Albemarle & Bond Holdings PLC - 214p

In March my colleague, Chris Bragg, reviewed H&T Group, suggesting that it could be an attractive company in which to invest, given the current economic climate, as it is a pawnbroker.

At that time the shares stood at 186p and recently they have risen to 215.75p. The share price has been helped by a positive trading update from the UK’s largest pawnbroker Albemarle & Bond and this is a company readers should be familiar with.

I have followed it for some time and have believed that it could have some value especially as the credit crunch filtered down to regular families.

It was my share pick of the year in January and although the price has moved up and down since then the recent update is very encouraging and has seen the share price in the right direction.

The company has benefited from increased retail trade as well as the price of gold.

The company announced that it has traded ahead of expectations in recent months and that results for the year ending June 30, 2009 are expected to be significantly ahead of market expectations.

The first reason for this is quite simply that retail sales have been ahead of last year as more people pawn stuff. The second is that the higher gold price has enhanced the yield on unredeemed loans.

The AIM listed Albemarle & Bond was founded in 1983 as a pawnbroking service. The largest part of the business remains issuing loans against jewellery and diamonds. The company has expanded rapidly and is now the UK’s largest pawnbroker with 114 stores nationwide and it has plans to open 30 more stores over the next three years.

As well as the traditional pawnbroking side the company has added two further strands to the loan business, namely Third-Party Cheque Cashing and Micro-Loans or Pay Advances.

The interim results for the six month period to Decem-ber 31 were encouraging and saw the company building on 16 years of growth.

Profit before tax rose 19 per cent to £6.2m (2007: £5.2m), the pawn loans book stood at £27m an increase of 18per cent (Dec 2007: £22.9m) and earnings per share rose 12.5 per cent to 8.17p (2007: 7.16p). The company also increased the interim dividend to 2.25p from 2p in 2007. Albemarle & Bond looks like it is fully taking advantage of current economic difficulties. There is no reason to think that this will not continue.

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.