Even as 2020 showed consumers what was really essential in their lives, it also changed the way they shopped. E-commerce was already on the increase b
Even as 2020 showed consumers what was really essential in their lives, it also changed the way they shopped. E-commerce was already on the increase before Covid-19 erupted but the pandemic pushed it to new levels. Online purchases are expected to account for more than 16 per cent of global sales this year and in the UK the percentage is even higher.
While shopping from the sofa is seductive, it needs careful monitoring behind the scenes to prevent fraud and ensure that transactions can be completed swiftly and safely. Chester-based GB Group specialises in this field and its progress has been phenomenal. Midas recommended the shares in 2013 when they were 92p, annual profits were £5million and customers were almost exclusively British.
The stock has risen nearly tenfold since then to £8.86. Profits of more than £40million are expected for the year to March 31, 2021 and there are now 20,000 customers in 70 countries, including multinational operators such as Citigroup, eBay and Etsy as well as homegrown businesses such as John Lewis, Asos and HSBC.
Safety first: GBG’s technology helps firms to make sure that people are who they say they are when they go online
The company’s technology helps these firms to make sure that people are who they say they are when they go online. Banks and gaming groups use GBG’s software when customers open an account. Retailers use the technology to ensure consumers are bona fide and help them buy goods quickly online. Government departments also use the kit to prevent identity fraud.
Interim results to September, published last week, revealed a 75 per cent rise in pre-tax profits to £14.9million. Chief executive Chris Clark cancelled the dividend back in May, citing Covid-19 uncertainty. Now, in an expression of confidence about the future, he has declared a 3p interim payment, and brokers forecast a total of 6p for the year.
Midas verdict: Clark is a marathon runner and he believes that GBG is not even at the half-way stage. The company has grown by leaps and bounds but it operates in a fast-growing market, staff are highly regarded and Clark is determined to make his business one of the biggest in the world. Investors who bought at 23p should definitely take some profits at current levels but keep at least a quarter of their holdings, as Clark moves towards the finishing line.
Traded on: AIM Ticker: GBG Contact: gbgplc.com or 020 7353 4200 (via Tulchan Group)
Wellie group should weather storm
It was not supposed to be like this. Midas recommended colourful wellies and clothing retailer Joules in 2016, when the company had just joined AIM and the shares were £1.71. By 2018, the stock had shot up to £3.02, with sales, profits and dividends all growing fast.
Today, Joules is trading at £1.40, hit by a brutal combination of stock mismanagement last Christmas and persistent lockdowns for the past nine months. The company fell into loss in the year to May, dividends were cancelled and no payout is forecast for this year either.
There have been tentative signs of recovery since then. Chief executive Nick Jones said last week that first-half sales have been better than expected, driven by online sales, which now account for more than 70 per cent of group revenues. Christmas trading has held up well so far and brokers are looking for further improvements in the months ahead.
Midas verdict: Joules has been a huge disappointment for investors but now is not the time to sell. The company has traditionally been a lot more resilient than competitors and a focus on families, fun and the outdoors should stand it in good stead in the post-Covid world. Hold.
Traded on: AIM Ticker: JOUL Contact: joulesgroup.com or 01858 435 255