Stanley Gibbons Group - 140p

It goes without saying that it has remained a difficult time to be invested in shares recently. This is one factor which is making people look towards alternative investments and collectibles are now viewed seriously as a potential way of storing and increasing wealth.

Stanley Gibbons is a major player in this arena. There is an interesting story behind the formation of the business, which took place over 150 years ago when Edward Stanley Gibbons bought a sackful of rare stamps brought back from South Africa by two sailors. From these beginnings, a valuable business has been built and profits are forecast to break through the £5 million barrier this year.

The bulk of revenue is still derived from stamps. However, despite the fact that Stanley Gibbons is such a respected name in world stamp collecting, it still has a market share of less than one per cent and this means there is still plenty of scope for growth.

In terms of financials, the company has a strong, progressive track record. In 2007 revenue rose by 21 per cent to £20.19 million and profit before tax rose by a similar amount, improving by 20 per cent from £3.75 million to £4.51 million. Adjusted profit before tax was £4.63 million versus £3.75 million a year earlier and this translates into adjusted earnings per share of 13.83p, up from 11.07p in 2006. At the year end net cash was a shade over £3 million and the company has maintained a reasonable cash balance over time, which has no doubt proved helpful. Total dividends for the year were 4.5p, up from 4.0p, and a progressive dividend policy is being followed.

The current economic turmoil is having a harsh impact on many companies, but Stanley Gibbons could actually benefit from such conditions. As investors seek alternatives, collectibles are becoming a more widely accepted idea. Initiatives such as improving the online offering should ensure the company can continue to develop, building on the growth already seen in the early part of 2008. Under current market conditions, Stanley Gibbons looks like a good bet although it should be noted that the shares have been on a relentless downward trend from the peak of 251.5p last August and the price may well go even lower in the short term.

  • WARNING: Opinions expressed are the writers' judgments at the time of writing. The information does not constitute a personal recommendation and readers should seek their own professional advice as to the suitability of the investments.