With over 2,000 companies listed on the ASX, it can be an exhausting process searching for new companies to buy. Here are 3 that I think are worth a closer look right now:
Collins Foods Ltd (ASX: CKF)
This KFC restaurant owner-operator has been on an acquisition spree recently, acquiring restaurants in Europe to add to its well-run stable of Australian restaurants. KFC isn't the only restaurant franchise operated by Collins (it also has Sizzler and Snag Stand) but it is the company's focus. Collins carries higher levels of debt and has been expanding aggressively, while profit margins are low, so I believe this is a higher-risk investment. However, assuming management is able to keep their focus on costs, I think Collins Foods is worth a closer look today.
Thorn Group Ltd (ASX: TGA)
This consumer finance company took a hit last week after announcing that it was increasing its provisions to allow for the increased likelihood of regulatory penalties being placed on it. This will have an impact on profit after tax, and will constrain Thorn's full year profit to approximately $25 million and result in a cut to the dividend. That's not inspiring but, if you think about it, increased provisions effectively reduce the impact of the regulatory penalty (the company takes the hit now rather than later) which, I believe, increases investor certainty in Thorn's earnings. Priced at 10x this year's earnings and with an estimated ~6% fully franked dividend, Thorn looks cheap.
Reject Shop Ltd (ASX: TRS)
Bargain-bin retailer Reject Shop is struggling to grow earnings in what is a low-margin and highly competitive retail space. That's not ordinarily the type of thing that should get shareholders excited. However, at today's prices it is worth a closer look from a 'value' perspective – in the first half of 2017 the company made $17 million in profit and the whole business is worth $226 million. With a 5% fully franked dividend that appears sustainable, Reject Shop looks interesting at today's prices.
