RWS has advanced steadily over the years, through both organic and acquisition growth. They have increased revenues and profits for 9th consecutive year, even during the 2008 financial crisis, which saw the number of world patent filings decline, reaching a new high in 2011. The founder Andrew Brode still holds a 43% stake in the company, and pays himself a salary of 269 000 GBP (including pensions), which is a thing I really like, it shows he is shareholder friendly and cares more about the long term future of his business.
The main catalyst for future growth is their recent acquisition of inovia, a global leader in web-based foreign patent filing. Their technology itself is protected by 12 current patents and 35 pending applications. The company has already served 1500 clients, and grew it's revenues to 26.5 million USD in 2013, a 37% YoY increase. Because of this, RWS Group projects a 12% increase in revenues to 76 million GBP and expansion of margins leading to a 23% increase in pre-tax profits to 20.9 million GBP. Their balance sheet is debt free with 16 million in cash, and 21% ROE, which will increase as well given the inovia profit contribution. In addition to this, WIPO (World intellectual property organization) has announced, that global patent filling growth has reached 9.2% in 2012, fastest increase in 18 years. Their future looks promising, and I think it's one of the best stocks to buy now, I have initiated a position already. For the complete list of best UK stocks, go here.
Market cap: 355 mil. GBP
Risks: The greatest risk is a mismatch or human error in their translations, which would void a patent of a client and badly damage their reputation. Although they carry indemnity insurance, the cost of a company's reputation is far greater than any insurance could cover. Another uncertainty is that regulatory approvals and patent requirements might change in the future, which could increase their costs or make them more vulnerable to competition.