Market entry barriers, balance sheet robustness and high operational gearing should alert investors to Best of the Best, which displays luxury cars (Porsche, Aston Martin) as competition prizes in airport terminals.

Figures for the year to April made encouraging reading with pre-tax profits perking up more than 20% to £710,000, in line with downgraded forecasts, on turnover up 23.4% to £5.9m. Strong second-half trading made up for first-half airport security alerts that hit margins and forced Best of the Best to warn on profits in December. The second half flurry reflected trading recovery as well as the introduction of lower ticket price and shorter duration competitions, helping the company target ‘a broader demographic’ and capture more players for its burgeoning database.

Two new airport contracts, one for Heathrow Terminal 4 and the other for the new Terminal 5, were signed last year while three new airport sites have been signed up since year-end – Birmingham Airport, Heathrow Terminal 2 and Nottingham East Midlands Airport. Best of the Best is also examining shopping centres (trials at Bluewater have been conducted) with overseas airport opportunities also under consideration. Shopping centres and the continued development of higher margin online competitions will help reduce over-reliance on airports, where security alerts can disrupt business.

This year, analysts are looking for pre-tax profits of £1.1m giving earnings of 5.8p and a likely maiden 1p dividend. Those numbers produce a forward p/e of 11.7 that drops to less than 10 on 2009 estimates, undemanding given earnings should grow 32% this year and the business is debt free with £1.8m cash in the coffers. Best of the Best has speculative appeal, though potential volatility within the airports business presents a significant risk.