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Views on CARD

Practical discussions about equity High-Yield Portfolios (HYP) for income
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vrdiver
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Views on CARD

#142844

Postby vrdiver » June 1st, 2018, 2:10 pm

There is a discussion on Card Factory viewtopic.php?f=33&t=9558&start=40#p142719 where some posters feel that CARD is a good purchase candidate.

Another discussion has voiced concern that the high street and retail is a bad place to be: viewtopic.php?f=15&t=11689&start=40#p142824

I keep looking at CARD but can't bring myself to buy it, despite the lure of a knocked down, unloved, profitable business just getting on with it...

Greed and fear, fear and greed. What's a HYPer to do?

VRD

idpickering
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Re: Views on CARD

#142856

Postby idpickering » June 1st, 2018, 2:37 pm

Having just read through both threads that you kindly provided links to, it seems to me that there is a lot of uncertainty among our gaggle here as to what to do (buy, sell, or hold?). That's enough for me to back away from this as a potential purchase. Moreover though, I don't like niche type shares with few strings to their bow. It's not worth the risk IMHO, but good luck to those who think differently.

Ian.

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Re: Views on CARD

#142903

Postby Wasron » June 1st, 2018, 5:16 pm

VRD,

I’ve been in the same boat. Almost bought some today but didn’t. They wouldn’t be a HYP purchase for me though, more a bit of fun.

The business seems sound though and i’ll be mulling it over this weekend

Regards

Bouleversee
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Re: Views on CARD

#142919

Postby Bouleversee » June 1st, 2018, 7:37 pm

I did top up today because it has a good yield, well covered, a modest P/E ratio and is hoping to return more excess profits to shareholders in the form of special divs. rather than share buy backs. It seems to be rather oversold at under £2 but time will tell. I'll enjoy the divs. in the meantime.

Gengulphus
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Re: Views on CARD

#142923

Postby Gengulphus » June 1st, 2018, 7:51 pm

Small market cap for a HYP share (~£680m) - not below the minimum I'll accept in my HYP, but fairly close.

Very specialist retailer - I'm OK with retailers in my HYP, but I much prefer ones with a broad range of products.

Pays 'not so special' dividends (a term I use for ones the company calls special, but is currently paying on a regular annual basis) - not prohibitive, but I've a bias against them for my HYP, as they confuse the issue of what one can reasonably expect in the way of future income from it.

Debt increasing faster than the size of the business (net debt up 56% over the last three years, turnover up 19% over the same period) - suggests dividends are being paid partly by borrowing more than company growth will support.

Recent declining profits and profit warnings.

None of those is on its own a severe problem for me about adding a company to my HYP, but they're all indications that a company isn't what I really want for my HYP holdings, and I've found five of them so far in my initial analysis. That initial analysis isn't complete and so I might well find more if I were to complete it - but together those five are enough to tell me that there's no point in me completing it, and so I'm not going to!

To be clear: I'm not saying any other HYPer needs to take the same view as me of those points - that verdict is about what I want for my HYP. Other people might well have different wants for their HYP holdings that are still entirely compatible with general HYP principles and thus not regard them as problems - and that's fine by me: I'm offering them as points to consider, not points that say CARD is definitely unsuitable for a HYP.

And I might end up considering CARD for my non-HYP investing - I can certainly see some attractive points about the company... If I do and feel I have something to say about it, I'll post on the Share Ideas thread rather than this one.

Gengulphus

Bouleversee
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Re: Views on CARD

#142928

Postby Bouleversee » June 1st, 2018, 8:07 pm

Agreed, Geng. I had been reading and posting on the other board and only posted here because someone had raised it. TBH I don't classify my shares; I just buy what I fancy without regard to size etc. I have done far better with those in the FTSE 25O or AIM, with one or two exceptions.

Do you buy tobacco shares? Also very specialist retailers and probably a declining market. I heard one of BAT's top dogs on Today a few days ago telling everyone to abandon smoking tobacco and switch to the heat not burn variety. It will be interesting to see how many follow that advice or just give up altogether as I did some years ago. I hold a lot more tobacco shares than CARD and it will be interesting to see which does best from hereon.

monabri
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Re: Views on CARD

#142933

Postby monabri » June 1st, 2018, 8:19 pm

I topped up today.

