive, operations generate around £6M a year. Turnover is 123M (07/2019), GP £27M, OP £8.8M. Balance sheet current assets are £10M greater than total liabilities, so reasonably sound.
Main Risks: - Consumer cyclical business, so subject to macroeconomics, exposure to Chinese supply chain.
Main Favourables: - The team have “skin in the game”, The team have traded through past supply chain disruption. Market sentiment presents a buying opportunity of a reasonably good quality stock at a good value price.
Declaration: - I have no holding at present but considering adding to my ISA as a long-term hold, or medium-term at worst. I am watching to see how the price moves over the next couple of weeks, with a limit order set at 55p. Stop loos will probably be at 49p with a get out quick at 52p (if things look bad).
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