Electricity was an exciting but untamed force when, in September 1879, Thomas Edison said he'd use it to light up New York City. Nobody even believed he could do it. The public was still coming to terms with the idea of a lightbulb. So working out how to make distribute electricity seemed completely fanciful.
So journalists and politicians were left blinking in disbelief when he used underground mains to flood his Menlo Park laboratory with light. And the crowds swarmed into Pearl Street power station a couple of years later, as Edison instructed his chief electrician to throw a switch sending electricity bounding through the city's financial district for the first time.
In that moment, the electricity utility was born. And by 1907, more than 40% of America's electricity came from central power stations making Edison and many others enormously rich in the process.
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Why am I telling you this? Well because I think we are on the cusp of another lighting revolution.
Call it the LED revolution. It is predicted that within five years 60% of light sources will be LEDs (light-emitting diode). If that rate of progress sounds fanciful, consider this. Just about every traditional light bulb will reach the end of its life within the next five years and, at least outside the residential market, they are almost certain to be replaced by LED lights, which use far less electricity and last much longer.
Today LEDs only represent about 1% of the UK's light sources. But one company is prepared for the huge changes that lie ahead. I was keen to take a closer look, so headed down to STADIUM GROUP's (SDM) UK head office.
An industry veteran leads the way
On the surface LED lights look neat and compact. But behind each one is quite a large and sophisticated electronic engine. Making these engines is just one of the opportunities driving the growth of Stadium Group.
At Stadium's UK manufacturing plant in Rugby I was met by the chief executive, Stephen Phipson, and was given a tour of the factory by the business unit director, Ian Davies.
Phipson, a fifty year-old with big company experience in the electrical industry, gained at Plessey, Philips and Smiths Group is ambitious to expand Stadium. I will tell you about his big plans in a minute. But first let me explain what Stadium actually does.
Stadium designs and manufactures power supplies. If you are unsure what I mean by that, think of those black boxes that take electrical power and then supply it at the correct voltage to your computer. Last year this accounted for only 11% of Stadium's £45m of revenues, but 39% of its operating profit. The majority of Stadium's revenue comes from Electronic Manufacturing Services, a contract manufacturing operation.
Why this will be a British revolution
At Rugby I saw, being printed on large long and expensive machines, circuit boards destined for LED light engines, stair lifts, vehicle trackers and smart meters, to name but a few. You may wonder that circuit boards are still being made here in the UK. But Stadium is making a very good living, as Stephen Phipson explained.
While Chinese manufacturers are very good at producing in high volumes and long runs, they are not so good at making smaller batches. With a factory of its own in China, Stadium is able to offer both alternatives, and it will also either supply the circuit board on its own, or assemble it into the final product. This flexible approach, allied to the fact that it relieves its customers from the challenge of negotiating with Chinese suppliers, has made Stadium a steady performer in recent years.
But Phipson wants to take Stadium to the next level. Already, with the help of Charlie Peppiatt the ex-Laird group operations director who has spent several years in China, he has re-organised Stadium from geographical to functional lines and trimmed a significant amount from Stadium's raw materials bill. He managed this by implementing an overdue move to centralised purchasing. He has also beefed up the sales team and won new customers.
Why investors have high expectations for Stadium
But Stadium's facilities are still operating at only half of their potential level. As was evident from my visit this is an operation with high fixed costs and so any increase in throughput should have a disproportionate impact on profitability. Key to this, Phipson believes, is to offer a broader capability.
Electronic devices are becoming more sophisticated. Take a simple vending machine. The latest versions have radio frequency (RF) links and, under the terms of an EU directive designed to cut energy usage, they must automatically shut down unless they are being used. By adding the capability to add those RF links, Stadium could keep more work in its own factories, add value and reduce the customer's supply chain.
The City is expecting Phipson to make acquisitions and he is well aware that to gain investor backing he needs to make the first one a good one. He sees plenty of opportunities. Although Stadium's customers are currently in a rather cautious mood and demand is patchy', Phipson has seen several small UK companies that could fit the bill and, starved of bank finance, could welcome an investment from Stadium.
