Midas update: CPP Group has further to rise

By This Is Money
Updated: 07:17 EDT, 6 March 2011

CPP Group describes itself as an international 'life assistance' business, which boils down to card protection, with some mobile phone, legal and home emergency insurance thrown in.

The company floated last April and last week announced its first annual results as a public company.

Underlying turnover rose 12% to £326m last year and underlying pretax profits were up 33% to £47m, the fifth consecutive year of double-digit growth. There is also a maiden dividend of 7.54p.

Losing a wallet causes considerable disruption, especially where consumers have lots of cards, but customers can make a single call to CPP and it will sort everything out. Policies cost about £30 a year.

In emerging markets, consumers have fewer cards but banks are much less likely to cover them for fraud so there is an incentive to take out cover.

Midas recommended CPP shortly after it floated when the shares were 256p. Today, they are 303p.

Midas verdict: Investors have done well but the price should continue to increase.

The dividend may well rise too, as CPP generates plenty of cash and has no debt.

Existing investors should hold on. New ones may choose to buy on weakness.