I think Ramsdens Holdings (LSE:RFX) meets the definition of a growth share because the pawnbroker’s stock market valuation has risen by nearly 60% since the start of 2025. In February 2017, its IPO valued the group at £15.7m. Today (8 October), it’s worth approximately £125m.
This morning, the company gave a pre-close trading update for the year ended 30 September 2025 (FY25). It said its profit before tax is now expected to be “slightly ahead” of analysts’ expectations of £15.4m.
All that glitters…
One of the drivers of this improved financial performance is a higher gold price. As well as buying and selling jewellery, it also offers short-term loans secured against valuable items. It sells foreign currency too, although this is a small part of its business.
Today, gold has broken through the $4,000-barrier for the first time. Since the start of January, the spot price has risen 53% following a 27% increase in 2024. During the second half of FY25, Ramsdens has seen the gross profit on its precious metals business increase by more than 50% compared to the same period in FY24. In terms of weight, an additional 15% has been purchased.
| Segment | % of revenue |
|---|---|
| Retail jewellery sales | 29.2 |
| Purchase of precious metals | 28.2 |
| Pawnbroking | 22.9 |
| Foreign currency | 18.7 |
| Income from financial services | 1.0 |
| Total | 100.0 |
The ethical dimension
When I first came across this company, I had my concerns. Understandably, pawnbroking gets a bad press. That’s probably why the group often describes itself as a “diversified financial services provider and retailer”.
Is the company taking advantage of people on low incomes with no savings to fall back on?
Or by taking the business away from dimly-lit back alleys and on to the ‘respectable’ high street — its loan business is also regulated by the Financial Conduct Authority — is it helping the most vulnerable avoid the temptation to turn to loan sharks and the world of illegal money-lending?
On balance, I think it’s the latter. I believe the mainstream banking sector fails people on lower incomes so at least Ramsdens means they have somewhere to turn to when experiencing a financial emergency. The group’s average loan value is currently £347.
Pros and cons
Like all businesses, this one has to deal with a number of potential problems. For example, loan defaults are an ever-present risk. The group also operates 169 high street stores with all the associated challenges. From FY26, it has plans to open eight-to-12 new ones each year.
It’s also relatively small. This means it doesn’t have the financial muscle to cope with a prolonged economic downturn. In addition, the price of gold can be volatile so the boost to this year’s earnings could be a temporary phenomenon.
However, it has a strong track record of growth with earnings per share rising by an average of 7.3% over the past five financial years. And based on amounts paid over the past 12 months, the stock’s yielding a reasonable 3.4% (no guarantees, of course).
Many economists believe the present economic uncertainty (caused by stubborn inflation, increased government debt and fears of an artificial intelligence bubble) could push the gold price higher. If their predictions prove to be right, it’s likely to tempt more people to cash in and sell their precious items.
For these reasons, Ramsdens Holdings could be a stock to consider.
