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Card Factory was highlighted by the Sunday Times' Inside the City column after the retailer's shares lost almost a third in 2018 so far and are under water for any shareholders who are still holding on from its flotation in 2014. Last week's results showed a 9% fall in underlying earnings but were followed by Swiss activist investor Teleios Capital revealing it has a 5.1% stake. When Teleios bought shares in SodaStream in 2016 the investor helped quietly steer the company to a $3.2bn takeover by PepsiCo within around two years.
As Card Factory makes most of the greetings cards it sells, it has gross margins of 30% and throws off enough surplus cash to pay a good dividend. Greetings cards are far from the worst areas of the retail market in the event of a downturn, but its toes could easily be stepped on by supermarkets looking to use their excess shop-floor space by stocking more cards and the last recession shredded Card Factory's profits.
"Teleios is leaving investors guessing as to its intentions. If it really does want to eventually engineer another lucrative buyout, it's hard right now to see who would take a big money punt on a bricks-and-mortar chain."
Midas in the Mail on Sunday had two share tips, Xpediator was as "a punt" for adventurous investors and the Multifamily Housing Reit was a "buy".
Xpediator is an acquisitive AIM-listed freighter management outfit, helping clients from Amazon to small businesses transport goods efficiently and cost-effectively within Europe and further afield. Xpediator does not own trucks and transport facilities but takes charge of arrangements involved in moving freight around, from leasing lorries and drivers to making sure that paperwork is in order. "As such, the company is one of the few British businesses to say publicly that it is likely to benefit from Brexit as the more complicated import and export rules become, the more UK and European firms will need the services of an expert freight manager."
Interim results last week showed a 60% increase in revenues to £79m with profits up 132% to £2.3m and a 21% increase in the half-year dividend to 0.42p.
Multifamily Housing Reit intends to float on the stock market in the next couple of weeks, raising £175-250m at a price of 100p per share. The group's business is buying and managing blocks of flats with exiting tenants in and around Bristol, Birmingham, Leeds, Manchester and Norwich, with an average rent of £600 a month, ideally suited to teachers, nurses, office and factory workers. It provides decent, well-priced rental homes to people who desperately need them.
As one of the first large firms to operate in this area, Multifamily also sees numerous opportunities and can buy properties at good prices.
Management are targeting a 4% dividend yield in year one, rising to at least 5% thereafter, also hoping to deliver a steady increase in the share price, creating a total return of 10% or more per year.
Elsewhere, Questor in the Sunday Telegraph said it was time to sell Capital & Counties.
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