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Ahem, forget all that blah, blah, blah. I'll tell you what matters in the present scenario, you need investments which preserve the purchasing power of your money and that means businesses which have a record of paying dividends which yeild above 5-6 %. I confess to having a small portion of my cash in a couple of outfits which I hope to get some growth from but I know that it's a gamble in reality and it could go wrong.
PEG…
“ The price/earnings to growth ratio (PEG ratio) is a stock's price-to-earnings (P/E) ratio divided by the growth rate of its earnings for a specified time period. The PEG ratio is used to determine a stock's value while also factoring in the company's expected earnings growth, and it is thought to provide a more complete picture than the more standard P/E ratio.
KEY TAKEAWAYS
The PEG ratio enhances the P/E ratio by adding in expected earnings growth into the calculation.
The PEG ratio is considered to be an indicator of a stock's true value, and similar to the P/E ratio, a lower PEG may indicate that a stock is undervalued.
The PEG for a given company may differ significantly from one reported source to another, depending on which growth estimate is used in the calculation, such as one-year or three-year projected growth.”
Key is ‘expected earnings’ also ‘time period’.
Both highly volatile in this space so PEG and even PE is I guess what it is.
Usual caveats
Trek
Hi Roy,
Thanks for your reply. I am here because I agree on the cash generation and overall health of the balance sheet. Follow my own nose!
As for rate rises I remember Norman Lamont raising interest rates to 16%! Two rises one day was it due to the ERM.
Both of my sisters consequently had their houses re-possessed in the late 80’s! They didn’t expect rates to go up over 100% from what they had mortgaged at. And of course endowments would eventually cover the mortgage, at least that’s what they were led to believe so they kept up some payments. . Oh but any endowments taken out pre 1987 were exempt from miss selling scams! So they then lost again! The endowments were much less than they had paid in despite years of being told all was on track!
Anyways imo don’t get hinged on PEG it’s a real blog buzz. For sure it try’s to portray earnings growth as a factor but it’s value diminishes when you have a non linear cashflow exemplar like JIM.
IMO you are better of looking at sector comparisons like CMCX, PLUS and IGG to get an early warning on the market vix which can really drive one off cash bonanzas which may I add are becoming unfortunately ever more frequent!
However, if you have a longer term outlook then I honestly think the chart is as good an indicator of value as any financial metric.
On the 1 year we are due a climb back to 250p. On the 5 year we have a strong support at 200p.
The trend is a return to 300p and given the results and growth prospects imo that looks very likely.
Trick is with these investments, obviously don’t fall in love with any investment but have funds to cover your position.
So be prepared to sell or average down. The market often gets these wrong but it can be wrong for ages!
I have picked up a few to let ride, I will add at 197 if it drops there unless the outlook changes materially. If the SP looks week on higher volume I will just sell.
No love just an active investor and in my experience it beats hold and hug!
After all I have mortgages to pay off!
Usual caveats
Trek
Morning Trek, interesting comments from you, some good points. Just like to mention, I remember, being an old git, when interest rates were extremely high, that the market went stale, as money in savings couldn't be matched by divies generally paid by businesses. But Jim are a cash generative business, with no leverage.This is before the 80s boom. The other thing I noticed, in the chairman's statement, was the mention of growth and based account figures stated, gave a PEG of 1.36 although my calcs gave a higher figure, but I won't go into it. A figure above 1 is considered as being not good, in the financial business. But maybe its a one off maybe, and the 1 to 4 split, the reserve shares sold, covid. All added into the melting pot. I end there, and think positive. I buy Jim's shares. Cheers
Looks like the market has absorbed the numbers. Even the chart is showing a bounce! It’s this current trading period that will be key. We have just seen another base rate rise and the Fed are more hawkish muting 6 rises the next fiscal.
“ 2021 was very much a year of two halves, with trade volumes high in the first five months but then tailed off in the second half as markets generally became quieter. Overall, the general trend for our settlement and transaction volume continues upwards. Market sentiment can however in the short term overshadow the long-term growth being achieved and future outlook for the business. The cash balances held under administration have continued to grow, but in 2021 we saw the average interest rate achieved on deposits continue to fall. We are now seeing an upward turn and rates earned on new funds are back up to a level not seen for over two years and further increases seem very likely. Looking to 2022 and beyond, my view is that monetary policy is entering a new phase and one which Jarvis is well positioned to benefit from. Much of the cash we administer is maturing in the short term and will be available to capture increases in rates as they materialise. Added to this interest income has minimal associated marginal costs.”
