Piggy bank

Any company that has shareholders’ funds or book value of £2.2bn and a market capitalisation of around £800m is one that will pop up on this column’s preferred stock screens.

A share price chart that goes from top left down to bottom right almost as far as the eye can see will deter some (as it may suggest the business model is mortally wounded) but it will intrigue others, especially if sound long-term drivers to demand and an improvement in trading are visible.

Just Group ticks both of those boxes and the resumption of final dividend payments in 2021 and interim ones in 2022 suggests the board feels that better times lie ahead.

The FTSE 250 firm, formerly known as Just Retirement and JRP Group, made its debut on the London market in late 2013, only to have the rug pulled from under it almost straight away.

George Osborne, chancellor at the time, launched pension freedoms and gave pension holders a far wider choice of options beyond just buying an annuity, an insurance product offered by companies such as Just.

The share price has never recovered. Just still takes a fifth of sales from individual annuities, and as interest rates and bond yields rise some individuals may look once more to the relative certainty that the exchange of a defined contribution pension pot for cash could offer.

Just also provides lifetime mortgages and bulk annuities. Bulk annuities, insurance products sold to defined benefit pension schemes, now represent more than half of revenues and business flow here is good.

Lifetime mortgages represent a sixth of sales. They work like equity release schemes from homes and thus come with risk for Just, which then takes on exposure to property prices, but a lowly loan-to-value ratio provides a protective buffer here.

What is interesting now is how Just is generating cash. As it began to write new business, it previously had to set aside cash so that it could meet its liabilities and reassure regulators that it could and would do so.



Now policies already written are generating cash and funding new business, while the Government’s plans to reform the EU’s Solvency II regulations could lessen the amount of cash that Just must set aside when it writes new business.

This narrative – and frankly the business model – might not excite every type of investor by any means. But powerful cash generation could fund steady dividend growth and also drive further increases in book value – the 72.75p share price already represents less than half of the stated book, or net asset, value per share figure of 172p.

Patience will be needed but value could emerge over time. Buy

Questor says: buy
Ticker: JUST
Share price at close: 72.75p

Update: Yellow Cake

Rather like the oil price, the price of uranium is down by around a quarter from its spring highs, and the slide to $48 a pound from $64 explains why Yellow Cake shares are down by a similar amount from their April peak.

However, our well (or fortunately) timed entry point in August 2020 means we are still comfortably in the black, even as the shares trade at a 11pc discount to net asset value, while the possible return to favour of nuclear power provides a strong narrative that may attract some investors (although those of an ethical bent will admittedly throw up their hands in horror and run away as fast as they can).

Yellow Cake holds 18.8m pounds of uranium oxide, a key step in the process of nuclear fuel rod enrichment, in its specialised storage facilities. Adjusting the market value of those holdings for cash, currency valuations and debt provides a net asset value of around 409p a share.

Energy security concerns in the wake of Russia’s invasion of Ukraine are prompting a re-evaluation of nuclear power in the UK, US and elsewhere but supply is constrained, owing to the conflict, long-term contracts between miners and utilities and limited investment in new output in the wake of the 2011 accident at Fukushima in Japan.

Further gains in uranium prices could follow and give Yellow Cake’s asset value – and share price – a boost. Hold.

Questor says: hold 
Ticker: YCA 
Share price at close: 363p

Russ Mould is investment director at AJ Bell, the stockbroker

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