Debt:
Jan 31 2012 £408m
flattish
Jan 31 2014 £387m
Jan 31 2015 £170m
Jan 31 2016 £134m
Jan 31 2017 £138m
Jan 31 2018 £164m (expanding shops)

Interest payments on debt ~ 31 x covered, thus well covered by operating cash flow.

Divi cover is predicted to reduce over the next 3 years - but a tweak to the very generous specials is forecasted and this might compensate.

Earning per share are predicted to increase over the next 3 yrs (earnings by ~6% p.a).


This is one of only 2 holdings in "retail" (the other being Greggs - bought recently - not for HYP though).

Gengulphus
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Re: Views on CARD

#143008

Postby Gengulphus » June 2nd, 2018, 9:13 am

Bouleversee wrote:Agreed, Geng. I had been reading and posting on the other board and only posted here because someone had raised it. ...

Actually I wasn't responding to you at all, but the earlier posts in the thread, especially the OP - I hadn't even seen your post when I submitted mine! Not very surprising, because the times of our posts say to me that you submitted yours while I was researching and composing mine, and while the TLF software tries to let posters know if someone else has posted to the thread while they've been writing and give them a chance to reconsider, it does so in a flawed way... Specifically, it does the check each time one previews or submits, only checking for posts since one last previewed, or started the reply if one hasn't yet previewed. If somebody has posted since then, it tells one about it in a very noticeable way if one is submitting, but in a very unnoticeable way if one is previewing...

Bouleversee wrote:Do you buy tobacco shares? ...

I have bought very small holdings of BATS and Imperial Brands in the '1/8th scale' real-money versions of my demo portfolios GDHYP and CHYP1, and might do some similarly small top-ups of them in the future. Other than that, no, I don't buy tobacco shares. That's for ethical reasons, and the fact that I do hold them in the demo portfolios is because of a conflict between two ethical principles of mine, which I have managed to resolve to my satisfaction. That resolution only works because the demo portfolios are a tiny fraction of my overall investment portfolio - well under 1%. (I won't go into further detail of my ethical reasons here, as their only relevance to the board's topic is that they're personal feelings that affect my own HYP choices. If anyone does want to discuss them, I think the Other Investing board is probably the most suitable one on TLF.)

If I didn't have the ethical objections that I do, yes, I would buy them.

Bouleversee wrote:... Also very specialist retailers and probably a declining market. ...

No, they're not very specialist retailers - they're not retailers of any kind! They're producers of tobacco products.

And to anticipate an obvious reply to that, yes, they are very specialist producers. But producers of one type of product or another are a far higher proportion on the companies on the market than retailers, and they're generally more specialised than retailers. Those combine to make a prejudice against specialist producers much more difficult to maintain in practice than one against specialist retailers.

In any case, as I said, none of the points I raised is enough on its own for me to rule a share out of my HYP. I do regard being a very specialist producer as a point against tobacco companies - it renders them potentially very vulnerable e.g. to anti-tobacco legislation or to changes in public attitudes towards tobacco - but not one serious enough to rule them out. Basically, every HYP share has some bad points...

And those vulnerabilities are mitigated by the fact that they're global companies. A tobacco company whose market was purely the UK or purely any other single country would be horribly vulnerable to that country's government deciding to pass stringent anti-tobacco laws or tobacco use becoming deeply unfashionable among that country's people, making it risky enough that I would be very reluctant to include such a company in a HYP even if I had no ethical objections. For companies like BATS and Imperial Brands, however, any single country undergoing such developments would basically be just a pinprick.

As for the declining market, maybe - but if so, it's a very slow decline and so (a) the companies have plenty of time to adapt to it; (b) I don't feel any confidence in any views I can form about whether it will reverse or not before its effect accumulates seriously, nor in anyone else's views on that question. Basically, predictions are hard, especially ones about the future - and especially especially about the long-term future!

Gengulphus

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Re: Views on CARD

#192323

Postby Wizard » January 10th, 2019, 9:15 am

Continued discussion, with link to today's RNS here: viewtopic.php?f=33&t=9558&start=80

LFL sales flat, profit guidance for the year unchanged, but market is taken back all the recent gains.

Terry.


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