Stanley Gibbons is still looking like a collector's item

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Stanley Gibbons Group - 130.5p

We covered Stanley Gibbons last July when their share price was 140p. The company has recently released interim results for the first six months of 2009 and these demonstrated the fact that progress continues even though the share price now stands at just 130.5p, albeit in a weak stock market overall.

Sales rose by 18per cent to £9.6 million from £8.2m and profit before tax came in at £1.4m versus £1.2m a year earlier.

This translated into earnings per share of 5.09p, up from 4.16p a year earlier. The interim dividend was held at 2.0p but this is clearly well covered.

Stanley Gibbons is a sound business which has stood the test of time.

To bring those who are not aware of the company’s activities up to speed, it is primarily involved in stamp dealing and other collectibles such as autographs. It traces its roots back over 150 years.

The company is in growth mode and looking to improve upon the levels of turnover and profit it has previously achieved.

It can boast a very impressive track record, which means the company has maintained a net cash position and a progressive dividend policy in recent years.

Profit before tax had previously been forecast to break through the £5m barrier in 2008 but due to the current economic conditions this was not achieved.

The share price, which had peaked at 253p in 2007, plunged to 85p earlier this year but has subsequently recovered.

At the current price the shares trade on a modest multiple of earnings and based on fundamentals look cheap.

The recent figures were very reassuring and suggest that a higher valuation on the company would be more appropriate. The shares rank as a buy for those looking for an interesting smaller company to invest in.

The broad stock market has been very buoyant of late. At the time of writing the FTSE 100 is well above the 4,700 level and recent announcements by the major banks have been well received on the whole, as has news that an economic recovery may already be under way.

Whilst this is encouraging we would urge caution and there are no guarantees that share prices are firmly on the recovery path.

Even though the recent rally has been remarkable, we are some way off historic highs and plenty of investors are still nursing heavy losses.

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

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