Share purchases December and January

By | March 5, 2017

Author: Mr and Mrs DDU.

Disclaimer: Stocks mentioned on this blog are for general entertainment/documentation purposes only, following our own investment journey and decisions. Nothing in this article should be considered investment advice nor is intended to be investment advice. Please click here to continue reading our disclaimer. By viewing any page on this blog you are agreeing to the linked terms & conditions.

We’re finally getting around to sharing our purchases we’ve made over the past 2 months!

Now that we’ve been successful with our IVF, we’ve decided to put around $1,000 a month towards buying shares. We were thinking we’d do a post about each purchase, but seeing as we’re up to 7 purchases to tell you guys about, we will consolidate them into 2 posts.

 

So let’s go back and have a look at what we’ve bought..

December 2016

What we bought: Altium (ASX:ALU). We bought 63 Altium shares at $8 each, with a dividend yield of 2.63%.

We already owned Altium and posted about them here. It’s a good thing we did buy at $4.44 way back in January 2016 because they’re now at $7.24 – not bad for around a year’s work.

What Altium do: Altium are an electronic PCB software company that helps designers design the products of the future. They have a long list of big customers including Toyota, John Deere, NASA, Boeing and Microsoft (and many more). Not bad!

A few numbers:

Market Capitalisation: $977 million

Dividend increase streak: 4 and a half years

In its latest results for 6 months to 31st December 2016 it announced:

Latest dividend increased by: 10%

Latest earnings per share (EPS) increase: 7%

Operating cashflow: USD$13.7m

Profit after tax: USD$9.9m

Why we bought more: Altium has grown very nicely over the last few years, the Internet of Things and complexity of products is probably going to get even bigger as time goes on.

They are predicting $200m revenue in 2020 (and more beyond that date), which is around double where they’re at now. One of the pleasing things we like is the rising EBITDA profit margin, which grew to 25.8% from 25%. Every dollar that Altium earns, is making more profit for them – that’s a good business for us to own.

Risks: Tech companies are always in danger of being disrupted so we’ll have to keep an eye on if any other competitors are coming along. But Altium is growing its market share, up to 16% of the global PCB market. It’s looking good.

 

January 2017

What we bought: Class (ASX:CL1). We bought 189 Class shares at $2.69 each with a dividend yield of 1.32%.

What Class do: They provide accounting software for accountants to administer self managed superfunds with a 100% cloud product.

A few numbers:

Market Capitalisation: $355 million

Dividend increase streak: 4 years

In its latest results for 6 months to 31st December 2016 it announced:

Latest dividend increased by: Dividend became ‘fully franked’ which increases a 1c dividend to a 1.43c dividend.

Latest earnings per share (EPS) increase: 17% (excludes IPO costs)

Operating Activities cashflow: $4.8m

Net Profit after tax: $3.6m

Why we bought Class shares: We think Class could turn into one of Australia’s blue chips one day. There is long term growth predicted for Australia’s superannuation (pension) system and SMSFs.

The reasons why we like it include: there is a big change of accounting from desktop to cloud products, accountants pay annual fees (nice recurring revenue), Class has a 99.8% retention rate of clients and it’s growing its market share of the SMSF market – it now stands at 21.7%. It also has a promising new product for accounting in non-super entities like trusts, which could grow strongly over the coming years too.

Risks: There is a risk that other competitors could create a better product, such as BGL, but at the moment Class is still strongly winning market share so that doesn’t seem a worry for now.

There was also a risk of overpaying for a ‘growth’ stock like Class. At $2.69 we thought we had a nice margin of safety and bought at a good price. It’s now currently $3.02, a nice 12% increase in a month – hopefully it just keeps rising from here.

 

Our other January buy:

What we bought: National Veterinary Care (ASX:NVL). We bought 245 shares at $2.14 each.

What National Veterinary Care do: They aim to be (one of) Australia and New Zealand’s largest vet groups.

A few numbers:

Market Capitalisation: $106 million

Dividend increase streak: 0 years

In its latest results for 6 months to 31st December 2016 it announced:

Latest dividend increased by: No dividend yet – expected for the next report.

Latest earnings per share (EPS) increase: From -0.73 cents EPS to 4.96 cents EPS

Operating Activities cashflow: $6.46 million

Net Profit after tax: $2.86 million

Why we bought National Veterinary Care shares: This is by far our smallest cap business that we’ve bought and it doesn’t have a dividend streak. It doesn’t exactly fit into the dividend category but we think it has the potential to pay a good dividend in the future. We like the idea of having a few growth stocks in our portfolio for some diversification, especially whilst we’re young.

So, with that in mind we went for this vet group. Its strategy is to acquire vets and build its market share. It’s already the second biggest group in Aus/NZ behind Greencross (ASX:GXL) (which we also own) and actually has a number of ex-Greencross management.

The number of pets is increasing with the human population and earnings are fairly defensive too so it will hopefully be a good one for a number of years. We thought we’d buy in early with a small amount and let it hopefully grow.

Risks: As long as the number of pets in Australia/NZ keeps rising then there shouldn’t be too much risk. Management will need to be careful about the price they’re paying for acquisitions but the strategy is working so far.

 

Final thoughts

So there you have it, our purchases in December and January. Hopefully all 3 purchases turn into great long term dividend payers. They’ll be included in our next couple of dividend monthly updates so look out for that! We have another share purchase post coming up soon for February purchases.

 

Thanks for reading this article about our investing journey Down Under.

Onwards and upwards!

12 thoughts on “Share purchases December and January

  1. Buy, Hold Long

    Good to see others are investing in not so well known companies. They all seem like solid businesses with plenty of growth potential. Cheers.

    Reply
    1. Dividends Down Under Post author

      Thanks BHL, funny that some would consider them “not so well known” they are so high on our radar that they’re very known to us! a lot of the biggest companies on the ASX are just not our cup of tea 🙂

      Mrs DDU

      Reply
    1. Dividends Down Under Post author

      We love being in “buy mode”! it’s a lot of fun, although we have been buying more than we’ve budgeted for.. so we will have to reign that back into our budgeted amount over the next few months.

      Mrs DDU

      Reply
  2. Team CF

    They are on a buying spree, cool! Hope the stocks will perform as anticipated over the coming years!

    Reply
  3. Mrs. ETT

    Really appreciate that you take the time to break down your thinking for each share purchase. It gives me an insight into the type of investigation needed before purchasing shares. Looking forward to the next one!

    Reply
    1. Dividends Down Under Post author

      No problem Mrs. ETT – we break it down just as much for you guys reading as we do for ourselves. Some people like to buy shares on a whim, or based on share price, we do like to do our research 🙂

      Mr DDU

      Reply
  4. Josh @MoneyBuffalo

    I recently looked at some of the direct shares I purchased a year or two ago, one of my stocks (Northrop Grumman) has grown about 50% since I purchased it in spring 2015. Plus it pays a dividend which is always a nice bonus!

    Great picks & like how you explained why you bought what you did. This is something I want to keep more notes about with my own purchases instead of solely making a mental note I forget the next day.

    Reply
    1. Dividends Down Under Post author

      That is a great return on investment for your portfolio :). It always feels great when your picks do well, sometimes they don’t do so well haha.

      Laying out why we bought a stock is great for our records and as a bonus is great for you guys reading to understand our methods. It would be so easy after many years of DGI to completely forget the original reasons for purchasing/selling.

      Mrs DDU

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *