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By Nigel Somerville, the Deputy Sheriff of AIM | Sunday 3 June 2018
Disclosure: I own shares in one or more of the stocks mentioned. 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.
AIM-listed Adam Reynolds float Sosandar (SOS) has been having quite a ride since I first commented on it following this year’s UK Investor Show at 12p to buy and tipped it at 13p – they are now up to 19p to buy so I guess that’s a 50% profit. I bought in at just over 15p and nabbed a small handful more on Friday at 18.46p.
The latest surge seems to have been helped along the way by the appearance of one of their dresses on ITV’s Good Morning – good national advertising there! But the recent trading update which showed that sales were zooming ahead in March and again in April is what I am interested in.
Full year results to 31 March are due to be released by the end of September, but given the size of the business I would hope the numbers will be released rather earlier than that. Given that the likes of Shell get their numbers out in four months, I would hope to hear something in July – especially if sales have continued to grow at the March and April rates.
Assuming all goes well, I am looking for a share price of 30p or more following those full year numbers. It is not the year-ended March 2018 I am interested in, however – those numbers will be pretty awful (ie losses). What I am looking forward to is the update on current trading and the outlook statement. I also want to see what the cash position is – has it enough wonga to get through to next March?
It is the growth going on from month to month now which, as discussed HERE, suggests to me that the company will be trading at break-even at a plc level by next March – or sooner. At that point we can start thinking about industry standard PEs and get terribly excited.
In the meantime I still reckon it is worth a punt at up to 20p with a target of 30p to take some cash off the table and leave the rest to run. It is still very speculative of course, but the upside looks very favourable in the light of recent updates.
And it could all happen very quickly, for there is a clear inverted head and shoulders from 11.5p to 18.75p sitting there. That suggests that a break of 19 or 20p would see the shares up to 26 or 27p in short order. Of course, that is squiggles in the sand talk and we don't do that here. So let's just say that the market is waking up to the potential of Sosandar, and that waking up could accelarate sharply.
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