Stadium has long paid an attractive dividend and, at its current price of 73p it trades on nine times forecast earnings of c. 8p. But it is Stadium's net cash of £3m that is of greatest interest at present. When a big company man like Stephen Phipson joins a small company like Stadium, investors have high expectations. If he can spend that cash wisely then Stadium could attract quite a following. I'll be following its progress very closely in the year ahead.
This article is taken from Tom Bulford's free twice-weekly small-cap investment email The Penny Sleuth. Sign up to The Penny Sleuth here.
Information in Penny Sleuth is for general information only and is not intended to be relied upon by individual readers in making (or not making) specific investment decisions. Penny Sleuth is an unregulated product published by Fleet Street Publications Ltd.
Tom worked as a fund manager in the City of London and in Hong Kong for over 20 years. As a director with Schroder Investment Management International he was responsible for £2 billion of foreign clients' money, and launched what became Argentina's largest mutual fund.
Now working from his home in Oxfordshire, Tom Bulford helps private investors with his premium tipping newsletter, Red Hot Biotech Alert.
Follow Tom on Google+.
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Umeme ulikuwa nguvu ya ajabu lakini isiyoweza kudhibitiwa wakati, mnamo Septemba 1879, Thomas Edison alisema angetumia umeme kuangaza New York City. Hakuna hata aliyeamini kwamba angeweza kufanya hivyo. Watu walikuwa bado wakikubaliana na wazo la balbu ya umeme. Kwa hiyo kufanya kazi jinsi ya kufanya usambazaji wa umeme ilionekana kabisa fantasy. Waandishi wa habari na wanasiasa walishangaa sana wakati alipotumia mifereji ya chini ya ardhi kuijaza maabara yake ya Menlo Park na mwanga. Watu wengi waliingia katika kituo cha umeme cha Pearl Street miaka michache baadaye, wakati Edison alipomwamuru mkuu wa umeme wake kugeuza kubadili, na kusafirisha umeme kupitia wilaya ya kifedha ya jiji kwa mara ya kwanza. Wakati huo, kampuni ya umeme ilizaliwa. Mwaka 1907 umeme wa Marekani ulitokana na mitambo ya umeme ya Edison na wengine wengi. Kujiunga na MoneyWeek leo na kupata toleo lako la kwanza la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo la toleo. Kwa sababu tunaamini kwamba tuko kwenye kilele cha mapinduzi mengine ya taa. Kwa hivyo, kwa kweli, hii ni mabadiliko ya LED. Kwa mfano, katika miaka mitano ijayo, asilimia 60 ya taa zote zitakuwa LED (light emitting diode). Ikiwa kiwango hicho cha maendeleo kinasikika kuwa cha ajabu, fikiria jambo hili. "Kuhusu kila taa ya kawaida, itakwenda mwisho wa maisha yake katika miaka mitano ijayo, na, angalau nje ya soko la makazi, ni karibu hakika kuwa kubadilishwa na taa za LED, ambazo hutumia umeme mdogo na kudumu kwa muda mrefu zaidi. """ LEDs ni moja ya vyanzo vya taa vya Uingereza. Lakini kampuni moja imejitayarisha kwa ajili ya mabadiliko makubwa yanayokuja. Kwa sababu ya kuvutiwa na hali ya hewa, kampuni hiyo ilizindua ofisi ya STADIUM GROUP (SDM) nchini Uingereza. Mzee wa viwanda anaongoza njia juu ya uso taa LED kuangalia safi na compact. Lakini nyuma ya kila moja ni injini kubwa na ya kisasa ya elektroniki. Kutengeneza injini hizi ni moja tu ya fursa zinazoendesha ukuaji wa Kikundi cha