There is no need for anyone else to listen to this podcast. This is a lesson in how to do fundamental analysis of a biotech stock for just one reader, Peter "the ramper" Brailey.
Flip flop Ben Turney, Doc Holiday, Zak, they are all at it… talking utter nonsense about CEB Resources (CEB). This stock is a conviction sell at 0.93p and anyone who says otherwise just does not understand the basics of fundamental analysis.
Tom Winnifrith could not make the Monday 8 December ShareProphets seminar in person as rain delayed his plans as you can see in the videos shot from his Greek residence below. However he posted a few thoughts by audio on the disgust folks feel about AIM listed mining stocks and we now relay this podcast to a wider audience. It explians why fundamental analysis of such stocks is in a sense not relevant right now.
Back to the ‘T’s and mother nature for this month’s Stockping however far removed from wireless technology and infection control, the company this month operate on the old adage ‘where there’s muck, there’s money’ and possibly in increasing amounts in years to come. TEG Group PLC (TEG) with its wholly owned subsidiaries, TEG Environmental , TEG Energy and Simpro along with 50% stakes in TEG Biogas (Perth) and TEG Biogas (London) provides state of the art technology for handling organic wastes with abbreviations such as: ‘IVC’ – in vessel composting, ‘ABP’ – animal by product and ‘AD’ anaerobic digestion, gardeners will know, the latter is rather smelly, but this shouldn’t put you off the share!!!
So, with the 152 % increase in Q1 profitability and – more fundamentally important the reported 4% in passenger numbers – is the curse of O’Leary be lifted for Ryanair; transformed into something more endearing and cuddly than the hard bitten reputation of past times? The thing that makes equity investing the dynamic thing it is – for good or ill – is the fact that companies are managed by people and people can adapt to change and challenge, as Mr. O’ Leary is clearly attempting to do now. The fact that 4% more passengers have elected to go Ryanair suggests that he has won through; or at least is not still on the back foot in terms of public appreciation of Ryanair Holdings (RYA).
The fall in the GlaxoSmithKline (GSK) share price to1428p is a story in its self. Not only is it back to where it approximately was in 2013 but it now stands on what I perceive to be a three year support level. (Have a look for yourselves.) If so, will the share price hold there and is it a reason to buy the shares as cheap at 1428p on an historic dividend yield of 5.4% and on the basis that “there will always be a Glaxo”; an approach that has generally speaking been a good point to buy the shares when the news looks bleakest?
When I first saw this morning’s RNS from Patagonia Gold (PGD), announcing the award of 4,000,000 options to the company’s Managing Director, Bill Humphries, at Friday’s close price of 7.875p, my immediate thought was “here we go again”. In fact Patagonia nearly made the debut of my new feature “The Trough”, but that dubious honour goes to Getech (GTC) instead. Awarding a sizeable chunk of options, priced marginally above a stock’s 52 week low, is generally (and rightly) viewed as very bad form. You can imagine the vitriol I was about to unleash on this company. That was until I discovered one fact. In 2013 the directors of Patagonia took over 90% of their fees in shares.
On Friday we had the preliminary interim results from the Royal Bank of Scotland (RBS.) Whereas one might have might have expected something slow and vaporous, they were instead robust and tangible enough to push the share price to rise not so much like the slowly rising ghost from the deep grave of its former self but more like a rocket on Guy Fawke's night. The numbers which lit the touch paper of the market’s hopes and best expectations were the reported figures for profits before tax and the operating profits during the first half.
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.
Hello Share Mashers: Inmarsat (ISAT) is a great British space-age techno company – but not as we know it, Jim. You may recall lots in the news about Inmarsat earlier this year. They were the ones who were looking for bits of wrecked plane in that big missing aircraft tragedy.
As a generalist watcher of shares and their performance, I am often intimidated by the intimate and esoteric knowledge of experts; particularly in the mining sector. They seem to understand, or at least explain, every nook cranny of company performance in exquisite technology speak. However, as always in life, particularly in share spotting - that very unpredictable business - there are alternatives. My own approach as a generalist contrarian, with an eye on the fundamentals, as well as the technical analysis, is the combination of pedestrian observation and hopefully common sense evaluation; that has certainly been a helpful approach in the case of RTZ (RI0).
