Theres been plenty of news flow from the investment community regarding the economic state of China, and the price of oil and other commodities that has sent the share prices of well-known blue-chips crashing to new lows.
The volatility that began last year shows no signs of abating with the FTSE 100 swinging from highs to lows within a range of 5,500 to around 6,000 points. Its worrying though that the lows seem to be getting lower, which could spell trouble.
Scratching beneath the surface
While all of the news is aboutunder-pressure blue-chips, there are plenty of cash-rich profitable companies that are worth a look and Ive selected three to review today:
Photo-Me International (LSE: PHTM) is a UK-based company engaged in operating photo booths and coin operated products including washing machines and car washes.
Sprue Aegis (LSE: SPRP) is in the business of the design, sale and marketing of smoke and carbon monoxide (CO) detectors and accessories.
AndPayPoint (LSE: PAY), through its subsidiaries, provides clients with specialist consumer payment and other services and products, transaction processing and settlement services.
True, these companies arentthe most exciting, but all are profitable and boast plenty of net cash on the balance sheet so arentbeholden to banks should the economy and trading conditions take a turn for the worse.
However, this isnt the case currently, especially where Photo-Me is concerned. This morning the company released news that the strong trading that the company had witnessed in Japan as the My Number programme is introduced had continued into the third quarter. It saw abetter than expected performance here, coupled with the year-to-date performance of the rest of the business where the recent laundry roll-out is also producing promising results. This led management to believe that pre-tax profits for the full year would be in excess of 40m. However, if trading in Japan continues to be this strong, this figure would again need to be upgraded.
Current forecasts for the company put the shares on a rather punchy 21 times forecast earnings according to data from Stockopedia. However I suspect that this will start to recede as analysts again have to revise up their earnings target.
This bodes well for shareholders as the board revised the dividend policy recently to include a special dividend taken from excess cash over 50m on the balance sheet. Given that theres currently 66m, Im expecting a bumper payout in November.
Not to be outdone, Sprue Aegis recently announced it had over 22m, or nearly 20% of its market cap, in cash. This was despite investing in additional stock to avoid any disruption to its supply chain as the Chinese factory that builds most of its products relocated to another site.
PayPoint also reported that the group maintained a strong balance sheet, with cash of 56m, up 10m from 30 September. Although the cash balance includes amounts held to settle short-term client obligations of 28.3m, the cash that belongs to the company equates to around 6% of the market cap and its none too shabby.
As well as the cash on the books, theese companies are also set to pay dividends in excess of the market as a whole with 4% at Sprue Aegis, 5% at Photo-Me and over 6% at PayPoint whats not to like?
Will You Grow Richer In 2016?
Let’s face it, investors love juicy dividends, and one of The Motley Fool’s top income advisors, James Early has found a share that has stirred his interest.
These are the sort of investment opportunities, which when coupled with other like investments could help contribute to life-changing scenarios, a wealthier retirement for example, and right now, you can access ALL of them for just pennies a day.
To find out more, take a few moments out of your day and downloadA Top Income Share From The Motley Fool.
The report is free to a good home and you are not obligated in any way. SoClick Heresit back, and enjoy.
Dave Sullivan owns shares of Photo-me and PayPoint. The Motley Fool UK owns shares of PayPoint. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.