Uwanja. Katika kiwanda cha Stadium huko Rugby, Uingereza, nilikutana na mkurugenzi mtendaji, Stephen Phipson, na nilipewa ziara ya kiwanda na mkurugenzi wa kitengo cha biashara, Ian Davies. Phipson, mwenye umri wa miaka hamsini na uzoefu mkubwa wa kampuni katika sekta ya umeme, alipata katika Plessey, Philips na Smiths Group ni tamaa ya kupanua Uwanja. Nitakuambia kuhusu mipango yake mikubwa katika dakika. Lakini kwanza acha nieleze Stadium inafanya nini hasa. Uwanja wa michezo kubuni na utengenezaji wa vifaa vya umeme. Ikiwa una shaka kuhusu maana ya neno, fikiria masanduku meusi ambayo huchukua umeme na kisha kuupeleka kwa voltage sahihi kwa kompyuta yako. Mwaka jana, hii ilifanyiza asilimia 11 tu ya mapato ya uwanja wa £ 45m, lakini asilimia 39 ya faida yake ya uendeshaji. Sehemu kubwa ya mapato ya Uwanja hutoka kwa Huduma za Utengenezaji wa Elektroniki, operesheni ya utengenezaji wa mkataba. "Kwa nini hii itakuwa mapinduzi ya Uingereza: Katika Rugby niliona kuchapishwa kwenye mashine kubwa, ndefu na ghali, bodi za mzunguko zilizokusudiwa kwa injini za taa za LED, lifti za ngazi, wafuatiliaji wa magari na mita za akili, kwa jina la chache tu. """ Unaweza kuwa na wasiwasi kwamba vifungo vya mzunguko bado vinatengenezwa hapa nchini Uingereza. Lakini uwanja wa michezo unafanya maisha mazuri sana, kama Stephen Phipson alivyoeleza. Ingawa watengenezaji wa China ni bora sana katika kuzalisha kwa kiasi kikubwa na kwa muda mrefu, wao si bora sana katika kutengeneza vikundi vidogo. "Kwa kuwa kampuni hiyo ina kiwanda chake nchini China, inaweza kutoa njia zote mbili, na pia itatoa ""bodi ya mzunguko"" yenyewe au kuikusanya katika bidhaa ya mwisho." Njia hii ya kubadilika, pamoja na ukweli kwamba inaondoa wateja wake kutoka kwa changamoto ya kujadili na wauzaji wa China, imefanya uwanja wa michezo kuwa na utendaji thabiti katika miaka ya hivi karibuni. Lakini Phipson anataka kuchukua Uwanja wa michezo kwa ngazi inayofuata. "Kwa msaada wa Charlie Peppiatt, mkurugenzi wa zamani wa shughuli za kikundi cha Laird, ambaye amekuwa akifanya kazi nchini China kwa miaka kadhaa, amepanga upya uwanja kutoka kwa ""mstari wa kijiografia"" hadi ""mstari wa kazi"" na kupunguza kiasi kikubwa cha gharama za vifaa vya uwanja." Yeye kusimamiwa hii kwa kutekeleza hatua ya marehemu kwa ununuzi wa kati. Pia ameimarisha timu ya mauzo na kushinda wateja wapya. """Wekezaji wana matarajio makubwa kwa uwanja wa michezo lakini vifaa vya uwanja bado vinafanya kazi kwa nusu tu ya kiwango cha uwezo wao." Kama ilivyokuwa wazi kutoka ziara yangu hii ni operesheni na gharama za juu za kudumu na hivyo ongezeko lolote la throughput linapaswa kuwa na athari isiyo ya usawa kwenye faida. Ufunguo wa hili, Phipson anaamini, ni kutoa uwezo pana. Vifaa vya elektroniki vinazidi kuwa vya hali ya juu. Chukua mashine rahisi ya kuuza bidhaa. Vifaa hivyo vya hivi karibuni vina viunganishi vya redio (RF) na, chini ya masharti ya maelekezo ya EU yaliyokusudiwa kupunguza matumizi ya nishati, lazima vizimishwe moja kwa moja isipokuwa vinatumiwa. Kwa kuongeza uwezo wa kuongeza viungo hivyo vya RF, Stadium inaweza kuweka kazi zaidi katika viwanda vyake, kuongeza thamani na kupunguza mlolongo wa usambazaji wa mteja. Jiji linatarajia Phipson kufanya ununuzi na anajua vizuri kwamba kupata msaada wa wawekezaji anahitaji kufanya moja