No Pain, No Gain: Undervalued Armour has the quality for battle
Saturday 24 November 2007
Many companies undergo dramatic changes. They have inhabited a variety of industries before assuming their present shape. But I suspect in the past few decades few have experienced such a meandering journey as little Armour, capitalised at a mere £25m.
Today it is known for in-car communication and entertainment and home entertainment equipment. Yet, when I first encountered the company – then called Armour Trust – it was a high-profile producer of soft drinks, embracing the famed Tizer brand. Indeed one of its early deals was an audacious bid for Tizer, then a quoted company. It has also dabbled, not always successfully, in such diverse fields as confectionery, pot pourri, toiletries, air fresheners and a variety of car accessories, including Bluecol antifreeze.
It emerged, I think, from an investment trust in the late 1960s when the City was awash with serial entrepreneurs led by Jim Slater and Lord Hanson. A lesser light, Andrew Balcombe, was the major force at Armour. He ran the company for approaching 30 years, and although it may have lost its way towards the end of his reign, it certainly enjoyed a degree of fame and fortune.
I have discussed the transformation of Armour before. I return to the company today because I believe the shares are worth buying. They bump along at around 37p, compared with the 73p when I discussed the group three years ago. Mind you, I admit I then thought they were an interesting long-term bet.
The stock market's judgement is not infallible. Share prices can be hopelessly wrong. Stagecoach, the bus and train group, is a prime example. Five years ago the shares crashed to around 10p as an array of wild and wonderful stories swirled around about an imminent catastrophe. The bears were soon desperately running for cover. A few weeks ago, after cash buy-backs (worth 81p a share), the price hit 278p.
Armour, I believe, is merely undervalued. The stock market seems perplexed by its latest results. It produced a pre-tax figure of £289,000 against a restated (and reduced) £2m in the previous year and almost £3m in the year before. What appears to have been overlooked is that the latest profit was struck after a special charge, a £2.7m disposal loss. So, in effect, the group achieved £3m. And the dividend was increased. What's more, the current year is going well. Although there is the obvious danger that any consumer slowdown could impact on a group selling high priced car and home accessories, chief executive George Dexter is confident Armour will enjoy a good run.
My guess is that profits should hit £3.6m – possibly stretching to £3.8m – putting the shares on a bargain-basement rating. It has a number of intriguing new developments to join its hi-fi, radio and headphone offerings, including a novelty that makes a clapped-out old banger sound like a high-powered sports car. An internet shop has been added to the 6,000 retailers who already stock the brands it owns, plus those it represents.
Armour is one of the companies in the stable of Bob Morton, a serial investor. Several of his companies have fallen to take-over bids in the past year or so. With Armour so undervalued I would not be surprised if it attracts a predator.
In recent months many smallcaps, often for no apparent reason, have come under pressure. I am growing increasingly concerned about Myhome International, the franchise group that was once the star of the No Pain, No Gain portfolio. As I write, the shares are 61p, down from a peak of 106p. Trading in them has been thin, but even so the lack of support is worrying, particularly as it has tossed shares around for takeovers. The two most recent placings were above the current price and that can only add to any nervousness.
I think Myhome still has much going for it. And I believe the fall has been overdone. But as the portfolio can be adjusted only once a week it needs some protection against sudden changes and I have decided to put a 50p sell price on the shares. I will be surprised if the decline continues but if it does the portfolio will enjoy some protection.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 PlayStation and Xbox hacked by Lizard Squad
- 2 Christmas comes early to Hong Kong, as millions of bank notes spill out onto busy street
- 3 The 'Black Museum': After 150 years, public can visit police’s grisly crime museum
- 5 Vagina canoe artist facing two years in jail defends herself over ‘obscenity’ charges
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
Alex Salmond has 'broken his word to the Scottish people' says Scottish Lib Dem leader
iJobs Money & Business
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...
£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...
Day In a Page
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens