A coffee for your portfolio? October 9, 2006
Posted by CamdenKiwi in : Investing , trackbackIts time to start thinking about my share investments again, after I’ve left them be over the summer. The Little Green Portfolio of green shares in my SIPP has become rather more little, with all the stocks languishing sadly.
Back in March, when I first started my SIPP, I put together some guidelines for myself in picking shares. I think the mistake I made was not to consider whether the share I was contemplating adding to the portfolio was at a peak price anyway. Most of the ones I bought were at alltime highs, and that may be part of why they haven’t recovered although the market itself has.
I’m now thinking about another purchase, not for my SIPP, but for my ISA. That means it can’t be an AIM listed stock, but has to be from the main market. A company I’m considering is Caffe Nero.
Caffe Nero were founded in the late nineties, and with a chain of just under 300 shops throughout the United Kingdom is the smallest of the three main coffee companies. Their main competitors are Costa Coffee and Starbucks, though of course they complete in the general leisure market as well, against local coffee shops and probably pubs too. Their coffee is stronger and, in my opinion at least, rather better than either of the other two.
The coffee shop market in the UK is expanding, and dominated by the chains, in contrast to the more traditional coffee markets in Europe which are dominated by independent stores. According to Allegra, there is still considerable room for growth in the UK. They have mooted plans to expand into Northern Europe and the Middle East, though nothing has happened on that front yet.
Their recent results are good, and they are now generating sufficient cash to fund their expansion plans from trading. There is also a possible management buyout in the wind, with the founder wanting to take the company private. For these reasons, Investors Chronicle tipped them this week.
Looking at the share price chart for this over the last few months leaves me worried though. The price has just passed an all-time high of 264, and overall it performed much more miserably over the summer months than the rest of the sector. The good results last week don’t seem to have helped the price much.
I think I’ll leave this one for the time being.
Technorati Tags: caffe nero
Comments»
no comments yet - be the first?