Shares for the future: time to buy this FTSE 250 stock
Using his new format to score two shares, analyst Richard Beddard’s Decision Engine is telling him to buy the one with winning attributes and sell the other that’s overpriced.
3rd October 2025 15:26
by Richard Beddard from interactive investor
This week, I’m re-scoring Hollywood Bowl Group (LSE:BOWL) and Quartix Technologies (LSE:QTX). Apart from Jet2 Ordinary Shares (LSE:JET2), which I recently scored, Hollywood Bowl is the highest-ranked share in the Decision Engine, currently available to the Share Sleuth portfolio.
Quartix is one of the lowest-ranked shares, partly due to a dramatic increase in its share price.
- Invest with ii: SIPP Account | Stocks & Shares ISA | See all Investment Accounts
Note: ‘b’ indicates an addition to the Share Sleuth portfolio
I haven’t scored either share using the new format, so I’m doing it now to confirm whether I should follow the Decision Engine’s nudges.
It’s telling me to add shares in Hollywood Bowl, and to reduce or eliminate Quartix from the Share Sleuth portfolio.
Scoring Quartix: price not right
Since I last scored Quartix in March, the company has reported interim results for the half-year to June, and judging by previous years a third-quarter trading statement may be imminent.
Quartix | QTX | Supplies vehicle tracking systems to small fleets | 30/09/2025 | 5.6/10 |
How capably has Quartix made money? | 2.5 | |||
In three years since Quartix substantively exited its insurance business to focus on recurring revenue from commercial fleets, it has grown revenue and profit at high single-digit compound annual growth rates (CAGRs). For the past two years, it has been run part-time by its experienced founder, supported by a loyal ‘operating board’. | ||||
How big are the risks? | 2.0 | |||
A skeleton board lowers costs, but Quartix has no succession plan. Unit attrition rates have risen in recent years, maybe due to increased competition. The company does not expect the shutdown of the UK 2G network will require it to replace units “in the foreseeable future”. | ||||
How fair and coherent is its strategy? | 3.0 | |||
By focusing on a simple, generic, configurable and self-installable product, Quartix keeps costs low. It is rolling out its system using direct marketing and price comparison sites across Europe and in the US where it has been operating less long, and has lower market share than in the still-growing UK. | ||||
How low (high) is the share price compared to normalised profit? | -1.9 | |||
High. A share price of 288p values the enterprise at £138 million, about 29 times normalised profit. | ||||
NB: Bold text indicates factors that reduce the score. Bold and italicised text doubly so. The maximum score is 3 for each criterion except price, which has a maximum of 1 (explainedhere) | ||||
Quartix supplies a low-cost and generic vehicle-tracking service to small- and medium-sized commercial van fleets. At the half year, its renewed focus on rolling out this service in the UK, Europe and the US appeared to be paying off.
The company makes it easy for customers to subscribe by providing the telematics units at no up-front cost and only committing fleet owners to two-year contracts. After that, they pay as they go. The longer Quartix collects subscriptions, the more profitable it is because most of the cost is incurred marketing the device.
A unit typically remains in use for seven years, which explains Quartix’s high level of profitability, but not so long ago the attrition rate was 10%, suggesting units remained in use for 10 years on average. By making it easier to install trackers, Quartix and its rivals have made it easier for customers to switch provider.
The company is compensating for lost business through price increases, aiming to retain the net revenue attributable to its user base each year, but this is a new development.
Historically, Quartix has not increased prices for fear of losing customers. There’s obviously a delicate balance to be struck if it is to remain competitive, and although it’s getting closer, it has yet to achieve the target of maintaining revenue from the installed base.
My biggest concern is Quartix’s management. Part-time executive chair Andy Walters, the company’s founder, is the only executive member of the three-person board.
- Why these three sectors stand out from the crowd
- Sign up to our free newsletter for investment ideas, latest news and award-winning analysis
A typical board for a listed company, comprising a full-time chief executive and chief financial officer, would increase costs considerably. Quartix experienced this a few years ago, when Walters, now 69, retired. That experiment quickly unravelled after a distracting acquisition.
The founder returned and, while he’s in charge, the company should remain focused and disciplined on a low-risk strategy that I think is likely to result in steady growth. But I don’t know what will happen when Andy Walters finally retires and I’m put off by the share price.
This mid-term review has not changed Quartix’s score, although I also considered the shutdown of the UK 2G network, which hangs over the company.
Older customers are on 2G, some of them tied to a particular network. Previously in France and the US, the company has dealt with redundant units by replacing them free of charge, incurring significant one-off costs.
