No gain without pain

The Christmas lights are on in Cambridge and I'm thinking about gift wrap, stationary, and card company International Greetings. It makes 50% of its profit in the Christmas season.

My interest is a coincidence. Really I'm feeling guilty for not having reviewed it earlier, as International Greetings published its results in the summer.

The company, which returned to profit in 2010, was more profitable in the year to March 2011, and less in debt. Here's my computation of the F_Score, which, because the shares are trading at below book value, means the company is a classic Piotroski-style recovery share.

It loses only one point for issuing more shares, although since this was to satisfy its executive share option scheme it's hardly a sign of financial weakness.

An update in November confirmed profits and sales are still growing so the rather prosaic strategy to whittle away at the costs in the business by relocating manufacturing to a factory in China and increasing revenues by targeting mass-market retailers is bringing it back from a partly self inflicted crisis.

Although it's still quite heavily indebted, a revolving credit facility and overdraft mean net debt, while falling, is still over ''44m, or pretty much equal to shareholders' equity, I like companies like International Greetings.

It's caused shareholders a lot of pain, chief among them the family of founder and former chief executive Anders Hedlund, the man who oversaw its ten-fold rise in share price between 1996 and 2006 and the twenty-fold fall in 2008.

The memory of that crash, I hope, is a temporary deterrent to new investors, meaning the price doesn't truly reflect the future potential of the business. It's also, I hope, a constant reminder to the current management, lead by chief executive Paul Fineman, to be more conservative than his predecessors.

Fineman joined the company in 2005, when it acquired Anker, so he must have witnessed its troubles integrating its many acquisitions, relocating its factories, and the company's weakening financial situation. He was only appointed to the top job at International Greetings in 2009, though, presumably to rescue it.

His mantra seems to be to grow profit, and pay off debt, and while that remains so, and the share price remains cheap, International Greetings will probably have a place in the Thrifty 30.