UK 17:12 Friday, 23 October 2026
Breaking news and expert analysis on fast-moving AIM and LSE listed shares
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
It is back to old style bearcast today as I cannot get Audioboom to work. I am sure that it is all my fault. I crow about: winning the living wage debate last night and Volex (VLX). Then it is onto Panmure Gordon (PMR), WH Ireland (WHI) - please sue me for libel bitchez - and Daniel Stewart (DAN). Then I give a good kicking to tosser Dragons Den star Piers Linney and his POS company Outsourcery (OUT)
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Comments
Mark
Hi Tom,
Following your recent comments, I had hoped to hear your views on Boohoo’s results out today.
D_Stone
Hi Tom
I was curious to get your insight into the situation with Mirada, especially as it was (not sure if it still is) a stock you liked.
Paul Scott
Hi Tom,
No update on BooHoo? The interim figures looked very good to me – the company is really driving the top line aggressively now, yet still managed to report an increase in profits too.
The Balance Sheet got better still, with net cash rising by about £6m in the half year, which reinforces my point that the company is indeed cash generative, and that it throws off positive cashflow as it expands, because it collects in the money straight away from most sales to customers, but buys in clothing from suppliers on credit.
I worked out that growing sales at 35% p.a. for five years results in a business which is 4.5 times the size.
Hence why the growth being achieved is very exciting, and justifies a growth company PER.
Growing sales at 35% p.a. for 10 years, results in a business which is about 20 times the size as when you started!
The most impressive figure within BOO’s update today was the Rest of World sales, which are responding tremendously well to a focus on key markets such as Australia, America, etc. RoW sales were up an amazing 65% in H1, or 75% at CER. That makes this a very exciting, international organic growth stock.
I think BOO should be on a forward PER of 40-50, so to my mind the stock is worth 50-75p right now, and should be worth considerably more in a few years’ time.
What is clear from the commentary today, is that margins are robust at 60%, although the company might choose to price more aggressively and take a slightly lower margin, to stimulate even more growth. So we might see margins drop slightly, to say 58%, but there’s no evidence at all to suggest a major reduction in margins is on the cards – which seemed to be your main bear point on the stock.
It really strikes me as a very odd, and completely illogical stock to attempt a bear attack on. The accounts are totally clean, it’s swimming in cash, and reporting strong growth. So why attack it? Doesn’t make sense to me. You normally pick your targets very well, but this one seems a crazy stock to short, in my view. Still, today’s short sellers are tomorrow’s forced/panic buyers, so maybe I should be happy that a few people have got their wires crossed & decided to short it?
Regards, Paul.
Tom Winnifrith
Paul
Rushed off my feet. a string of company meetings – the great, the good and the not so good swarming to FSAL to see me. Inc your pal at Boohoo. We had a very good chat. Will catch up after I get some sleep. Hope to see you tomorrow
T
Rudi
Tom Re Globo. The use of borrowing whilst having cash in the bank is indeed a mystery. The discrepancy between profits and cash generation is less of a mystery. There is an astonishing 35.8m of “other” current assets – which is not broken down in the Interim figures but in the 2014 accounts the bulk is “accrued income and amounts recoverable on long term contract work in progress” or unbilled revenue. This is 15m more than at 31 December 2014 and accounts for the majority of the increase in reported turnover and accounts for the bulk of the differences between cash and reported profits. I am not an expert in the software business but this seems a very unusual situation for a company selling licences.
The result is, as you say, that Globo produced only about 7m cash in the 6 months to 30 June and that was only because they paid no tax (although they did provide 3.5m in the profit and loss account so presumabaly it is going to be paid sometime). If it wasn’t for the 3.7m Fx credit on the cash flow (which GLOBO would be lucky to repeat on a regular basis) there would be almost no cash produced at all. Maybe the need to borrow isn’t so strange after all.