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By Nigel Somerville, the Deputy Sheriff of AIM | Thursday 14 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.
No doubt I shall be held up as a joke for this, but AIM-listed Sosandar (SOS) is a buy again, in my book. So am I flop-flopping? Er, no. I decided I would pay up to 20p. The shares went through that mark so they were a hold. Now they are down to 19.15p, so they are a buy again.
As ever, this is a speculative investment: it certainly isn’t a “widows and orphans” stock. But the news from the company of late has been very encouraging, with the last trading update recording two consecutive record months, the second of which was a 32% improvement on the first. That sort of growth is extremely encouraging, especially on the back of figures which appear to suggest the last three months of the year to March 2018 showed monthly trade up by about two thirds on the previous nine months. All of this suggests to me that things are accelerating nicely.
My back-of-an-envelope suggests that Sosandar will hit break-even by next March. But another update could blow that out of the water (in either direction!) In the meantime we have to guess at the trading, which is why I slapped a 20p limit on the stock. I would also like to know how its cash-pile is doing.
So there are some uncertainties which will be answered at least in its FY18 results, due by the end of September – but I hope will be released much sooner. I also assume that if trading is still going gangbusters, the company might have to offer a positive profit warning (ie earlier-than-expected profits) before then. Bearing in mind we are heading for the end of Sosandar’s Q1 at the end of this month, July could be very interesting.
But for now, I’m happy to pick up a few more as funds allow at sub-20p.
And I’m sticking to my rather cowardly 25p target to sell a few (but only a few) in the absence of news. Once we have the FY numbers and/or perhaps a trading update along the way it should be possible to get a much better handle on where the stock might go, and one can make an assessment based on facts rather than speculation.
Tom Winnifrith will take a different – and far braver – view. I hope and believe he is correct. But my plan is to de-risk my investment in part, a little earlier.
Meanwhile, at sub-20p, pile in!
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