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20 Jun | Hornby and the London Olympics 2012

A lot of readers that share my demographic will have fond childhood memories of a company by the name of Hornby that produces wonderful die-cast model railways. Established by Frank Hornby – who’s initial claim to fame was the invention of Meccano (respect) – the first model train was launched in 1920.

Since then Hornby has gone on to acquire Scalextric (slot car racing sets), Airfix (producer of model kits) in 2007, Humbrol (model paints and accessories) in 2008 and Corgi (of die-cast car fame) in 2008.

Making Hornby a sort of romantic super-company for the big kid in all of us – well, those of us who enjoyed a childhood free of everything but the most pixelated of computer games.

But I digress, it’s Hornby’s depressed share price (it’s currently trading at close to 5 year lows at 77.5 pence) and the fact that they’ve secured an Olympic licensing agreement that sees Hornby, Scalextric and Airix producing official London 2012 memorabilia that currently makes them a very interesting proposition.

 

Hornby 5 year chart courtesy of SharePrice.co.uk

 

Hornby’s official Olympic range will feature over 160 items priced from £2 through to £100 including key-rings and figurines, die-cast London buses, taxis and Union-Jacked Minis, heck, there’s even a Scalextric Velodrome Cycling set.

Coupled with the production of the Olympic range comes the increase in Hornby’s distribution network which will see retailers such as Clinton Cards and Sports Direct stock lines of their merchandise for the first time. Relationships that may survive long after the last athlete has packed their lycra and headed for Heathrow. Then there’s the squillion and one souvenir shops and booths that litter London…

I love a situation that adds an x factor element to a company’s potential and the Olympics certainly ticks all the boxes in that respect. With Hornby shares trading at a long-time low, now might be the perfect opportunity to give them a closer look.

A great place to start – and where I got my curiosity in Hornby piqued – was via Small Company Share Watch. They’ve written a couple of very informative pieces on Hornby over the past 12 months. We have no affiliation with SCSW we just think it’s a fab read. And check out DueDil, a great place to search for companies house information.

Remember, these are the ramblings of a totally amateur investor (I once invested in a company that went into receivership that very same day) and should in no way be construed as investment advice. Especially in this economic climate please, please, please do a ton of your own homework and never invest money you can’t afford to lose. Thanks again for dropping by.

Paul
rsvp@investorsoiree.co.uk