In terms of increased costs I don’t see that as significant given the nature of the business and their transformation.
Usual caveats
Trek
Worth reinvesting dividends today, even though they only pay tomorrow as historically they go up in anticipation of significant divi reinvestment.
I just did so at 227p which is a 6% historic yield
OK Trotsky, thanks for that succinct explanation
JIM Nominees Ltd (JIMN) holds equity assets as custodian. They are not assets of JIM; they're assets of JIM's customers.
If you look at the accounts of JIMN filed at Companies House, it has cash at bank of £1 and issued share capital of £1.
JIMN doesn't transact any business per se; it's just a separate legal entity that holds the customers' cash and equity assets as their appointed nominee (nothing appears in JIMN's balance sheet because there is an equal and opposite liability due to the customers which it is permissible to set off). It's a perfectly normal legal structure for an investment broker that ring fences its customers' assets to prevent them from being seized by JIM's creditors in the event that JIM should ever go bust.
Hi Barchid again, reading the account, I see Jim Nominees a dormant company, states on page 32 that it holding in assets increased, from £49 Mill in 2020 to over £60 Mill in 2021. Looking at this dormant company,(research) holds assets of a company in liquidation, Direct Market Touch Ltd. Its interesting to read further the meaning of nominee companies and their responsabiilites and powers. Dormont Companies as well, intriguing. How does their value increase, being dormant. Beyond my thinking.
Well that explains the 3p divi in Q1 the last half year drop in earnings, and maybe a follow on for Q2 being much the same. Considering the circumstances. A good profit overall, Mr Grant
You mean 1 to 4 from oct 2020. I think that was to increase liquidity due to shareholder base. They then bought stock back and put in treasury to be later released as a divi.
I think that’s all in the journey and further outlines how cash generative the business is!
Market has overreacted on the numbers. This will be back to 250 support pdq from oversold imo.
Usual caveats
Trek
Think the 4 to 1 consolidation was not a good idea
I have bought in as a divi play. Needless to say it’s now gone lower!
Massive disconnect between chairman’s statement and market reaction! Record breaking results = 12month sp low!
Can’t both be right. I think drop is now overdone and we will get a volume boost from war.
Usual caveats
Trek
Royc
Indeed and a rise in interest rates is v profitable for JIM as they pay their depositors zero but receive cash interest in the short money market on those same deposits.
Hi barchid, well I think it's a buy opportunity, even if the total years divi is around 2021 level. It will give over a 5% for 22, which is good into today's circumstances. Only if interest rates go considerably higher, will that threat, buying shares, and that isn't the BOE`s plan going forward.
Well Mr Market didn't like JIM results yesterday and down again at opening today, though there is a piece in the IC about them today by Simon Thompson for anyone who has a subscription.
For what it's worth I think they are a long term buy down here, especially with interest rate rises in the background. A cynic would call me a stale bull but thankfully I am in a bit lower than current levels so just waiting for another bad day to top up.
traditionally jim has paid out a lower 4th divi so dont read too much into it
Pretty disappointing imo. I think that plus500 results have spooked.
Usual caveats
Trek
eccles/Royc
Latest quarterly announced as 3p, unchanged from same quarter last year, which I believe, ignoring the special, makes 13.5p for the year, which on a price of 295p is a 4.4% yield.
I was hoping for a 3.5p divi as all the other 3 quarters of this FY enjoyed, but nothing to complain about eh ?
Happens allthe time my friend, my bank does it too. Always have one last look at what you are ordering before clicking.
I guess the cash flow will increase now interest rate increases, good.
Do other brokers enter a 0 in quantity box before client trades ? My wife sold 1590 shares instead of intended 159 because she failed to delete 0 prior to confirmation of trade. If the 0 was not already there this would not have happened. I know the adage Seller/Buyer beware but...
Can't wait, they have given me a 25% return on cost in the past 12 months, can't get that very often these days.
Good numbers from AJ Bell, encouraging for JIM holders
Eccles/Royc
Feb 17 is the date on their website but they often announce a few days earlier than the website indicates