Quartix doesn’t believe it will have to do this in the UK “in the foreseeable future”, because the number of potentially obsolete units is diminishing due to service upgrades, vehicle swaps, and as old customers cancel and new ones subscribe.
While Quartix maintains this position, I’m not penalising the score. But networks are talking to customers about shutting down later this decade, before the 2033 deadline, so I don’t think we can entirely rule out the possibility of a costly exchange programme.
Hollywood Bowl: modest upgrade
Although money’s tight, and the prospects for companies that provide little luxuries to consumers are correspondingly diminished, Hollywood Bowl may have winning attributes.
The company runs a highly profitable UK chain of bowling alleys. Having dabbled in crazy golf, it has decided to stick with tenpin bowling for now by augmenting UK growth with a small Canadian chain, Splittsville.
The company says a family of four can go bowling for £26 in the UK, although most people spend more on food and amusements. This makes it an affordable form of family entertainment that we may choose not to forego unless things get very tough.
Hollywood Bowl | BOWL | Operates tenpin bowling centres | 30/09/2025 | 7.8/10 |
How capably has Hollywood Bowl made money? | 3.0 | |||
Under consistent management Hollywood Bowl has grown revenue and profit at double-digit CAGRs over the last eight years, by rolling out its Hollywood-themed format and opening and acquiring more alleys. It is low-cost family entertainment that generates high returns on capital and cash flows. | ||||
How big are the risks? | 2.0 | |||
The company has substantial lease obligations, but these have only proved troublesome in the pandemic when landlords shared the burden with their otherwise reliable tenant. To augment UK growth Hollywood Bowl diversified into crazy golf, which felt short. Then it acquired a Canadian bowling chain. | ||||
How fair and coherent is its strategy? | 2.5 | |||
Refurbishments ensure alleys receive the latest innovations. The company plans to grow its UK and Canadian estate by roughly 50% over 10 years. A focus on management training and internal promotions help ensure centres are run well and customers return. Median pay is low, and CEO pay is high. | ||||
How low (high) is the share price compared to normalised profit? | 0.3 | |||
Low. A share price of 252p values the enterprise at £615 million, about 17 times normalised profit. | ||||
NB: Bold text indicates factors that reduce the score. Bold and italicised text doubly so. The maximum score is 3 for each criterion except price, which has a maximum of 1 (explainedhere) | ||||
There’s plenty of room to grow, judging by Hollywood Bowl’s expansion plans in the UK and Canada, but the Canadian expansion has only just started and the smaller chain is less profitable.
Typically, the customer profile in Canada is more heavily skewed towards enthusiasts than the family friendly format in the UK, so I’m not taking it for granted that Splittsville will develop along the same lines as the Hollywood Bowl chain.
I last scored Hollywood Bowl in January. Then I penalised it for its failed Puttstars crazy golf experiment, but that was harsh. Although the company’s not planning to open any new standalone Puttstars, it probably learned a good deal, which may come in useful should it experiment with other forms of competitive entertainment.
I find it reassuring that Hollywood Bowl is thinking about new formats as well as rolling out its successful one.
But I struggle to come to terms with the company’s pay structure, which is tilted towards centre managers and very much towards executives. The median pay rate is close to the national minimum wage for a 21-year-old. The chief executive earned 71 times the median (over £1.5 million) in 2024.
Hollywood Bowl’s low wage bill goes some way to explaining its high profitability. It employs young people, for whom the minimum wage may be lower. Often, they are in their first jobs.
These recruits are a resource from which Hollywood Bowl selects centre managers. Eleven per cent of staff participated in talent programmes in 2024, and 58% of centre manager appointments were internal. Centre managers receive generous bonuses.
It seems inequitable, but it is also working. Hollywood Bowl reports a customer Net Promoter Score (NPS) of 70, a high measure of customer satisfaction. Without offering a number, the company says it is proud staff turnover is lower than it is in the wider leisure market.
The company’s financial year has just concluded, and it should provide an update on how it has traded later this month. My score is unchanged.
30 Shares for the future
Here’s the ranked list of Decision Engine shares. I review the scores at least once a year, soon after each company has published its annual report. The price scores are calculated using the share price prior to publication.
