A solid and tax-efficient Aim stock

Judges’ results for the six months to 30 June 2022 showed a continuing recovery from the pandemic, with revenue up to £46.4m from £43m in the first half of the previous year. However, the acquisition of Geotek in May 2022 substantially enhanced the company’s financial performance. Revenue of £66.8m for the second half of 2022 represents a major improvement from the £48.3m recorded in the second half of 2021.

The group’s order intake increased, led by North America, with the order book standing at a healthy 21 weeks at the end of August. By the end of December 2022 the order book had increased to 22.9 weeks. Encouragingly, Judges says it has seen “solid growth in organic order intake for the first two months of 2023”.

The 2023 figures will include a full year of Geotek, which should continue to boost both revenues and profits. Unfortunately, the British government raised corporation tax from 19% to 25% in April, and this will affect earnings per share (EPS) for 2023. Still, Shore Capital, the company’s house broker, estimates that the stock is on a forward price/earnings (p/e) ratio of 25. Analysts’ one-year price target for the stock is 10,000p compared with the recent share price of 9,240p, leaving plenty of scope for further rises.

The interim dividend for 2022 was 22p, a 16% increase on the previous interim. The preliminary final dividend is 59p, a 25.5% increase on the previous year, making a total of 81p for 2022. The stock’s forward dividend yield is 0.9%.

The directors have substantial stakes in the company. David Cicurel, CEO, holds 20.5% of the equity, with other directors holding 3% in total. So their interests are aligned with those of other shareholders.

Finally, Judges has the advantage of being one of a group of Aim stocks whose shares count as an asset free of inheritance tax after a qualifying holding period of two years.