However, S&U manages risk in a disciplined way, as you would expect from a company that dates back to 1938 and can count on three generations of management by the founding family, which still holds a significant shareholding.
Additionally, the near-new used car market continues to thrive amid a shortage of new vehicles and Aspen is building a strong loan book and future pipeline even though it only approves a relatively small percentage of requests.
S&U is well positioned to capitalize. The company can borrow up to £180m from its own lenders and with just £114m of those facilities already deployed, the business has a further £66m available for growth.
Finally, the valuation of the title is obvious. The shares trade at less than 10 times historical and forecast earnings and offer a dividend yield, based on past splits, of more than 5%.
Income seekers should note that S&U traditionally pays two interim dividends per year, one in November and one in March, followed by a final payment in July.
Stick with S&U.
Quaestor says: here
Share price at close: £24.20
Update: AG Barr
According to last week’s annual results, profits at soft drink maker AG Barr are now above pre-pandemic levels.
However, the share price does not and as beverage maker Irn-Bru, Funkin and Rubicon continues to generate cash and is once again offering regular dividend payments, the shares appear to deserve continued support, although we are still slightly in the red after our first analysis of the title in August 2019.
A forward price-earnings ratio of 17 and a forward return of 2.8%, based on analyst consensus forecasts, represent a premium and a discount to the broader UK market, respectively.
But the company has a net cash position of £68m, generates a high percentage of return on capital and nurtures the kind of popular brands that bring pricing power, a valuable feature in a time of runaway inflation. a major challenge for many companies.
Hang on to AG Barr.
Quaestor says: here
Closing share price: 530p
Russ Mold is Chief Investment Officer at AJ Bell, the stockbroker
Read Questor’s latest column on telegraph.co.uk every Sunday, Tuesday, Wednesday, Thursday and Friday from 5am.
Read Questor’s investment rules before following our advice.