RWS: translating tech into profits

RWS is a “picks-and-shovels” play for the technology sector, and boasts an excellent record, says Mike Tubbs.

906_MW_P31_Companies

Patents for new products: accurate translations are crucial
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During a commodities boom, investors may do better investing in companies providing miners with crucial equipment such as bulldozers or earth-movers, rather than taking a punt on the metals producers themselves. This "picks-and-shovels" approach to a promising sector can be applied to technology and bioscience too.

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RWS Holdings (Aim: RWS)
Share price450pEst p/e 2018/2019*25/21
Market cap£1.23bnPEG 2018/20192.1/1.7
Net debt/ adj. op. profit**~1.3Est. dividend yield 20181.7%
Recent resultsH1 2018H1 2017 (no Moravia)Full year 2017
Turnover£139.6m£76.6m£164m
Operating profit**£30.5m£19m£43.4m
EPS/adjusted EPS**4.7p/8.2p4.9p/6.9p11.0p/14.3p
Dividend/share1.5p1.3p6.5p
* Estimated for a full year of Moravia excluding acquisition costs Includes only five months of Moravia** Before amortisation of acquired intangibles and acquisition costs
Dr Mike Tubbs

Highly qualified (BSc PhD CPhys FInstP MIoD) expert in R&D management, business improvement and investment analysis, Dr Mike Tubbs worked for decades on the 'inside' of corporate giants such as Xerox, Battelle and Lucas. Working in the research and development departments, he learnt what became the key to his investing; knowledge which gave him a unique perspective on the stock markets.

Dr Tubbs went on to create the R&D Scorecard which was presented annually to the Department of Trade & Industry and the European Commission. It was a guide for European businesses on how to improve prospects using correctly applied research and development. He has been a contributor to MoneyWeek for many years, with a particular focus on R&D-driven growth companies.