The Motley Fool

Is Versarien plc a millionaire-maker stock?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Advanced materials group Versarien (LSE: VRS) probably wasn’t on the radar of many investors before its shares soared from 20p to 80p between 1 November and 8 December. During these weeks the firm announced partnerships with a “global consumer goods company” and a “global chemical major,” as well as ongoing negotiations with a number of other “multinational companies” in diverse sectors.

Could Versarien be a millionaire-maker stock? Or has the market got overexcited?

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!


It was floated on AIM in 2013, raising £3m at 12.25p a share. With 83.1m shares in issue, its market capitalisation was £10.2m. The number of shares has increased to 148.4m, largely as a result of four further fundraisings (totalling £11m), and shares issued in connection with acquisitions. At the recent peak of 80p, the market cap was near to £120m.

Investors need to tread carefully with companies on London’s lightly regulated junior market but I’ve found no glaring ‘red flags’ in Versarien’s accounts or in its directors’ backgrounds, which is a good start.

Chief executive Neill Ricketts and finance director Christopher Leigh were both previously with another AIM-listed firm, Elektron Technology. Ricketts was a divisional managing director, who, according to Elektron, “successfully turned around a number of underperforming businesses.” He departed when the group changed its strategic focus and divisional structure, as did Leigh, who had been Elektron’s finance director for 18 years.

From unpromising to exciting

At the time of its admission to AIM, Versarien, which had no revenue in its prior financial year, acquired a subsidiary of Elektron from the division Ricketts had managed. Some details of this and further acquisitions Versarien has made are shown in the table below.

Acquired company Date of acquisition Price of acquisition (£m) Revenue in year prior to acquisition (£m)
Total Carbide Jun 2013 2.28 3.84
2-DTech (85%) May 2014 0.44 0 or negligible
Custom Systems Feb 2015 0.21 3.60
AAC Cyroma Oct 2016 1.70 4.27
Cambridge Graphene (85%) Jan 2017 0.17 0 or negligible
TOTAL 4.80 11.71

Given the total £11.71m of the revenue-generating businesses it has acquired, it’s a little disappointing to find that group revenue for its last financial year (to 31 March) was just £5.93m, on which it made a £2.2m loss. Somewhat unpromising, it has to be said.

However, the aforementioned partnerships with a global consumer goods company and a chemical major relate not to the more mature businesses but to the commercialisation of the production of graphene by 2-DTech, a spin-out from the University of Manchester, which Versarien acquired 85% of for £0.44m.

In its latest half-year results (to 30 September), it reported a jump in revenue to £2.2m in its graphene and plastic products division from just £17,000 in the same period of the prior year. It’s the commercial potential of graphene, as evidenced by the keen interest of diverse multinational companies since the half-year end, which has got investors excited.

What price to pay?

While, some of Versarien’s businesses appear to be fairly humdrum, I believe the commercial opportunity for graphene is genuinely significant. But what price would I be willing to pay to participate in such an opportunity?

My rule of thumb for this type of higher-risk/potential-high-reward proposition is to pay no more than 10 times current sales. Annualising Versarien’s H1 revenue gives £8.76m, so multiplied by 10 gives a market cap of £87.6m or 59p a share. Therefore, I’d rate the stock a ‘buy’ at up to 59p.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

G A Chester has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.