By Malcolm Stacey | Saturday 5 March 2016
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Hello Share Trekkies. The health game is a good place to be for winning share seekers like us in 2016. Bio-science firms are set to reap the benefit of an ageing world population with all its attendant health problems. And even younger folk will sadly require more medical care, unless they can do something about their unhealthy diets.
Health firms also have a defensive quality. The last thing people will do without when times get hard, is their treatments and medication. I’ve brought a few likely small pharma firms to your attention over the last six months. And here’s another one: Alliance Pharma (APH).
It’s an AIM company, but don’t let that put you off. One of its main strategies is to buy up other promising set-ups in a similar line. For example, it gobbled up Sinclair IS Pharma’s dermatology arm. The cost was £132 million and some in the City say it was well worth it.
The company has also recently entered the US and Asia markets, where medical services are adequately funded, unlike many bits of the NHS. It already has a strong profile in Europe, and I suppose it's wise to expand in other continents, expceilly if Britain leaves the EU.
The PE Ratio is a manageable 15 and it pays a dividend with the yield just short of 2%. Any regular pay-out is fairly rare for a smallish bio pharmaceutical venture and is an indication of reliability. Pre-tax profits are not growing year by year, but, and this is fairly unusual for medical people, it never makes a loss. While its recent expansion policy makes me think that the firm's money-making capabilities will grow this year.
It has an annual turnover of £40 million a year. The share price dipped to 42p in January and is around 48p now. The share price was 61p last summer without the expansion news that’s come in since then. So I see no good reason why the shares shouldn’t bust through the 60p level again.
And I see no reason why I shouldn’t now visit the Punter’s Return. God bless.
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