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Stock of the week: Photo-Me International

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Ian Forrest, investment research analyst at The Share Centre, picks Photo-Me International as a 'buy' for higher risk investors.

Photo-Me International is best known for its photo booths, widely used for passport photos and the like, but in recent years it has broadened its product portfolio to include operating copiers, express print services, laundry machines and children’s rides. The company is also expanding geographically into South Korea, Spain and Poland and investors should appreciate that it continues to improve its existing sites.

Trading updates so far this year have been positive, again raising expectations for the full year. Photo-Me International indicated that improved trading in Japan, as a result of mandatory ID cards was the main driver and that profits are now expected to be in excess of £40m.

The group is expanding its laundry machines, which are mostly located outside supermarkets, after encouraging trials in France and Belgium. Investors should appreciate that further growth could come from improving security and fraud prevention for the authorities.

This is a company that is cash-generative and an increasingly innovative business, which has been concentrating on cost-saving measures and developing new products. The positive February update pushed the share price higher, but it has since drifted lower. We would therefore recommend Photo-Me International as a ‘buy’ for higher risk investors with a balanced portfolio.

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