I believe Photo-Me (LSE:PHTM) could be one of the best shares to buy now for my holdings. Here’s why.
Self-service provider
Photo-Me describes itself as an instant service equipment group. In simpler terms, it operates a number of technology driven-machines to help consumers with day-to-day tasks. It operates photo booths, laundry machines, and digital printing stations as well as other self-serve equipment.
As I write, Photo-Me shares are trading for 75p. At this time last year, the shares were trading for 47p, which is a 60% return over a 12-month period.
The best shares to buy now have risks
Photo-Me focuses on providing its products and services in public areas. The pandemic changed the face of retail operations and footfall dropped substantially. Any new variants that could cause restrictions to come into force once more, could hurt Photo-Me’s recovery and growth prospects.
Photo-Me’s photo booths are a core part of its offering. As the digital revolution throughout the world continues, these machines could eventually be moot and no longer required. This could put a severe dent in financials and growth prospects looking ahead.
Why I’d buy Photo-Me shares
I like the Photo-Me business model as a whole. It earns revenue without the worry of high staffing costs. Many of its machines are unmanned and only require limited servicing. In addition to this, the rise of card payments has further reduced the need for someone to physically attend a machine and remove cash from it. Some of my best shares to buy now have a low-cost, high margin business model too.
Photo-Me has a good track record of performance and the signs are things are only set to grow. I do understand past performance is not a guarantee of the future, however. Coming up to date, a trading update Photo-Me released in December made for good reading. The post-close update for the year said that Q4 had seen better-than-expected trading. Its photo booth business continued to recover and laundry machines did well also. Profit is expected to be around £25m-£30m.
Due to the pandemic, the need for self-serve consumer equipment is a growth market, in my opinion. A focus on self-service and the lack of a need to physically interact with a retail assistant to manage day-to-day tasks, has led to the rise in use of self-serve machines. I believe Photo-Me’s presence throughout the world should help boost performance and returns.
Finally, Photo-Me cancelled dividends in 2020 due to the pandemic, as did some of my other best shares to buy now. Analysts reckon a dividend could be declared when full-year results are fully announced later this month. With low costs, this dividend could grow in the year ahead, which is an attractive prospect for me.
Overall, I believe Photo-Me shares represent really good value right now. I would add the shares to my holdings at current levels as they sport a price-to-earnings ratio of just over nine. There looks to be growth potential ahead and its international presence and business model should serve it well for growth and returns which, is why I class it as one of my best shares to buy now and hold for a long time.
Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
