Questor: you don’t need an accounting degree to see why 4imprint’s shares should rise

This, broadly speaking, is what fund managers at Unicorn Asset Management expect to happen at Aim-listed 4imprint, which supplies promotional items such as branded pens and hats largely to the American market.

“We like the fact that this is an easy business to understand,” Unicorn’s Fraser Mackersie and Simon Moon told Questor. “It is one of the leading suppliers of these goods in the US, but the market there is very fragmented so there is plenty of scope for further growth.

"Its competitors tend to be “mom and pop” outfits with no economies of scale or customer service. 4imprint doesn’t hold a lot of stock, which helps efficiency, while it has good technology and looks after its customers well.”

The managers, who have strong track records of outperformance, described the business as “capital-light, cash generative and with a clean balance sheet”.

“It has come to the end of its capital expenditure cycle, having completed a big distribution centre, and cash is starting to build up on the balance sheet,” they said. “So we think it has the capacity to pay special dividends.

"We have seen similar things happen at other companies – it is a trend we have picked up on among small and medium-sized firms. We would expect any special dividends to be meaningful. We have a three to five-year investment horizon and would be astonished if special dividends had not started by the end of that period.”

They added that “share prices normally react fairly well to specials, which can open up the stock to new investors such as equity income funds and income-hungry private investors”. Without the special dividends the shares currently yield about 2.5pc.

Another point in the company’s favour is its management. The Unicorn investors said: “We place emphasis on trusting management and have plenty of trust in this team. Having met them over a number of years, we see them as sensible and pragmatic.

“They also hold decent stakes in the firm themselves. The chief executive, who is very competent, holds about 0.9pc of the shares, worth about £4.5m at the current share price.”

They added that 4imprint could “grow profits and dividends at a double-digit rate – it has in the past and we expect it to do so in future”. The shares have tended to trade at a price-to-earnings ratio in the high teens, “which we think perfectly warranted and not demanding given this level of growth”.

Questor says: buy

Ticker: FOUR

Share price at close: £17.68

Update: Secure Trust Bank

When we spoke to the Unicorn managers we took the opportunity to get their views on Secure Trust Bank, which Questor tipped as a “buy” last year just as post-referendum panic had sent its shares tumbling.

The managers pointed out that the bank’s recent interim results had demonstrated continued double-digit growth in customer deposits, the loan book and customer numbers, but that the management was increasingly cautious about the domestic economy.

As a result the bank is moving away from higher-margin, higher-risk unsecured consumer lending towards lower-risk secured lending. This has caused the shares to drift lower in recent months.

The Unicorn managers said: “In our view this now represents excellent value for long-term investors, with the market consensus for 2018 putting the company on a price-to-earnings ratio of less than nine and a yield of 5pc.

“Management clearly agrees – the chief executive, Paul Lynam, bought £100,000 worth of shares following the results. We remain supportive long-term holders and also topped up our position last week.”

Questor says: hold

Ticker: STB

Share price at close: £16.90

• All our Questor share tips: telegraph.co.uk/questor