This stock has turned £10,000 into £600,000 in 10 years

Here’s how one company has made investors a fortune.

| More on:

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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Accesso Technology (LSE: ACSO), formerly Lo-Q, has delivered a stunning return for investors over the past 10 years. It’s turned a £10,000 investment into £600,000.

For the moment, I’ll put aside the question of whether Accesso remains good value for investors today, because first I want to show you how the history of this company offers valuable insights for anyone looking to invest in early-stage businesses with high growth potential.

Rollercoaster

Accesso was floated on the small OFEX market (now NEX Exchange) in 2000. It raised £2.3m at 106p a share and a further £3.6m at 100p when it moved to AIM in 2002.

The company had developed a system for virtual queuing at theme parks, prototyped at Thorpe Park in the UK and Six Flags Over Georgia in the US. It looked a decent idea and the OFEX prospectus contained management projections for rapid revenue and profit growth.

Unfortunately, as the table below shows, the projections proved to be over-optimistic.

  2001 2002 2003
Projected revenue (£m) 2.4 7.7 17.2
Projected profit (£m) 0.1 1.9 6.7
Actual revenue (£m) 0.3 0.9 2.3
Actual profit (£m) (0.8) (1.6) (1.3)

Accesso’s fortunes weren’t helped by a downturn in US theme park visitors following the 9/11 attacks of 2001 and delays in rolling out its systems at Six Flags’ parks. A profit warning in 2002 sent the shares tumbling and by early 2003 they were trading below 10p.

Business remained tough — indeed, it was touch and go whether the company would even survive — and the share price languished in single digits to beyond the end of 2005.

However, things gradually improved. Accesso reported a maiden full-year statutory profit for 2007 and hasn’t looked back since.

Risk and reward

Accesso’s shares have been trading around 1,500p of late. The table below shows the current value of a £10,000 investment made on a number of key dates in its history.

  Share price Return on £10,000 investment
OFEX admission (30/10/2000) 106p £141,509
AIM admission (24/4/2002) 100p £150,000
Share price all-time low (21/6/2005) 2.88p £5,208,333
Announcement of maiden profit (10/4/2008) 25p £600,000

Things rarely go smoothly for a company that comes to market with a product or service but no trading history. Even if the story is good, setbacks can be devastating — indeed, terminal for many fledgling businesses.

Accesso’s early investors in the OFEX and AIM placings were sorely tested, seeing the value of their £10,000 investment falling to just a few hundred pounds for the best part of three years, before ending up with a 14/15-fold increase of their original stake.

In the darkest days, Accesso could hardly be classed as an investment. It was an out-and-out gamble. A lucky punter who put 10 grand on the nose at the all-time low would be a millionaire five times over today. However, you could go a lifetime of making similar bets without ever hitting such a jackpot — and losing many 10 grands along the way.

In my opinion, as a general rule, waiting for an early-stage business to prove it can turn a profit offers the best risk-reward proposition. In Accesso’s case, this transformed £10,000 into £600,000 — a return most investors would be more than happy with.

Finally, is Accesso still worth buying today? The forward P/E is a premium 38 and forecast earnings growth of 24% isn’t high enough relative to the P/E to persuade me that the shares are outstanding value. But nor is the valuation grotesquely high. As such, I would rate the shares a ‘hold’.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

G A Chester has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »