I have made a number of purchases in my portfolio over the last couple of months and haven't gotten around to writing them up properly. Here I'll detail what I've bought briefly, and will have posts to follow with a bit more detail on some of the stocks.
Just Eat (OTC:JSTLF, LN:JE)
This company is different from my usual investments in that it is far from what you would describe as a value stock, sitting at an eye-watering P/S of 10. This is a pure growth stock, and sales have been increasing by 60% per year, with profits increasing even faster. Just Eat is a UK takeaway app that has also expanded internationally. Takeaways register with it and put up their menus for customers to chosse from. Just Eat takes a cut of any orders through its app. I normally wouldn't touch such blue sky stocks, but it is profitable, with margins expanding every year, and is generating lots of cash with little need for reinvestment in capex. A friend of mine that owns a sushi takeaway has sung praises of this app and said it far outstrips its competitors from the sellers' point of view. Customers also love it, and this is shown by its popularity.
If history is anything to go by, the internet naturally converges to monopolies like Google (GOOG, GOOGL), Amazon (NASDAQ:AMZN) and Facebook (NASDAQ:FB), so I see this as a long-term investment in what should be the market's leading takeaway app. The valuation is high, but if growth continues for just a few more years in line with estimates, then the valuation suddenly looks reasonable.
As it is a blue sky stock however, I've made the position size modest at 2.4% of my portfolio.
IG Group (OTCQX:IGGHY, LN:IGG)
IG are probably a familiar name for investors in the UK, with spread betting services such as the IG Index and now an expanded range of products. Spread betting seems to be the main source of revenue for IG.
The company is another market leader for my portfolio, which means it isn't dirt-cheap, but unlike Just Eat, its valuation is more modest, trading at a forward P/E of 13. As always, I check conversion of profits to cash flow, and it is very strong, and the company is paying a healthy dividend yield of 5.8%. As you might guess from these numbers, the market isn't too hot on the stock and fears regulatory clampdowns along with macro uncertainty after Brexit. "Binary options" have become a thing in the UK and are just a form of gambling in essence, masquerading as investing/trading. Regulators are quite rightly looking to clamp down on this especially, but the whole spread betting industry could be affected by this. Whilst IG has its fingers in the pie, it is a small slice of its business, and I think it are a respectable company and will come through this. The market clearly doesn't foresee destruction either, or IG would be rated much lower.
I've made this position roughly 4% of my portfolio.
Gattaca (LN:GATC) and Northern Bear (LN:NTBR)
I will do full posts on both these companies, so this is just to say I have long positions in both, as they are very cheap, trading at single-digit P/Es.
I am finding quite a few cheap, small companies in Japan. Analysing them is very difficult, as they do not report in English, and unlike languages based on the Latin alphabet, I can't fumble my way through - the financial statements are simply impenetrable. I haven't made any purchases yet, but will likely purchase a basket of companies with small position sizes, given I cannot do due diligence on the companies beyond data on Stockopedia and Bloomberg.
Disclosure: Author is long GATC, NTBR, IGG, JE.
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