Printing.com - 41.5p

We covered Printing.com in December 2006 when the share price was 53.75p. Since then the company has continued to make good progress, which has allowed it to stick to its progressive dividend policy and even buy back some shares.

Despite this, the share price has slipped back and this means that the company now looks even better value.

As a refresher, Printing.com provides services aimed at consumers as well as small and medium sized businesses. The product range includes leaflets, booklets, postcards, promotional cards, invitations, letterheads and business cards which are produced in full four colour.

The business was founded by Chief Executive Tony Rafferty and Printing.com joined OFEX in 2002, raising £1.75m at 22p per share. At that time there were just five outlets and the progress made since then makes the current share price look very harsh in comparison.

Results for the year ended March 31, 2008 are a few weeks from being released, but we already know that these will be in line with market expectations, which means that the rating is undemanding. Profits before tax are anticipated to be in excess of £2 million for the third consecutive year.

The current year should see improved profitability and it will be no surprise if profit before tax is closer to £3 million than £2 million next time around.

Total dividends for the year ending March 31, 2007 were 2.5p per share and for the year just ended the interim payout was increased from 0.6p to 1.0p, which means that income seekers will also consider these shares attractive.

All in all, Printing.com has a solid track record of profitability and is building a very good reputation.

The shares look good value given the company's performance to date and although the shares are illiquid given the size of the company and the fact it is listed on AIM, we retain our buy recommendation.

It is also worth mentioning that Medical House, which we covered in December 2007, have been approached and an offer for the company may or may not be made.

The shares are 30.25p at the time of writing, having spiked upwards on the news. Whilst we remain bullish on the company's prospects the share price may well weaken in the short term if the potential offer does not materialise.

  • 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.