HHR16 Feb 2014 19:53
Helphire begins to motor
February 16, 2014 Simon Featured Companies, Growth Portfolio, Growth Shares, Income Shares
Shares in Helphire Group (HHR.L) began to breakout of their trading range last week, providing a strong technical buy signal. I am not normally convinced by technical analysis alone but in this instance, I believe there is some real substance behind the move and an overdue rerating could now occur. There are a number of key events that could trigger a sustainable rally, including:
- A potential legal settlement in the company’s claim against Autofocus and its insurers.
- Interim results due to be published before the end of February with the promise of a third interim dividend
- The prospect of a regular dividend rate of over 5% and additional special dividends.
- An acquisition of a personal injury law firm and/or an alternative, earnings enhancing acquisition.
For anyone wanting to conduct their own research into HHR, the full year results from September are a good place to start.
Following the elimination of its debt in March 2013 and a £60m fundraising in December 2013, the group is in a strong financial position with over a third of its market capitalisation in cash, revenues that exceed the capitalisation and a business model that is strategically positioned for growth in the accident management space. On a fundamental analysis, HHR throws up some exciting metrics with a Stockopedia overall stock rank of 91%, a return on equity of 83% and a Magic Formula score of A+. The upcoming interim results will provide more clarity around various ratios now that the capital restructuring process has been completed.
I added significantly to my own stake in HHR last week as the share price began to break out of its trading range. I also took the opportunity to add HHR into the SK virtual portfolio on Friday (funding the purchase by selling OPM). I believe there are some short-term gains to be made here with the prospect of further growth throughout the year and the safety net of a healthy dividend