Two months ago I wrote about, what I considered to be, the attractions of investing in the shares of Ramsdens Holdings (LON:RFX), the specialist lending group. 

That was on Tuesday 6^th August, after the pawnbroker and jeweller had reported a positive Trading Update for its year to end-September. 

The Business 

The Middlesbrough based group, which is FCA authorised for its pawnbroking and credit broking activities, operates some 169 stores in the UK, which also includes one franchised store, additionally it also has a growing online presence.  

The group defines itself as a growing, diversified, financial services provider and retailer, operating in four core business segments: foreign currency exchange, pawnbroking loans, precious metals buying and selling, and the retailing of second hand and new jewellery.  

Pre-Close Trading Update 

Ahead of announcing its Final Results for the year to end-September, due on 14^th January next year, the group last Thursday issued some corporate information about its trading in the last year. 

In August it informed the market that it had enjoyed another year of record performance. 

It now expects to report profit before tax of at least £11m (FY23: £10.1m) and noted that its positive trading momentum sets the business up well for continued growth in FY25. 

Management Comment 

CEO Peter Kenyon stated that: 

“We’re pleased with the record profit performance in FY24.   

All key income streams are growing and we have optimism for further progress in FY25. 

This performance once again demonstrates the strength of our diversified business model which underpins our long-term growth strategy.” 

Analyst’s Views 

At Panmure Liberum, its analysts – James Allen, Joe Byrne and Rae Maile – rate the group’s shares as a Buy. 

They have set a Price Objective of 305p on its shares. 

The analysts are estimating that the 2024 year will have seen some £95m (£84m) in sales, with pre-tax profits rising to £11.2m (£10.1m), lifting earnings to 25.6p (24.0p) and its dividend to 11.2p (10.4p) per share. 

For the year just started they anticipate £97m of sales, £11.2m profits, 25.7p earnings and a dividend of 11.4p a share. 

The analysts conclude their note after yesterday’s statement by stating that: 

“We retain our BUY recommendation and 305p target price, based on a blend of a FY 25 P/E valuation and a dividend discount model.  

The shares are trading on a modest CY 24 P/E of 8.0x.  

We think that is too cheap when closest peer H&T is on 7.2x, Ramsdens has a more diversified operating model, and has a better track record of delivering upgrades.  

A dividend yield of 5.5% is also much higher than the c.4% average since listing.” 

In My View 

The shares of Ramsdens Holdings, at 207.5p, are looking far too cheap on just 8 times historic earnings, and on such an attractive 5.4% yield. 

I can certainly understand why the Panmure Liberum analysts rate them as a Buy.  

In my view, I would suggest that an early rise to 245p or thereabouts is more than possible. 

It may be of little comfort to shareholders of the Belfast-based shipyard group Harland & Wolff (LON:HARL), but over the weekend, we have learned that one of its ‘partners’ is interested in taking the company out of its Administration state. 

The Spanish State-controlled Navantia Group is said to be in ‘exclusive’ talks with Teneo, the H&W Administrators, about some sort of deal that could be good news for the shipyard group’s 1,000 workers. 

The Madrid-based Navantia group designs and builds military and civilian ships with high technology and innovation. 

Its ‘SMARTShips’ address the essential elements for new ships over the next decade or two, as they look to explore and incorporate innovations to anticipate Navantia’s response on new threats, new linked operations between services, new materials and production methods, reduced crew operation, new propulsion and energy generation concepts, new combat systems, extensive use of UxV, and new and enhanced sensors and communication systems. 

H&W and Navantia are partners in a £1.6bn Government programme concerning the construction and supply of three Fleet Solid Support tanker ships for the Royal Fleet Auxiliary, which is believed to be worth some £700m to H&W. 

The RFA requires the FSS ships to support the two new Queen Elizabeth-class aircraft carriers with food and munitions. 

Navantia is believed to have already made available some lines of emergency funding to H&W so as to enable the shipyards to continue their operations, while alternatives are under investigation. 

Of importance to both Teneo and H&W is the pressure caused by its debt negotiations with Riverstone Holdings over repayment of the $140m high-interest facility that has been taken out by the Belfast group. 

Realistically, rumours suggest, Riverstone may well have to take a partial hit on any time-delayed settlement.

The FTSE 100 was slightly weaker on Friday as investors digested another tepid reading of UK GDP and Chinese stocks weakened overnight.

There is a sense investors are waiting for the next major catalyst for equities as the FTSE 100 traded down just 5 points to 8,233 at the time of writing.

“The FTSE has opened down a touch, as investors digest news that the UK economy returned to growth in August. The Office for National Statistic’s  estimates that real GDP grew by 0.2% after two months of stagnation,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

“This small rebound in growth was largely expected, but the lacklustre reaction echoes global markets struggle to find a clear direction. That’s perhaps unsurprising given high levels of geo-political tension, an upcoming US election and continued concerns about growth in China.

“Chinese stocks gave up some of this week’s gains overnight as traders look to Finance Minister Lan Fo’an’s scheduled Saturday press conference, where he’s widely expected to unveil additional stimulus measures. There are a range of opinions as to the potential size of any fiscal injection, ranging from anywhere between two and ten trillion yuan. The market is likely to be disappointed should the number be on the low side.”

Despite the weakness in China, miners were fairly flat on Friday with Rio Tinto trading 0.8% higher and ANTO down by the same amount. Should a fresh wave of stimulus be announced in China, one would expect this sector to fire up once more.

Sainsbury’s was down heavily on Friday on the news a large investor hold sold a stake in the supermarket.

