I don’t think 4imprint Group (LSE: FOUR) gets the attention it deserves from investors. This FTSE 250 stock rarely appears on the lists of the most bought shares in the UK. And it certainly doesn’t get the fanfare some other growth stocks get.
Perhaps that’s because the firm sells customised products such as mugs, stationary, shirts, and umbrellas, mainly in the US. There are admittedly more eye-catching business around.
Yet the stock has quietly made long-term shareholders a fortune. So this has definitely been a hidden gem.
Here, I’m going to look at how much the shares have returned over the past 20 years and consider if I’d buy them today.
A staggering return
On Thursday 24 July, 2003, the 4imprint share price opened at 45p. Today, as I write, it’s at 4,570p.
That’s a jaw-dropping 10,055% return!
So, if I’d invested £10,000 in the stock 20 years ago, I would now have in excess of £1m. This investment would have turned me into a paper millionaire!
I think this demonstrates a couple of things. First, it shows how truly powerful buy-and-hold investing can be when picking individual stocks.
Second, it proves that despite all the current negativity surrounding the London Stock Exchange, life-changing returns can and have been made through UK-listed stocks.
Very special passive income
Even more impressive is the fact that 4imprint stock has also paid numerous dividends over the last two decades.
Granted, the payouts haven’t risen every year and the dividend was understandably cancelled during the pandemic. But adding in the ones that have been paid would have taken my total return even higher!
My £10k investment would have bought me about 22,000 shares 20 years ago. Today, those would be netting me a small fortune in passive income.
For example, as a result of profit and revenue both soaring in 2022, the company paid a very generous special dividend of 165.38p per share in June.
A quick calculation reveals that my 22,000 shares would have generated me an incredible £36,000 from this special dividend alone. That’s on top of the £29,000 I’d have received in cash dividends since September.
That’s not too shabby from an original £10,000 investment!
Would I buy the shares today?
Last year, 4imprint’s revenue soared 45% year on year to reach $1.1bn. Meanwhile, pre-tax profit rose to $103.7m from $30.2m in 2021.
New customer acquisitions rose 17% to 307,000 from 263,000. Plus, the branded products firm now has no debt and its operating margin has risen to 9%.
Trading on a price-to-earnings (P/E) ratio of 20, some investors may consider the stock expensive. That could signal a degree of valuation risk, especially if the company’s earnings underwhelm in future.
However, of the four analysts covering the stock, two rate it as a ‘strong buy’, one has it down as a ‘buy’ and the other a ‘hold’. And the average one-year price target offered by analysts is 5,500p, implying potential upside of 22% from today’s price.
Now, such analyst ratings and targets can sometimes end up way off the mark. But it does show that the stock is highly rated by the professional analysts covering it.
As for me, I’m adding the stock to my portfolio as soon as I have the cash.
