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A Possible New Tax on Coffee Cups Should Put a Froth on this Company's Shares

By Malcolm Stacey | Monday 8 January 2018

Disclosure: I own shares in one or more of the stocks mentioned. 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 Samplers. Many years ago, I lost money on a company called Stanelco. It became Biome Technologies (BIOM) and I had another go. After a few moribund years, it suddenly took off and I sold to make a fair fist of dough. The reason the price spurted was that there was a hoo-hah in the media about takeaway coffee cups. The huge majority of them cannot be recycled, which means millions of the little beggars are cluttering up the environment. In Blighty alone, we get through two and a half billion disposable cups a year.

Biome has an interest in coffee cups, so the share rocketed. It was hoped that big coffee outlets would place huge orders in the wake of the controversy. But retail industry possibly wasn’t keen on the extra expense as the big orders were slow to come in. And the share price faded rapidly, though it has recovered since.

Well, on Friday, MP’s called for a 25p tax on disposable cups. They even threatened to ban them altogether. And expecting Biome’s share price to jump on the news, I bought some more stock. And yes the share reacted, but only marginally. So if you think as I did, that Biome’s fortunes may be vitalised by the new curbs, then it might not be too late to buy.

Some powerful environmental lobbies are very keen to see an end to cups you can’t recycle and Whitehall is on their side. Of course, the big sellers are not bound to go to Biome for recyclable stuff. And schemes will be launched for us to bring our own cups. But Biome, with its biodegradable materials, has been in a niche area for a long time, and it knows the field.

Biome does make a small profit and in a 9-month trading statement in November, revenues increased by nearly a half. But I have to say that it has not been the best company to turn ideas into cash. However, if the end of non-recycled coffee cups really is nigh in Britain, maybe Biome’s time has come.

Though we don’t serve coffee in the Punter’s Return.

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