The Weekend Rebel Review, 16th March 2024

Definitely 2024 and not 2018 lol

This is just some thoughts, it isn't investment advice or incitement to buy in any way, just my views - please do your own thorough research. I’m not an analyst, I’m just a private investor looking after my own money. Nothing I do or say is meant as advice or should be taken as such. Here I publish my ideas and research that I have done and discuss the way I invest.  Anything written here needs to be verified for its accuracy. Assume any stock I write about I likely own, so my views are biased. Inevitably I will get things wrong, everyone is responsible for their own decision making and what they buy and sell. Subscribing and reading this article means you accept the above and you take full responsibility for your own actions and decisions. Small Cap stocks can be illiquid and very hard to sell at times when demand is weak so caution is required.

The most exciting thing I can tell you this weekend is they the clocks go forward in 2 week’s time.  The market really is a slouch at the moment.  We were definitely spoiled from October to December with that strong rally but I suspect many will have forgotten that by now. A near 20% rally in two months was pretty stunning when you look back at it. Since January though the market has gone nowhere. The FTSE 250 Hasn’t risen at all since the start of the year, likewise the Footsie Small Cap index is still below the start of the year. I remember coming into the start of the year thinking that after making 40% in two months, it would be possible to double my portfolio by October, that would be 12 months. I started this year needing my portfolio to rally 40% by October in order to achieve that. Since January it’s been a mixed bag. In the 10 weeks so far I have a big hit from a 3% fall in the portfolio after Watches of Switzerland (WOSG) warned, and I near 1% hit from Halfords. I’ve made those hits up and then currently up nearly 4% for the year so far so it is going to take a strong performance between now and October for me to get to that doubling of the portfolio in 12 months. But let’s stay positive, as I’ve said before I expect to achieve double what the footsie 250 and the small cap index achieves as far as gains go, so a 20% gain in the FTSE 250 from here to October might still get me there, but that is being very optimistic. Having taken a near 4% hit since January 1st and still being up nearly 4% for the year to date isn’t too bad in my eyes when the FTSE250 and Small Cap Indexes are still negative, year to date. We shall see, markets can turn bullish out of the blue and after that 20% rally from October to December there was likely going to be consolidation.  We seem to be now pricing in virtually everything as far as bad news goes. I can’t imagine there’s anybody that believes that the Tories are going to get into office again. Everything from wars to elections to general malaise in the global economy and Europe in particular, seems to be priced in. It makes you wonder if there’s anything left to drive share prices down in my opinion. We’re at that point in the year as well where people who made a quick 20% in the lead up to year end or perhaps more, now want to crystalise some capital gains to use up their allowances, as we often see at this time of year and the financial year end. None of this helps the market in general and it’s just one of those things that traders and investors have to live with. Another 20% from April to October would be quite nice and who knows. It probably doesn’t matter who gets in after the election, none of them have got the money to do anything exciting. I actually think when you look back at Labour governments in office the stock market tends to do pretty well, we just need that uncertainty out of the way.

The S&P has continued it’s smooth trend up and there seems no reason to think that will break down.  We must be due a 5% pull back or more at some point on the S&P but for now the direction seems clear.

Here’s the Russell2000 over 5 years and the trend is up while it still hasn’t got back to late 2021 yet. Rate cuts would likely send small caps soaring imo

The Dow Transport is struggling here a bit so that’s not positive for the US at the moment  so perhaps a bit of US consolidation here?

The VIX is historically at low of 14.4 so I also wonder if it’s due a little short term spike to scare a few traders out but these are the things you just need to live through and ride out as they don’t last long.

Lastly, Fear Greed has dropped back a little into Greed which makes buying feel a bit more comfortable, knowing that the market isn’t that much overbought imo.

The market has been weak and one of the issues was the bounce in shipping prices after the middle east kicked off.  Those prices are now falling and even more so as the £ has risen v the $ so that should help retailers and importers.

So onto the week gone and on Monday, M&S received an upgrade to from RBC  with a 310p target which set the shares rolling. Happily, they are still making a nice rounded bottle at this point of the chart and I am expecting them to carry on upwards. Their year end will be in two weeks time and I suspect an unscheduled trading update will be published before the results in May.

Tuesday saw results out from Synthomer SYNT And the stock duty rallied 35%, which was pretty astonishing as I didn’t see anything in there to get me that excited. Perhaps it’s the assets that they have or investors smell a recovery coming and buying the big fall, or perhaps Kuala Lumpur Kepong are adding or looking to make a bid, who knows? Perhaps demand has picked up suddenly for rubber gloves (the mind boggles :-) ). I will keep watching but I’m not a buyer here just yet. SYNT carried on rallied the following day and has now risen 50%. H&T (HAT)also had a result statement out on Tuesday leading to the stock rally 20% since. It has come off a long way but yet again this is another share where you see results and the stock rallies double digits. I think there’s still plenty more of these to come over the coming weeks, especially if the market starts to get a bit more bullish rather than the dull market we currently have.  If anything it seems like the FTSE100 is performing the best here. The FTSE250 really has been like trudging through treacle since the start of the year, in the 11 weeks of this year it has traded in a 3.5% trading range, usually giving most gains back into the close.  Trainline TRN, is another 15% rally on results on Thursday and Friday.  The valuation just looks too rich for me but without a doubt a nice bowl.  So there is plenty of buyers into results and plenty of 1-2 day rallies of circa 20% as I have been expecting and I expect more.

