8.5% re­turn be­fore you start

Finweek English Edition - - INVESTMENT - MARC ASH­TON

I MEN­TIONED ISA Hold­ings a few weeks back as one of those counters that I’m adding to my share port­fo­lio. The re­cently re­leased full-year f inan­cial re­sults re­it­er­ate my view that this is a stock that’s worth hold­ing and is ideal for small re­tail in­vestors as it’s off the radar of most main­stream as­set man­agers.

On 52c/share you are ba­si­cally get­ting a busi­ness that trades on a 10 times earn­ings mul­ti­ple and an af­ter-tax yield of around 8.5%. Con­sid­er­ing how dif­fi­cult it is to find qual­ity busi­nesses de­liv­er­ing a real re­turn on cap­i­tal, this is a com­pelling ar­gu­ment be­fore you even be­gin to un­pack the op­er­at­ing en­vi­ron­ment. IT se­cu­rity is a big field and you only have to be the IT Man­ager for the South African Po­lice Ser­vice (SAPS) to know how im­por­tant it is to man­age this part of your busi­ness.

Over­all ISA’s costs were well man­aged in a tough en­vi­ron­ment. A lot of its busi­ness should be sta­ble an­nu­ity in­come and there are worse places to put your money.

* Author holds shares in ISA

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