It was culling through the morning paper, with a fortifying cup of strong coffee in hand, when I came across a report that R.J.Reynolds the US tobacco company was being sued for $23.6 billion - or £13.8 billion in the real currency of George Osborne’s Britannia. I took a slow long sip of the coffee and read on. It told me little definitive but did reveal yet again the extraordinary freewheeling of the US justice system in which is hard to relate to the way things are done in here. If this sum related to British American Tobacco (BATS) in the UK and not to R.J.Reynolds, the shares at today’s price would be selling on a multiple of 4.7 times that claim. Or to put it another way – a way that tells you something useful - the claim represents at today’s British American share price of 3500p, one fifth of British American’s current market equity capitalization.; or looking at it from another perspective, half the Group’s total assets.
Hello Share Twisters: I've been a holder of IndigoVision Group (IND) for so long I was watching a Viking raid when I first bought the shares. And over those many years, they have done rather nicely, thank you. Before the Credit Crunch they rocketed ahead in a thrilling fashion. Since then, the stocks have done ok. But the share price is due for steady progress I fancy for the rest of the year.
Since my previous update on blur Group (BLUR), the shares have slipped further – to a current 75p. Having at one stage early this year reached almost 800p, some see value at current levels. But is this illusory?
As a general follower of companies and shares – a “generalist” - I base my opinions (right or wrong) not on specialisation of interest and information, but on what is called fundamentals; those measures of value in the here and now. The future is always unknown; the here and now is not - subject to interpretation of course. When I look at Anglo American (AAL) for example I do not do so a mining sector expert, but as the generalist value hunter.
Hello Share Folk: OK, let's get down to the basics. Let's remind ourselves of the really important, solid gold ground rules that should govern all our share decisions. Let’s take the fundamentals of each company into consideration when we read all those tips on shares, especially those highlighted on this sizzling website.
Aviva (AV.) is 8.6% or so down from its high point of 536p last May. Some in the market have been slightly underwhelmed by the recovery plan thinking that more cost cutting needs to be done; that is to say, doing the right things but not to a great enough extent.
In the last year to 29 March 2014 we were told that the first fruits of restructuring and reforming Marks and Spencer (MKS) were starting to appear. The company had just started up its own new digital buying web site rather than relying on sales through Amazon and the important women’s’ ware had been revamped by someone with the credentials to do a good job. The first quarter’s results were thus looked forward to with the anticipation that horticulturalists have each spring. Were the green shoots appearing?
Hello Share Twiddlers. Anyone for a P/E lesson? Don't worry. I don't mean that hideous physical education at school. I am a great fan of price-to-earnings ratios. A low P/E shows me that a share is cheap in relation to the real money a company is making. What better recommendation could you have than that? A low P/E says to me that we are looking at a bargain.
In May, I judged Dixons to be a rational speculation on a year’s view, pointing to the weak balance sheet with balance sheet equity assets were geared 2.47 times by debt and the lack of dividend. The shares were 44p and have since moved up 12.5% to 49.5p last seen. Clearly it has to pay down costs to increase profits. That is still my view and the question is can the company achieve this?
IMI (IMI) is that rare and wonderful thing a British Engineering company. In modern parlance it provides “solution” for control of fluids. The country used to have hundreds of such companies. I note that its down 7% ; not a lot but enough to be of interest; particularly since it appears to have bounced of what looks like an upward sloping trend support line.
The best laid plans of mice and men will often go astray. That’s another way of saying that investment portfolios need the diversity of about twenty shares to take account of the unexpected; both bearish and bullish. I note, with a heavy heart, the dismal performance of Croda International, a share that I last gazed upon in December 2013, after it had undergone a 15% decline in its share price to 2430p. To be kind to my bruised discernment, the share price did subsequently gain 7% to above 2600p by May 2014 (a decent rate of capital gain in five months), when all seemed to be going to expectations. Since then the share price has collapsed; last seen, the shares were 2106p 20% below last month’s peak and 14% below the last December price.
With events in Iraq, Syria and Ukraine continuing to rumble on, you would have thought that a defence company would be an ideal investment – especially one with strong global market positions in pyrotechnics and countermeasures plus developing exposure in the growing sensors/electronics areas. Chemring (CHG) has been a volatile investment, however, and at the time of writing is once again below 200p a share having been at 285p as recent as March. I noted an opportunity in Chemring shares back in January and enjoyed the sharp rise, but now the shares are back to the multi-year low levels of last November.
