IPOs That Look Interesting
There's been a bit of a new issue bonanza recently; some have just listed, some are about to, so here are some thoughts.
The one that's got the most attention is Hotel Chocolat. It's a great name, hell I even want to buy it just because of the name. I could eat chocolate all day long. Who needs Christmas when you've got the Easter Day excuse?
But personally I don't like that sort of posh, organic 70% chocolate kind of thing – give me a yummy Twix or a Twirl any day. It is a bit worrying to note its "end of season sale". The "Big City Easter Bunny" has hopped down from £7.50 to £3.75. And the Rocky Road Extra Thick Easter Egg didn't sell at its crazy £27 now slashed to £13.50. Meanwhile the Dark Ostrich Egg which was selling at a staggering £75 (come on!!) is now (just) £37.50. There are pages of these "bargains" so I simply wonder if they overegged the price of their Easter stuff. A lot seem to be left sitting in the bargain bin.
Looks like it makes about £8m and wants to float at £150m. Looks pretty pricey to me but then again so did Fever-Tree when it launched. So it's a kind of "maybe" from me but if first day trading is at a massive premium I may give it a miss till the share price melts a bit.
Possibly one to hold onto for a bit then quit. Thorntons had a pretty torrid time on the market till it was eventually put out of its misery with a bid. My suspicion is it might go too high from the off and it could be worth waiting. And the amount of Easter stuff unsold is a bit of a worry.
The IPO I like the most is Cerillion which has just floated. A £2.1m profit and a 22m market cap at its 76p float looks like value. It installs and supports billing charging etc solutions to the telecoms market mainly.
It operates across the works and includes some big boys like Cable and Wireless. It's a nice steady business, I can see myself doubling my money here over a year or two without losing sleep. It doesn't have the glamour factor of Hotel Chocolat but I always find it's the boring ones that make me money.
I'm not so sure about Blue Prism which has also just floated. This one has tech glamour to it which should excite investors. Sure it looks way more exciting than Cerillion, after all it's all robots… robots!!! Cool!!!
But its market cap is more than double Cerillion's and it makes a loss - and only £6m or so revenue last year. But it says current trading is good and "within expectations." Of course they don't say what those are so valuing it is hard work.
Anyway, chillingly it wants to supply a virtual workforce with robots taking over mundane back office clerical jobs. Yes, folks, it is after your job. Work in the back office for a finance house? Be afraid... be very afraid....
So yes, I guess profits could grow but there must be a lot of competition out there. Not really sold on this one so I'm doing a Duncan Bannatyne on it (no, not hooking up with yet another woman half my age) what I mean is, "I'm out!"
One that I have tucked away is YU Group (YU.) This one really is impossible to value with no real figures to go on, however there are barriers to entry in its market supplying energy to smaller companies. It had £8.4m of contracted revenues for this financial year (ooooh!). It's going to pay a dividend and should throw off plenty of cash. Anyway I took a chance with it and have tucked some away in the ISA.
Safe and solid is Watkins Jones (WJG) which buys property and lets it to students. It won't be an exciting capital play but it plans 6% dividends.
I like to tuck these sorts of property plays away that pay big dividends. Similar examples that I hold are Tritax Big Box and Empiric Student Properties. It's the kind of share overlooked as being boring but with capital growth it could pay 20% a year. Not so boring, right?
I would be happy with a rise from 100p to 120p over the next year netting me around 25% including dividends. Sleep at night too, though the students probably won't be, the party animals.
An interesting one coming up in April is Osirium, a UK based cyber security software provider. Cyber security is a hot sector and this could be an interesting gamble. Definitely a gamble as it makes bugger all yet. As an old fart I don't understand much about this area but I think part of what it does is stop insiders from causing cyber attacks.
So an insider in a bank couldn't use a privileged account to wreak havoc. If you watched "Mr Robot" on Amazon you'll know what I mean. It's a tiny company, might be worth a small gamble.
Now the Harwood Wealth Group. That wants to advise people who have quite a bit of cash but are not super rich (£200,000 to £500,000). It says it’s a "Vertically integrated financial planning wealth management group". No idea what that means either, you can imagine the waffle in management meetings can't you? Doesn't really get me going.
And I even tried to think out of the box, had a brainstorm with myself before touching base about it offline. As you see, I always like to give 110% to everything.
Lots of companies have listed over the years promising to fight cancer. The aim is brilliant but generally punters lose their shirt on these. The next one is SalvaRx which wants to develop new therapies to use our own immune systems to fight cancer. I so hope it works but chances are you'll do your money buying into it.
Anyway, don't rely on me, do your own research into these. My guess is you'll just carry on buying FTSE 100 and dodgy oil stocks. Good luck with that.