ya kwanza kuwa nzuri. Anaona fursa nyingi. Ingawa wateja wa Stadium kwa sasa wako katika hali ya tahadhari na mahitaji ni patchy, Phipson ameona makampuni kadhaa madogo ya Uingereza ambayo inaweza kufaa muswada na, njaa ya fedha benki, inaweza kuwakaribisha uwekezaji kutoka Stadium. "Mwaka huu, kampuni hiyo imetoa faida kubwa ya faida, na kwa bei yake ya sasa ya 73p, inashughulikiwa kwa mara tisa ya mapato ya utabiri wa ""C.""" Lakini ni fedha za Stadium za £ 3m ambazo zinavutia zaidi kwa sasa. Wakati mtu wa kampuni kubwa kama Stephen Phipson anajiunga na kampuni ndogo kama Stadium, wawekezaji wana matarajio makubwa. Kama anaweza kutumia fedha hizo kwa busara basi Uwanja wa michezo unaweza kuvutia wafuasi wengi. Nitakuwa nikifuatilia maendeleo yake kwa karibu sana katika mwaka ujao. "Hii ni moja ya makala ya kwanza ya Tom Bulford, ambaye ni mwandishi wa ""The Penny Sleuth"" (Penny Sleuth) na ""The Penny Sleuth"" (Penny Sleuth)." Jisajili kwa The Penny Sleuth hapa. Habari katika Penny Sleuth ni kwa ajili ya habari ya jumla tu na si nia ya kutegemea na wasomaji binafsi katika kufanya (au si kufanya) maamuzi maalum ya uwekezaji. Penny Sleuth ni bidhaa isiyo na udhibiti iliyochapishwa na Fleet Street Publications Ltd. Tom alifanya kazi kama meneja wa mfuko katika Jiji la London na Hong Kong kwa zaidi ya miaka 20. Kama mkurugenzi wa Schroder Investment Management International, alikuwa na jukumu la £ 2 bilioni ya fedha za wateja wa kigeni na kuanzisha kile kilichokuwa shirika kubwa la fedha za Argentina. Sasa akifanya kazi kutoka nyumbani kwake huko Oxfordshire, Tom Bulford husaidia wawekezaji binafsi na jarida lake la premium la kupeana, Red Hot Biotech Alert. Fuata Tom kwenye Google+. Nvidia inakuwa kampuni ya nne kwa ukubwa duniani - je, unapaswa kuwekeza? Nvidia, mtengenezaji wa chip, ameshinda Alphabet na Amazon kwa mtaji wa soko Je, wawekezaji wapya wamekosa mashua, au bei ya hisa itaongezeka zaidi? Na Ruth Emery Published Soko la akiba lina joto wakati watoaji huongeza viwango - je, unapaswa kubadilisha sasa kwa faida bora? Kwa kushangaza, benki nyingi zaidi na zaidi sasa zinaongeza viwango vyao vya akiba. Je, ni wakati mzuri wa kuhamisha pesa zako na kupata kiwango bora zaidi? 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Matthew Partridge anazungumza na Paul Latham na Richard Power wa kampuni ya usimamizi wa fedha Octopus. Imeandikwa na Dakt. Matthew Partridge na kuchapishwa na Fetch! Hisa za Kichina ndogo-cap kununua katika Mwaka wa Mbwa Maoni Kila wiki, mwekezaji mtaalamu anatuambia ambapo yeye <unk>d kuweka fedha zake. Tiffany Hsiao, Mkurugenzi wa Matthews Asia, ametoa maoni yake juu ya hisa tatu za Kichina za ndogo ndogo na za kisasa. "Mwanzilishi wa kampuni ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara ya biashara.""" "Guy Anderson, mwandishi wa ""Kupata ukuaji wa bei nafuu, wa kuaminika kutoka kwa makampuni madogo,"" aliandika: ""Mmoja wa mwenendo wa uwekezaji wa muda mrefu wa kuaminika ni utendaji wa muda mrefu wa makampuni madogo juu ya blue chips." Max King anaelezea jinsi ya kuunda biashara ya biashara ya biashara. Katika mazingira ya mfumuko wa bei wa kati na viwango vya chini vya riba, hisa ndogo-cap huwa na kushinda kubwa-blue-chips. John Stepke anaelezea kwa nini, na jinsi ya kuwekeza katika yao. Imechapishwa na John Stepek