JDG
📈 Judges Scientific grows organically and primarily through acquiring smaller companies, achieving impressive average returns of 20% historically.
💼 Despite being a small-cap in a niche market (scientific instruments), it boasts strong fundamentals, including over 20% free cash flow growth for 17 years and significant founder ownership (12%).
📉 Recent share price weakness due to temporary issues (contract delay, China slowdown, UK tax hike) appears to be resolving, presenting a potential buying opportunity with a projected 20% long-term return from current levels.
@adriarivero:
“Judges Scientific is a very small company, specializing in scientific instruments in the UK. Although small, it doesn’t mean it’s not high quality; it’s just in a specific niche. It grows organically but mainly by acquiring other smaller companies, using its generated cash to buy businesses at cheap prices, yielding average returns of 20%, which is above the market average. A founder, David Scurek, holds 12% of the shares. Its free cash flow has grown over 20% annually for the last 17 years, and the stock price has seen annual growth of 30%. Currently, it has suffered short-term setbacks, in my opinion due to temporary problems, making it a potential opportunity. Its clients are often universities needing scientific instruments like microscopes. The company has faced recent headwinds: a revenue dip, lower margins, a delay in a significant contract for its subsidiary Geotec (which has since been confirmed), a recession in China (a key market), and a UK tax increase. However, these seem temporary. The Geotec contract is now secured, China is showing signs of recovery in the second half of the year, and order intake is increasing significantly. The company still has cash for acquisitions, and comparisons this year will be against a weak prior year, making it easier to beat expectations. Valuation based on historical multiples suggests a potential 20% long-term annualized return from these levels.”
Watch the exact part of the video where @adriarivero talks about Judges Scientific Plc here:
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