Share Watch

Share Watch: are these three quality shares worth the price?

I have investigated three companies this month. As usual, this comes down to weighing up the quality of the businesses against their market values. None of these firms comes up short on quality, but in terms of value it is a different story.

Tristel

For more than 10 years, growth in sales of disinfectant wipes, foams and sprays has confirmed the superiority of Tristel’s chlorine-dioxide chemistry for manually cleaning simple instruments in hospitals.

Share Watch: two shares for the next 10 years

Over the long term, companies investing for future growth should earn higher returns than firms returning most of their profit to shareholders. Thinking 10 years ahead as usual, I prefer innovative Renishaw and Goodwin to conservative Colefax.

Colefax

I recently ejected Colefax from the Share Sleuth portfolio (see previous page). Though the company believes it can grow, it has not grown convincingly for a long time. Revenue and profit remain stubbornly around their pre-financial crisis highs over 10 years ago.

Share Watch: looking beneath the bonnet of four good businesses

As well as soul-searching about System1, I have investigated two companies for the first time and two members of the Share Sleuth portfolio this month. Let’s take the newcomers first...

Integrafin 

IntegraFin operates Transact, an investment platform for financial advisers and their clients. By consolidating peoples’ investments in one place, it simplifies record-keeping, reporting and trading.

Share Watch: Computacenter increasing profits at a steady rate

Computacenter (CCC): smart acquisitions drive revenues

Computacenter will report results for the full year to December in the new year and publish its annual report later in spring, but the signs are that the company will have followed a strong 2017 with a stronger 2018. In the first three quarters of the current year, it has reported revenue 11% higher than the same period a year ago – a figure that does not include the contributions of two acquisitions in September, right at the end of the third quarter.

Share Watch: Alumasc's winter woes make its shares an enticing buy

Alumasc (ALU): winter woes

After five years of profitable growth, Alumasc suffered a reversal of unexpected intensity in the year to June 2018. Revenue fell 6% and adjusted profit fell 25%. Without the contribution of Wade International, a manufacturer of drainage products acquired during the year, revenue and profit would have fallen further, by 11% and 38% respectively.

Share Watch: battling technology group diversifying and looks cheap

Cohort (CHRT): defensive measures

Steady performance in terms of revenue and profit growth in recent years has hidden ructions at Cohort, a group of small businesses that supply technology and expertise to the armed forces, schools, councils and the police force. Flat revenue and modestly improved profit have come at the cost of the closure of one firm, the shrinkage of another and the acquisition of a third.

Share Watch: financial risk threatens this high performing company

Motorpoint (MOTR) High performance, low margins

Independent motor dealer Motorpoint performed very well in the year to March 2018. Revenue increased 21 per cent and profit increased 34 per cent compared to the previous year, when it experienced a mini-slump after the Brexit referendum. Even that year, Motorpoint, which had only just floated on the stock market, was an impressive performer. Return on capital in the year to March 2017 was 13 per cent. In 2018 it was 18 per cent.