Child care operator GEM has had a tough time, falling 25% over the last 3-months as they grapple with a number is issues, however, we see evidence that the tide is turning and we like this deep value income stock for 3 key reasons:
- The business is turning around after a tough few years, having survived various waves of the coronavirus we like the path for revenue moving forward.
- Their balance sheet is sound and an on-market buy-back of up to 10% of issued capital should support the stock.
- We believe their 8% fully franked yield is sustainable which means investors seeking capital gains can be patient.
MM likes GEM around $1.10
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NB: We own GEM in our Active Income Portfolio