Sunday 22 April 2018 | ShareProphets: The one stop source for breaking news, expert analysis, and podcasts on fast-moving AIM and LSE listed shares
Tom Winnifrith Bearcast - in awe of Cynical Bear and all my colleagues and feeling like a prat ( or not) over the AIQ scandal
hope over the festive period all your Christmas cards and parcels were both received and sent successfully. Personally I still await the successful delivery of a book I self-gifted...but rather than turn this into a self-centred rant I thought we would talk about the Royal Mail (RMG).
In a world of omnipresent instant communication and next day delivery options, I am not really sure there is that much difference between the first and second class letter service - and I am certain that many of you reading this in rural communities can barely distinguish between the two. Anyhow, Royal Mail (RMG) has itself been downgraded this morning with the news it is out of the FTSE-100 and into the mid-cap melee known as the FTSE-250.
Hello Share Shedders. When I invested in Royal Mail (RMG) on the golden day it went public, I made an instant paper profit. I sold the shares soon afterwards at an even bigger gain. However, others in my family, hung onto their shares. And since July 2016 there has been a slough of despond.
Hello Share Trundlers. There are folk who think investing in Royal Mail (RMG) is doomed to failure. They point to falling numbers of letters coming through our doors and the possibility of big companies like Amazon to arrange their own deliveries.
Hello Share Crunchers. Let me send you a letter recommending you research Royal Mail (RMG). I believe, though am not entierly sure as I don't look too closely into her finances, that my wife still holds some shares. So I am not entirely unbiased. Though I sold mr Royal Mail stock some time ago for a tasty profit - and have no plans at present to buy them back. This is not because I believe the share has a limited prospect of rising, but because this family already owns enough Royal Mail shares. Eggs and baskets and all that.
Hello Share Springers. I sold my shares in Royal Mail (RMG) ages ago, but my wife hung onto hers. I think so anyway, as I only usually look at my own portfolio. The reason I sold was because I feared competition from a hoard of other companies which seemed happy to cash in on a booming parcel trade. Obviously, the surge in internet shopping is making that little market much more attractive.
Hello Share Sprinters. I trust you made a packet out of Royal Mail (RMG) when it was privatised. I sold my shares fairly quickly, and did very nicely. My wife held onto hers and is still in profit.
Six months ago after rhapsodising about the 4.5%+ dividend yield I described the Royal Mail (RMG) as:
‘…a brand that has persisted for hundreds of years and it is not going away. As a balance to your blood, guts and violence capital gain stocks it works’
And in that sense the outperformance versus the broader FTSE-100 index since then has been pleasing to note albeit still down a handful of percent since the call was made versus 10% for the UK’s large cap index. Of course you can’t eat relative performance…but that’s where that dividend comes in.
Eleven months ago at the height of England’s World Cup debacle I mentioned the Royal Mail (RMG) as a stock to buy. Fast forward to today and stock has made a few percent for any investor and there’s been a healthy enough dividend yield of 4%+.
To put it mildly it has been a rather rocky ride as far as shares of Royal Mail Group have been concerned since they came to market in the autumn of 2013. But at least from a technical perspective there has been a method in the madness given the way that after declining quite sharply in early 2014, support came in repeatedly at initial post IPO sub 400p levels.
Having come to the conclusion that Royal Mail (RMG) shares looked good value at 390p in early October, I was chuffed to see the share price then rise to above 460p. Less gratifying is to see it fall to 417p after the recent publication of the company’s first half results to 30th September.
Royal Mail (RMG) has announced its results for the six months until the 28 September. Profits were down slightly from £233 million last year to £218 million this year. The issue of ‘Universal Service’ (the universe comprising of the United Kingdom in this case) is a key one to the company.
Having seen the share price of Royal Mail (RMG) reduce by a quarter (from 526p to 390p - last seen) since my initial assessment last May, I thought it opportune to have another look to see where now are in valuation terms?
Royal Mail (RMG) shares are trading at 419p with a yield of 3.17% and a PE of 3.25. Royal Mail is known throughout the UK as a ‘universal service’ provider of letters and parcels.
Royal Mail (RMG) has just reported that it has launched its first commercial bond issue for Euros 500 million. Is that a good thing? Certainly, since part of logic of the business being floated was to get it out of the National Accounts and most particularly, out of the clutches of Her Majesty’s Treasury and its cost cutting acolytes. The fact that the Treasury has failed to meet earlier targets as promised, to get the Nations’ finances in sufficiently good order to win an election, the cutting goes on. There is little doubt that the Royal Mail would have had a hard time of it competing with the NHS and education for funds. So at least it can now raise cash for the kind of investment needed to build future revenue, profit and earnings flows.
Despite the inevitable national torpor following events in Brazil yesterday it is time to pull yourself out of the depths of misery and think about shares. Well today one share in particular: the Royal Mail (RMG). Now you probably remember trading this one late last year (or early this year) and selling your IPO allocation somewhere either side of the 6 quid level if you were clever, lucky or both. Have you checked the share price recently? No longer a ‘6’ in front of it. Not even a ‘5’…but a ‘4’. The low 480s to be precise at the time of writing.
I didn’t comment on Royal Mail (RMG) on flotation because there was plenty of coverage. Now we have had a moment’s hesitation after the first annual results, I have had a look.The shares are not attractive on the basis of the valuation of these first annual results; with a PER of 21.4 and an annual dividend yield of 2.4%.
One of the better rules as far as stocks or markets are concerned is to go with the trend unless or until it is impossible to do so. This rule may be applicable to Royal Mail Group (RMG) where the great IPO rip off continues in terms of the rally from the end of last year.
Mr Tom Winnifrith (who along with a “very close” mutual friend of ours had the idea for Shareprophets) regards this website, associated businesses and those who work for them as the “Rebel Alliance.” This may be a somewhat romantic notion, but it is not far off the mark either - given the utter freedom of speech allowed here.
Only a madman or a chartist (or both) would attempt to make a call on a new issue like Royal Mail (RGM) so soon after its stock market debut. So soon after the desperate Government’s fire sale to get a few pennies on board with which to bribe the Great British public at the next election. Am I a cynic? Was the taxpayer robbed?
The great Royal Mail (RMG) IPO has been a success. Listed at 330p the shares are now 475p. That rather vindicates my call to stag the issue but now it is time to bank gains and sell. And here’s why.
Hello Share Fans: Just so you know – I am what they call a momentum trader. This means I am mostly concerned with whether a share is going up or down, rather than the nuts and bolts of its valuation.
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