The Vodafone (VOD) share price has been heading south in recent times; like a lemming heading for a cliff edge. Looking at the chart there seems little to stop it plunging further. Is it telling us something above and beyond what the market seems to expect? Probably not! The Markit short selling market activity coverage has it on a “low” rating. But it is a veritable “falling knife” that investors - according to timeless market tradition - should never grasp. To quote the great Horace Rumpole, Heaven forefend that one should disobey that timeless rule! But nevertheless, there are good rational reasons saying that one should.
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.
There is a bit of current interest in Royal Dutch Shell (RDSA) that is worth some comment. The shares now priced 2430p (last seen) have not only broken out from a recent sideways moving trading range (approximately 2340p -2370p) but have also reached new territory; not only that, they also reached at 2433p, their highest point in five years.. The share price has climbed by 15% this year; handsomely beating the All Share Index, which only managed a rise of 7%. Over the last month, when the FTSE 100 hardly budged, Royal Dutch Shares clocked a 3% increase which has taken them to this peak.
Last month, I gave my reasons why I thought Sainsbury’s equity was attractive at the then share price of 340p. I described the company as “impressive fundamental value in a sea of intense competition”. In essence, that was based on an estimated prospective dividend yield of 4.8%, backed by a strong balance sheet net asset value of an estimated 317p a share. The share price continued a slide down to about 326p before bouncing; last seen, Sainsbury shares were back up to 337p almost back to where we came in about a month ago.
Shares in business services marketplace operator in the ‘cloud’, blur Group plc (BLUR) are currently little changed at around 90p on the back of the results of a fundraising, which saw the company’s CEO Philip Letts “delighted by the broad support shown by so many of our shareholders… including members of the board”. But should delight also be felt by other shareholders here?
It looks as if the share price of Drax (DRX) - one of our big electrical energy power suppliers - has reached its three year trend support line. Indeed bounced off it just above 600p. The share price, having had its little bounce, is now 632p last seen. What fundamental grounds exist to support belief in that technical position?
Hello Share Mates: Let's have a look again at price-to-earnings ratios. There are all sorts of formulae, sums and equations you can use to help you decide if a share price is good value or not.
I return to the subject of Imagination Technologies (IMG) pointing out that the shares broke out from their recent downtrend when they went through 225p. They stand, last seen at 233p. I last wrote them up in April when the shares were 202p, as a follow up to an appraisal I had penned last December when the share price was at 178p. The stock had been driven down by some pretty big short selling. After a 30% gain since December, what next?
Despite the market’s reaction, this morning’s announcement by Range Resources (RRL) leaves shareholders in this company with many of the usual guessing games we have come to expect. Why can’t new CEO Rory Scott Russell prove he is his own man and break from the past? Why do RNSs released under his watch still leave more important questions unanswered than answered?
Early last month, I pointed out that Rentokil Initial (RTO), the £2 billion plus market cap services support company, was not far from what looked like a potential one year trend support line. At 118p, according to my inspection of the share price chart, the share seems to have reached that support level. So will it bounce off it?
Hello Share Shufflers: There's been some interesting news about the government's house buying scheme. Apparently 28,000 families have been able to buy their own homes under the Right to Buy plan.
The results from Sainsbury (SBRY) for the year to 15 March were far from being a disaster; which was good news given the cloud the food retail sector has been under from those drat German price discounters, who seem to have learnt how to compete on both price and perceived quality. Sales were up by 2.8% - not bad even if the ‘like for like’ sales from the stores that had been open a year or more, were up by a mere wisp at plus 0.2%. The company retained its market share in the year to March 2014.
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%.
Hello Share Swingers: I've held our Signet (SIG) shares for many years. You know, the big jewellery stores. I've always thought that engagement rings, wedding bands, presents to girl friends and glittering watches, together with all bangles and beads, will always be in demand.
I have no previous notes on Dixons Retailing (DXNS): it seems it has never appealed to me enough to investigate it as an investment: unsurprisingly to judge from recent annual margins. Even so, I decided to take a look at this potentially speculative play and can see why some might decide to take the gamble on this stock.
Standard and Charter Bank (STAN) has a capacity for issuing statements with blurred outlines, which contrast with the almost legal documentary offerings, by way of management statements, from other banks. Consider, for example, the Q1 management statement from HSBC (HSBA), which opened with a glossary of terms and acronyms with their definitions which you expect to find in a prospectus or a contact. There is a myriad of precise percentage and other numbers in that Management Statement from HSBC