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Why Shares In BrainJuicer Group PLC Jumped

Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.

What: Shares in the market research agency BrainJuicer (LSE: BJU) surged 11% to 472p during early trade after announcing plans to return another £1.5m to shareholders.

Brainjuicer has a £6.2m cash pile and no debt, and has therefore elected to pay out a special dividend of 12p per share. This follows a previous 12p dividend in October.

CashSo what: Brainjuicer is a capital light business and in 2013 spent just £139,000. As such, the firm tends to have strong cash flow, and the amount was particularly high in 2013 (£4.6m).

The firm’s revenue and operating profit have grown at an average annual rate of 21% and 22% respectively. During this period the shares have climbed nearly 400%.

As we’ll see, looking ahead the chief executive is cautiously optimistic.

Now what: BrainJuicer has been a long-time proponent of applying behavioural sciences to improving market research. In 2013 the industry “woke up” to this, according to boss John Kearon, and leaves the firm well positioned to grow in the near term. 

Mr Kearon added:

“We have made a promising start to 2014.  As always, however, given our limited revenue visibility we cannot predict with any certainty how the year will unfold.  What we do know is that the coming years will be exciting.”

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Mark does not own shares in BrainJuicer. The Motley Fool owns shares in BrainJuicer.