SpaceandPeople (SAL)

I have added SAL to my portfolio today.  SpaceandPeople markets, sells and administers promotional space in a variety of high footfall venues across the UK, including shopping centres, theme parks, garden centres, retail parks and airports. They offer a comprehensive service covering everything from consultancy services through to the provision and management of retail merchandising units in shopping centres.

The company appears to be good at what is does and recently announced the following:

Friday 23^rd March 2012 - SpaceandPeople, the retail, promotional and brand experience specialist, has announced that is has signed contracts with Land Securities, the UK's largest real estate investment trust, to manage mall retail and brand partnership activity in its shopping centres throughout the UK. The five year exclusive agreement with the FTSE 100 company starts from April this year and provides SpaceandPeople with an additional weekly footfall of 2.4 million shoppers to offer brands, promoters and retailers.

The agreement encompasses 12 venues including many of the leading UK shopping centres such as The Bridges (Sunderland), White Rose (Leeds), Gunwharf Quays (Portsmouth) and Overgate (Dundee).

The company's revenue is heavily skewed towards the UK but SAL has divisions in Germany, India and Russia and so is diversifying internationally.

Having said all this, my reasons for identifying SAL are a p/e of 8.1, 4.5% div yield covered more than twice plus growth forecast at 24% for 12 months to 31/12/12.  I believe that the worst of the banking and Eurozone crisis is behind us and that consumer confidence is returning and there is pent up demand from recent years.  Nevertheless companies will have to work hard to get consumers to spend with them and SAL is well positioned to take advantage of that in my opinion.  Again the dividend means that I am paid to wait if my timing is off.

Hargreaves Services (HSP)

I have added HSP to my portfolio on 22/3/12.  HSP are involved in the supply, movement and management of mineral resources and the provision of support services to the energy and waste industries.  They are a fully integrated business; they source, produce, process, handle and transport a wide range of bulk materials.

Hargreaves Production Division produces coal, coke, and smokeless fuel briquettes; it recycles tyres for customers throughout the UK and in Europe. The Hargreaves Energy & Commodities Division provides coal, coke, minerals and biomass products to a range of industrial, wholesale and public sector energy consumers. Basically they produce coal/coke & other fuel, supply it, transport it and provide support services. This fits in with my theme of commodity inflation but it should also benefit from increased demand due to a global recovery.

The reasons for identifying HSP are a p/e of 10, 1.5% div yield covered more than 6 times plus growth forecast at 28% for 12 months to 31/5/13. So it works on a standalone basis but is a play on the macro themes.  The share price has been climbing for 3 years now and keep on putting in new highs.

My entry at 1200p is 6.6% below recent highs and despite the recent market moves I am currently up by 2.4%.  The share price chart looks bullish with the moving averages turning up.

Stock Selections

Before I mention the two new shares that I have added to my portfolio I thought that I would respond to some feedback that I have received, namely:

"the research behind that blog leaves a lot to be desired"!

Well that's telling it as it is.  That person is absolutely right, there is no depth to the information that I have posted as I haven't researched the company to a huge degree but have placed more emphasis on the numbers.

also "I would be wary of following any recommendations on such flimsy detail given in that blog".

My response to this comment is that I am not interested in people directly following me into trades but more about being disciplined and consistent myself and learning from interactions with fellow investors.  This blog records my reasons for buying and selling and allows me to go back and determine whether it was the correct course of action and whether I could have done anything better.

OK moving on, I thought I'd mention the process that I follow to identify target stocks in order to clarify my methods.

I use a stock filter based on the PEG ratio together with some additional filters to identify stocks with the margin of safety that I desire.  As well as looking for stocks with a PEG ratio of less than one, I also look for a low PE ratio, good cash flow, low gearing and good growth prospects.  I then look for companies in this list which appeal to my own views of where the economy are headed and which sectors will prosper in that environment.

I place a lot of emphasis on the filtering process rather than researching the company to the 'nth' degree.  This is really just due to a lack of time on my part.  I am a numbers person anyway so this approach suits me.

A stock filter will get you so far but you still have to apply your own research and opinions to determine what to buy.

I have tested the process over the last few years and it seems to have a good win rate in terms of picking winners.  Not all of them work out well but that's investing for you.

Hopefully the results will speak for themselves.