The Weekend Rebel Review. 1st Feb, 2025

WJG BOOM FTC FEVR AVON

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.

Quite a volatile week, especially in the US, reality hit fantasy this week when the release of Chinese Deep Seek app shook Nvidia Corp, makers of chips for AI. The app, cheaper and faster in many respects should be a wake up call to lots of investors. Do your research! One of my fears when looking at a company is missing something obvious. I can hunt down all sorts of stocks and study their product, service or business but the big issue for me is how do you research the competition? It isn’t so difficult with high street retailers and other service companies or manufacturing co’s perhaps, but when it comes to bio and tech in particular, you can be sat there and a rival turns up out of the blue completely unforeseen. It is one of the many reasons I avoid tech and pharmas, even the most in-depth research can never see something secretly being developed which makes a certain product obsolete. VHS killed off Betamax which really was a better product but it got out-marketed. When I was a graphic designer, 800dpi laser printers were the go too while colour inkjets printed at 72 dpi were the poor cheaper, second and the ink ran if it got wet. I never foresaw then that inkjet would end up going to 9600 dpi that can be achieved today and dry on contact, print onto 3D while laser printers are mainly adequate office machines only these days. Just a note of caution for anyone playing the racy end of investments.

The S&P has been tormenting investors at the highs even though Nvidia got the wobbles and shook tech this week.

The Dow Transport continues to trend upward which is positive, but would be nice to see the trend steepen. For those that follow Dow Theory, a strong Dow Trasport is a good leading indicator.

Here in the UK both the 250 and the Small cap are pressing at that roll over line again. A break out through this trend would be very positive:

Two ugly charts, but ugly charts are like signets, ugly before they are about to become beautiful swans. Always worth being wary of poor charts like this but also worth remembering that poor charts eventually have to turn up if businesses keep performing.

All in all though, the market feels like it is ready to rally imo and a break of those trends would comfirm it. Recently we have had a bit of a rally but there’s still a lot of nervous investors or traders, banking profits quickly. Personally, I’m a buyer and hold at this moment in time. We have seen Rachael Reeves blink, she knows she has screwed up and if she wants to save her bacon, she is going to need to start being very accommodative to business. Heathrow is a waste of time, the business from that will come way after she has written memoirs. She does seem to be realising that you can’t have net zero and run a competitive economy. I have the feeling Milliband won’t be able to defend Heathrow and net zero and the nonsense is starting to crumble – markets will rally sharply if so.

On to stocks

Watkin Jones, WJG, highlighted here at 23p a two weeks ago, has had a blinder of a fortnight. Up to 32p now, touching 36p+ this week, the co announced some decent buying from the CFO and Chairman too:

Good to see directors actually buying shares with their own money. Circa 220k buy from the CFO and his family and 148k from the Chairman. The good news is they are buying here, when we are 4 months into H1 and 2 months from the H1 close. Next trading update early April, when the CFO will have been here 1 year.

In 2020, WJG were doing 14.9p eps on sales of £350m, they are forecast to do £350m sales this year. Restore operating margins and they could restore those earnings or there abouts and have £40m net cash compared to £40m net debt back then. The interest earned on that could account for £3-4m more profit this coming year on its own. A lot of stuff seems to be falling into place and they have diversified their income so as to avoid shocks in the future.

Here’s an interesting article I found. The co has a legacy of lots of cladding remedial work but it looks like they have turned it to their advantage under the new CFO and are now contracting the requirements from others to do these repairs etc now for themselves and others rather than pay others to do it. Could be a lot of business here imo.

https://www.housingtoday.co.uk/news/watkin-jones-creating-margin-out-of-building-safety-remediation-work-says-cfo/5133960.article

The company also had a presentation on investormeetcompany this week too:

https://www.investormeetcompany.com/companies/watkin-jones-plc

Definitely a must watch – the CEO credits the new CFO of a year, again for being instrumental in much of the recovery.

On Friday the company also released this news:

I really like these more and more as I research them. - now a sizeable top holding.

The government is out to boost construction - it’s a sector coming into play imo.

Tuesday saw an update from Audioboom, BOOM.

There’s further comment at the end which you can read where you get you RNS news. Audioboom definitely seem good at picking up listeners and advertises and selling advertising perfectly suited to the podcast. I had a listen to No Such Thing As A Fish, it’s a sort of podcast take on QI and I can see how it would be popular with a younger audience.

https://audioboom.com/posts/8641985-no-such-thing-as-a-honey-badger-on-toast

Love the growth here and continue to hold, looking forward to the April results and trading update.

