Primary Recommendation

Cake Box - Franchised cake shop business with plans to double estate to 250 stores

August 2020

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

In the celebrated case of Domino’s Pizza Group, whose shares have soared from under 4p (adjusted for share splits) at the start of this century to a scarcely believable 305p, the plan had been to build a nationwide network of franchised stores, enabling it to expand without a commitment to capital. Franchisees could then be charged a small slice of their sales for the privilege of using its brand, central marketing pot, ingredients and expertise. The plan worked and then some and Domino’s store numbers have grown from single figures to over 1,000 while its profits have soared from just £1.1m to £98.8m in 2019. In view of those stellar returns, it’s a mystery why there hasn’t been an avalanche of ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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