After a fairly reasonable rally in Sainsbury’s shares over the past year, the Qatar Investment Authority has locked in profits raising questions about their motive for doing so.

Investors seemed to have concluded Qatar don’t see a great deal of upside and have followed them in dumping the stock, sending shares down 5%.

“Sainsbury’s shares fell nearly 5% following reports that its biggest shareholder, the Qatar Investment Authority (QIA), had sold £306 million worth of shares at 280p each. Prior to the transaction, QIA owned 14.2% of the supermarket,” said Dan Coatsworth, investment analyst at AJ Bell.

“The Middle Eastern investor has a reputation for backing financially strong companies across a wide range of industries. While it invests with a long-term view, like any asset manager it does make changes to its portfolio from time to time. QIA has been trimming stakes in other holdings of late, including Barclays, Shell, Vinci, Iberdrola and Accor. In contrast, it has been increasing positions in the likes of OQ Gas Networks, Kingdee International Software and Haleon.

“QIA might feel that now is a good time to trim its stake in Sainsbury’s, selling into a market where other investors have become more interested in the supermarket. The fact it managed to offload a large chunk of shares at only a 2.8% discount to last night’s closing price implies there was decent demand.”

Fears about the budget are sucking the life out of the AIM market. 

The private individuals London’s junior bourse is reliant on for day-to-day liquidity are paralysed with fear about what Keir Starmer’s Labour government might to do taxes and the implications for AIM.

After the a strong start to the year for AIM, it’s been pretty much one way traffic for the index since July. Fears about whether Labour will scrap IHT and other tax relief for investing in AIM shares are largely to blame.

Should the measures implemented in the upcoming budget be anything better than the worse case scenario, one would hope we see a relief rally in AIM shares.

Over time, markets always recognise value in companies, no matter the tax incentives for investing. The market is littered with exciting companies that deserve a higher valuation.

Here are just eight of them.

hVIVO

hVIVO have set an ambitious £100m revenue target for 2028 and everything coming from the company suggests this target will be hit. The company is a specialist in viral challenge studies working with the world’s largest drug companies. Revenue for the first half of 2024 rose 30% to £35.6m as the company launched a new state-of-the-art facility in Canary Wharf, recruited a record number of volunteers for its challenge trials, and implemented automation at FluCamp, it’s flagship virus testing brand.

Avacta

Like any early stage biotech stock, Avacta comes with a high level of risk. However, for those investors willing to accept those risks, the potential returns for shareholders are enormous. The company is focused on developing a drug delivery platform designed to reduce damage to normal tissue during chemotherapy. Should Avacta succeed, the returns for investors will be sizeable, but the outcomes for patients and their families will be immeasurable.

GenIP

The Generative AI analytics specialist listed in October and has already announced orders for one month that totalled 40% of the prior year’s revenue. The company is targeting the technology transfer market with Generative AI tools that help commercial new technologies. Around 70% of potentially groundbreaking innovations produced by Universities and research institutions never reach their full potential in commercial enterprises. GenIP is helping ensure more innovations maximise their commercial potential with the power of Generative AI. Given the size of the addressable market, GenIP shares present very good value.

Yu Group

Yu Group is simply screaming out for a higher valuation and it wouldn’t be a surprise if the power supplier and smart meter installer is snapped up by private equity in a takeover. Trading at just 8.8x historical earnings, the market isn’t efficiently recognising the 60% increase in revenue in the first half of the year. Nor is it appreciating the rapidly growing dividend and capacity for it to ramp the dividend up further in the years to come.

Optima Health

A recent AIM IPO, Optima Health is the UK’s leading provider of technology-enabled corporate health and wellbeing solutions in the occupational health sector, with a revenue 1.8 times larger than its closest competitor. Optima health generated revenue of £110.9m in the year to year to end of March 2024. The company has set out clear ambitions to capture 25% of the £1.4bn occupational health market representing a significant opportunity for growth. Optima is new entrant to AIM, and like all recent IPOs, should have had a better reception.

Cadence Minerals

Long term investors with a propensity for the risky early stage mining sector should spend time looking at Cadence Minerals. The company’s flagship Amapa Iron Ore mine has the potential to produce annual EBITDA many multiples of Cadence’s current market cap. Cadence doesn’t own the entire asset, but its majority stake should eventually yield the company significant cashflows. In addition to Amapa, Cadence has investments in European Metals Holdings, Evergreen Lithium, and Hastings Technology Metals. At £5m market cap, Cadence offers plenty of potential upside.

Yellow Cake 

There’s not two ways about it, nuclear power will be a vital part of the world achieving its net zero targets. Yellow Cake is London’s foremost uranium pure play and any investor seeking exposure to the energy transition should pay particular attention to the company. With a market cap in excess of £1.2bn, Yellow Cake is one of AIM’s heavy weights. The company acquires and holds physical U₃O₈ and engages in uranium-related commercial activities providing investors with direct exposure to uranium prices, which are forecast to increase further, even after more than doubling over the past three years.

Cornish Metals

Cornish Metals working towards restarting production at the South Crofty Tin mine in Cornwall. Once an operating mine at the heart of Cornwall’s mining industry, operations were ceased in 1998 as low tin prices made continuing extraction uneconomical. Fast forward to 2016 and higher prices supported by demand from electronics and industry, Cornish Metals acquired 100% of the South Crofty mine. Cornish Metals is undergoing dewatering of existing South Crofty mine infrastructure with a view to begin production soon after.