The Ethics of Buying Avon Rubber plc (LON:AVON) and Ramsdens Holdings PLC (LON:RFX)

I bought Avon Rubber plc (LON:AVON) and Ramsdens Holdings PLC (LON:RFX) recently for the UK Portfolio. I must admit that my rationale for buying Avon was largely taken from an excellent article by Richard Beddard. I particularly liked this bit:

"The company's values are encapsulated in an acronym: CREED, which, sadly is not inspired by the tremendous extension of the Rocky film franchise, but nevertheless stands for something worthwhile"

I will add that I think the near-term outlook is very promising for Avon given the order book at half-year results (31/03/19) was £59.1 million, 45.6% higher than at the same time last year. In addition, a US$16.6 million order was announced on 24/04/19.

This recent video on PI World provides a great summary of Ramsdens. The stock trades on a single digit earnings multiple, pays a fat dividend and offers steady defensive growth.

I thought about the ethics of both companies before purchasing as I aim not to buy businesses that contribute net harm. Avon services the defence industry, but manufactures products which improve safety rather than inflict damage so it passes my filter. Ramsdens has a pawnbroking arm and I have long avoided subprime lenders for moral reasons. I think that pawnbroking is less predatory than payday lending as it is clear to customers what they are risking upfront. People are not encumbered with a high interest debt they can never repay either. I have also revised my opinion on the entire sector. Someone pointed out to me that if these companies didn't exist then criminals would fill the void. This would be worse for those who rely on such services and so I now think that pawnbrokers and certain subprime lending provides a net benefit to society.

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