Why can't all companies be run like this one?
If all companies were run like wood importer and distributor James Latham (LSE: LTHM), the stock market would be a happier and more trustworthy place.
We often talk about the merits of long-term investing on The Fool, as opposed to short-term trading. But few small companies really justify the wisdom of such an approach, sadly. The trick is in finding those that do -- and Latham is most certainly one of those, in my opinion.
Of course, the company suffers from the swinging mood and confidence of end-users and the market as much as any other. The shares dipped as low as £1 back in March 2009 as sales and profits fell. But for the true long-termers, this really was a chance to invest more heavily in a well-organised and part family-owned and run business.
This is a company that is most definitely run for the benefit of shareholders rather than the directors' egos and salaries. It illustrates the sense of aligning one's interests with those of the founding family, as long as no-one has an overall controlling stake allowing them to take it private on the cheap.
The final results for the year to the end of March show a company making steady progress and paying a handsome dividend along the way; particularly for an AIM-listed investment.
Latham made solid inroads against a pretty rough market backdrop while simultaneously making strategic changes en-route. On sales 10% ahead of £143.6m, the company made a slightly reduced pre-tax profit of close to £7.2m. This was down to costs associated with a relocation to its biggest depot; a larger, modern site in Leeds. The total annual dividend of 9.75p for the year is covered 3.3 times by earnings and represents a respectable yield of 3.5% at the improved share price of 281.2p.
The price-to-earnings ratio of 10 does not look too expensive given the company's repositioning for growth and its track record in achieving that growth, while net tangible assets per share of over 240p are further reason for confidence.
The shares are worth more in my opinion; a great investment for the long-termers.
Finally, let me finish by adding that more share ideas can be found within this Motley Fool report: "8 Shares Held By Britain's Super Investor". The guide reviews the investing approach and portfolio of City dividend legend Neil Woodford and is free to download today.
Further investment opportunities:
> David owns shares in James Latham.