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MARKET COMMENT
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Stamps are the new shares. Stanley Gibbons (LSE: SGI), the world's oldest stamp dealers, says its SG100 Stamp Price Index has grown by around 6% per annum since the start of 1998. British stamps have out-performed, growing in value by nearly 11% per annum. No surprise therefore to discover Stanley Gibbons claiming: "The opportunities for careful and informed investment in scarce or rare stamps... has never been better than it is today". Stamps, and other 'collectibles' (such as autographs, up 19% a year since 1997), are best left to the experienced specialist. However, Stanley Gibbons' shares should appeal to the canny stock picker. In fact, the company could very well be the next Hornby (LSE: HRN) -- a famous old name recovering from a ropey past by cashing in on the collectable nature of its products. Hornby, by the way, has been a five-bagger for those who spotted the early potential two years ago. Stanley Gibbons comes with many positives. For starters, it's the company in the world of philately. Furthermore, last year saw it move from loss into profit, with upbeat trading comments and the roaring stamp market prompting the company's broker to pencil in 70% earnings growth this year and next. At today's 26.75p, the shares trade on a forward price to earnings ratio of 8. The company is cash generative with net cash in the bank and, for what it's worth, owns tangible assets worth 26p per share. There are downsides though. Stanley Gibbons is a £7m AIM-listed stock, so liquidity, spreads and all the other small company risks apply. In addition, like their stamps, the shares won't provide an income. Stanley Gibbons is based in Jersey and the tax structure between the Channel Islands and the UK currently prevents a dividend. Nevertheless, the risk-reward ratio presently looks very favourable for the collector of Stanley Gibbons shares.