Filtronic, FTC, makers of RF communication devices and suppliers to Elon Musk’s Starlink have results out this Tuesday.

Interesting that on Tuesday broker consensus raised a little more from 4.435p eps to 4.85p eps

I don’t think the forward forecasts are up with events so there may be a decent reaction to any upgrade imo. One of the really interesting developments is that Starlink are now testing satellite direct to cell phone. Well it seems to be going far more than testing, the new Apple iphone comes with Starlink Satellite Access. To me, it looks like we won’t be far away from everyone having satellite phone access with none of this ‘no-service’ like you get with O2 or other providers. Who fancies being invested in cell phones if Musk is about to take over the show? I really don’t know if and how this will come to fruition, but it underlines my point above that you can be invested in something tech and in a blink it’s all over. I do know that high latency is an issue and reducing it is a priority, and that’s where Filtronic comes in – this could be a big boost for FTC going forward imo. As ever – I could be talking nonsense and this is all hype, so do your research please and don’t follow blindly.

https://www.forbes.com/sites/davidphelan/2025/01/29/apples-new-game-changer-iphone-update-brings-starlink-satellite-access/

Watch out for the results on Tuesday.

Everyone knows Fevertree, FEVR the soft drink /mixer company. On Thursday they announces a commercial partnership with Molson Coors in the US.

You can read the full RNS where you get your news.

Molson Coors buys an 8.5% stake in FEVR for £71 million for exclusive sales, distribution and production of the carbonated mixer brand in the US. FEVR are then doing a buyback of shares with the money which will offset the dilution of the new shares being issued. FEVR are guaranteed a proportion of the profits for 5 years.

FEVR are selling their US distribution unit to Molson Coors for $23.9m

Basically they are outsourcing all the production and distribution in the US which should boost profits and cashflow. The shares currently trade on a PE of 30 falling to 24 after Friday’s share price rally. The US is a huge market and the PE could fall substantially while cashflow increases and returns to investors could rise significantly.

Basically the US becomes more or less pure royalties in the future, They currently require a lot of working capital in the US and now that will no longer be the case. So with the £50m net cash they have and the £23m cash from the sale of their unit to M-C, they will have £70m+ net cash. If they took on a bit of debt, now that they don’t need all that working capital, they could pay a special divi of £1-£2 if they so chose.

Additionally, with US earnings being like pure profit, margins, earnings quality, growth and cashflow should all rise significantly, which would likely re-rate the shares imo. These were trading at £40 and on a PE of 60+ in the past. They trade on a 2015 PE of 24 – I cannot remember the PE ever being that low before. They might not get to a PE of 60 again but they could have a decent re-rating imo. They will also avoid any potential tariffs from Trump by manufacturing in the US which is another positive. One thing I wonder is with energy so much cheaper in the US, I wonder if they could actually get Coors to eventually manufacture all the UK product in the US and ship it here? FEVR could then save all the manufacturing costs here in the UK and just take what is like a royalty similar to in the US? That’s potentially down the line if the numbers worked and just speculation by me.

I have bought a stake as the shares are on a long term low and there has been no dilution to speak of for well over 7 years. In these stories, punters can dream all sorts of numbers so I won’t be surprised if it gets driven significantly higher. Director bought very substantial amounts of shares following the deal news this week, one non-exec buying £950k shares.

Worth keeping on your radar and likely warrants a decent bit of time researching more. There is a lot of potential recovery on the chart.

As ever – do your own research and don’t follow me, I’m just telling you what I’ve been doing. These are not tips.

Avon had their AGM statement on Friday, confirming the strong outlook they posted in the November results

Everything in that statement sounded fine and positive to me. Better still, they had a presentation in the afternoon. It’s very well worth watching, both Jos Sclater CEO and Rich Cashin, CFO sounded full of confidence. Lots of interesting stuff from the directors will well illustrated charts.

Order book expanding at a very good rate.

Won the Australian military, ordered their top gas mask.

Working with Nato re rebreathers.

Launched a new rifle tech helmet.

They emphasised they are a year ahead of their medium term targets.

They also emphasised that their US product are US made so won’t be liable to Trump tariffs if and when they happen.

These are just a few of the interesting highlights but there’s really lots more to hear so watch the presentation as the start of your research if the company interests you.

https://presentations.investormeetcompany.com/conferences/cba0d715e829/bigroom

So that’s been my week on the market. It has been a very good week so let’s hope we get a repeat performance next week.

FTC results Tuesday.

Have a good weekend

Rebel

Twitter: @rebelHQ