New holding: Paypoint added to JIC Portfolio

Paypoint (PAY.L, FTSE 250 Index. Market Cap £518m, 712p, 2.0% of JIC Portfolio and 0.0% of JIC Top 10)

I have started a new position in Paypoint, buying a 2.0% holding to start with.

Paypoint: from Stockopedia; “It provides specialist consumer payment, and other services and products, transaction processing and settlement. It offers clients streamlined consumer payment processing and transaction routing in an integrated solution, through MultiPay. MultiPay gives users the flexibility to choose channels depending on their customers’ needs, including mobile application, online, text, phone/interactive voice response, cash in-store and cash out. Its platform, PayPoint One, combines PayPoint services, integrated card payments and electronic point of sale (EPoS) all in a device. Its retails payments and services offerings include bill and general (prepaid energy, bills and cash out services); top-ups (mobile, e-money vouchers and lottery), and retail services (payment card, parcels and money transfer). Its mobile and online offerings include parking, permits, tolling, ticketing and bicycle rental transactions.

I held it during 2012 and have bought back today at the same price as I sold in July 2012. It is at its most oversold ever, with an RSI of 15. In the past, when so oversold it has proven a good buying opportunity.

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Its business should be reasonably resilient through a hopefully, sharp and short recession. People still have to pay their bills. Its balance sheet is fine, and it generates loads of free cash, hence the high dividend pay-out and a forecast yield for the year ending March 2021 of 10.0%.

On Stockopedia it has a StockRank of 88 (Quality 94, Value 48 and Momentum 71). It passes two screens: Richard Beddard’s Nifty Thrifty in Value investing and Greenblatt’s Magic Formula in Quality Investing.

I would hope that at some time over the next couple of years it will head towards the top of its trading range i.e. £11. That would give a nice capital return but, in the meantime, I’ll be collecting a hefty dividend.