Generally, I consider shares that score more than 5 out of 10 to be worthy of long-term investment in sizes determined by the ideal holding size (ihs%).
company | description | score | qual | price | ih% | |
1 | FW Thorpe | Makes light fittings for commercial and public buildings, roads, and tunnels | 8.5 | 0.2 | 7.5% | |
2 | Howden Joinery | Supplies kitchens to small builders | 8.0 | 0.6 | 7.1% | |
3 | James Latham | Distributes imported panel products, timber, and laminates | 7.5 | 1.0 | 7.0% | |
4 | Oxford Instruments | Manufactures scientific equipment | 7.0 | 1.0 | 6.0% | |
5 | Jet2 | Package tour operator and leisure airline | 7.0 | 1.0 | 5.9% | |
6 | Macfarlane | Distributes and manufactures protective packaging | 7.0 | 0.9 | 5.9% | |
7 | Solid State | Manufactures electronic systems and distributes components | 7.0 | 0.9 | 5.8% | |
8 | Bunzl | Distributes essential everyday items consumed by organisations | 7.5 | 0.4 | 5.8% | |
9 | Renew | Maintenance and improvement of national infrastructure | 7.5 | 0.4 | 5.7% | |
10 | Hollywood Bowl | Operates tenpin bowling centres | 7.8 | 7.5 | 0.3 | 5.6% |
11 | YouGov | Surveys and distributes public opinion online | 7.5 | 0.3 | 5.5% | |
12 | Porvair | Manufactures filters and laboratory equipment | 8.0 | -0.3 | 5.4% | |
13 | Bloomsbury Publishing | Publishes books and educational resources | 7.5 | 0.1 | 5.2% | |
14 | Softcat | Sells hardware and software to businesses and the public sector | 8.0 | -0.4 | 5.1% | |
15 | Churchill China | Manufactures tableware for restaurants etc. | 6.5 | 1.0 | 5.0% | |
16 | Renishaw | Whiz bang manufacturer of automated machine tools and robots | 7.5 | -0.2 | 4.5% | |
17 | 4Imprint | Customises and distributes promotional goods | 8.0 | -0.7 | 4.5% | |
18 | Auto Trader | Online marketplace for motor vehicles | 8.0 | -0.9 | 4.2% | |
19 | Advanced Medical Solutions | Manufactures surgical adhesives, sutures and dressings | 6.5 | 0.5 | 4.1% | |
20 | Focusrite | Designs recording equipment, synthesisers and sound systems | 6.0 | 1.0 | 4.0% | |
21 | Games Workshop | Designs, makes and distributes Warhammer. Licences IP | 8.5 | -1.5 | 4.0% | |
22 | Judges Scientific | Manufactures scientific instruments | 7.5 | -0.6 | 3.9% | |
23 | Dunelm | Retails furniture and homewares | 8.0 | -1.1 | 3.7% | |
24 | Anpario | Manufactures natural animal feed additives | 7.0 | -0.3 | 3.4% | |
25 | Volution | Manufacturer of ventilation products | 8.0 | -1.3 | 3.3% | |
26 | Keystone Law | Operates a network of self-employed lawyers | 7.5 | -1.2 | 2.7% | |
27 | Cohort | Manufactures/supplies defence tech, training, consultancy | 8.0 | -1.8 | 2.5% | |
28 | Quartix | Supplies vehicle tracking systems to small fleets | 5.6 | 7.5 | -1.9 | 2.5% |
29 | Goodwin | Casts and machines steel and processes minerals for niche markets | 8.0 | -2.4 | 2.5% | |
30 | Tristel | Manufactures disinfectants for simple medical instruments and surfaces | 7.5 | -2.1 | 2.5% |
Click on a share's score to see a breakdown (scores may have changed due to movements in share price). Key: qual is the share’s score out of 9 for the three quality factors (capabilities, risks, and strategy), price is the price score from -3 to +1, and ih% is the suggested ideal holding size as a percentage of the total value of a diversified portfolio.
Richard Beddard is a freelance contributor and not a direct employee of interactive investor.
Richard owns Quartix, Hollywood Bowl and many shares in the Decision Engine. He weights his portfolio so it owns bigger holdings in the higher-scoring shares.
For more on the Decision Engine, please see Richard’s explainer.
Contact Richard Beddard by email: richard@beddard.net or on Twitter: @RichardBeddard
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.
Disclosure
We use a combination of fundamental and technical analysis in forming our view as to the valuation and prospects of an investment. Where relevant we have set out those particular matters we think are important in the above article, but further detail can be found here.
Please note that our article on this investment should not be considered to be a regular publication.
Details of all recommendations issued by ii during the previous 12-month period can be found here.
ii adheres to a strict code of conduct. Contributors may hold shares or have other interests in companies included in these portfolios, which could create a conflict of interests. Contributors intending to write about any financial instruments in which they have an interest are required to disclose such interest to ii and in the article itself. ii will at all times consider whether such interest impairs the objectivity of the recommendation.
In addition, individuals involved in the production of investment articles are subject to a personal account dealing restriction, which prevents them from placing a transaction in the specified instrument(s) for a period before and for five working days after such publication. This is to avoid personal interests conflicting with the interests of the recipients of those investment articles.