Anyway, the FTSE 250 still has that little bowl on the chart from the start of the year and I expect it to break that high soon.

Wednesday would be a likely date for it to break out if the inflation data comes in weaker than expected, that might be the catalyst to get the market moving on the hope of early rate cuts, tho I doubt the BofE has the goolies or the inclination to do that with April seeing living wage rises of £1 an hour and pensions rising 10% which will be a stimulus in themselves, on top of NI cuts.

Highlights of the portfolio this week have been MKS and RR. continuing their rally.  Gama Communications GAMA, has broken out well.  They do Unified Communications as a Service (UaaCS) – this is for small to large businesses, basically combining all their phones and messaging system to work with each other seamlessly and efficient and have a great track record. Two interesting things – BT has stopped providing copper line phones now and the service will be discontinued next year. This is a bit of a gift to GAMA listening to the last presentation. There’s about 3m businesses that will need to have an alternative, especially small businesses with a few lines so there should be a boost to sales.  They have also just acquired Satisnet, a small Cyber Security business into the stable after increasing demand from customers for security for their coms too.  The shares have halved from 2021 yet earnings have grown nearly 40% still.  That makes them a fraction of their previous valuation.  A year or so ago the CEO moved on and the CFO stepped up to CEO.  He knows the business well have been there a long time and I think he will want to stamp his mark. Take a look at the eps growth and reliability in green below. In January the co put out a trading update saying they will meet expectations and putting this footnote:

“The latest known sell-side analyst estimates for the full year ended 31 December 2023 are adjusted EBITDA £113.8m - £116.0m and adjusted EPS 74.2 pence - 77.4 pence”

A lovey bowly break out over longer term which I like too. Had one eye on these for a year nearly, waiting for this break out. Results are on Thurs 21^st.

One stock I bought this week was Aviva – hard to believe I now hold 3 FTSE100 Co’s – that’s not happened in 20 years for me.

After very good results, a boost to the divi guidance, and a share buy back announcement, the stock broke out through resistance.  CEO Amanda Blanc has been with the co for 4 years.  She has a great track record at other insurance co’s like Axa and Zurich.  She added another 27k shares this week as the chart broke out.  With 7.15% yield for 2024 and 7.8% for 2025, these are not going to one-bag in a year but I’ve move some of my ‘emergency cash’ fixed deposit into AVIVA simply because the divi return looks better and solid and there’s growth, and will look even more attractive as interest rates fall imo.

Amanda Blanc’s arrival marked by the circle.

Aside from that I’ve not done a lot of committed investing this week. Having added more to Liontrust LIO I also bought a small amount of Molten Ventures GROW as these investment co’s seem to be coming into favour, LIO making a great little bowl and breaking out.

Aim seems to be struggling but my two main Aim holdings have been growing fabulously – AT. and W7L, both at new highs

I have also bought JDG a few weeks ago that has been soaring too.

One thing I have noticed about all three companies, you hear very little from them most of the time, they quietly get on with running the business and let the shareprice deal with itself.  Great growth and low PEGs help too

Ashtead Tech  AT.  EPS after doubling last year is set to near double again this year, fwd PE 20 for recent growth over 2 years of 100%+ per annum.  PEG 0.2

Warpaint W7L.  EPS after doubling last year is set to more than double again this year, fwd PE 22 for recent growth over 2 years of 100%+ per annum. PEG 0.2

Judges Scientific JDG.  EPS up 130%+ over the past two years and on a forward PE of 30. A PE of 30 may sound rich but when eps is growing at over 50% p.a the PEG is 0.6 and the strong growth erodes the PE fast.  They have said they’ll meet the 352p eps this year despite the rise in corp tax. The 383p eps forecast for the coming year looks too low imo.

I point these out because high growth with PEGs well below 1 excite me and make great long term holds imo.  You rarely notice the PEG in the early years as the earning history isn’t there but once established and reliable, these make some of the best investments imo, I know to my regret having bought JDG originally at 110p but selling at £8-15 I think, from memory. There are some great investments on Aim if you look hard but track record means a lot.

That’s it for this week – let’s hope the inflation data on Weds cheers the market up.

Remember, I am just a private investor winging it, not an analyst and I am not giving advice, these are just my thoughts fore amusement. Do thorough research before making any decision to buy any stock and make sure the risk and reward is right for you.

Rebel