The Weekend Rebel Review, 8th March, 2025

AVON, WJG, FCH, FTC, RR., BOOM

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.

Expect some spelling mistakes – I’m dyslexic and in a rush to get this out on a Friday so a bit of a task at times.

A warm week to fill your heart with a smile, the market kicked off well after the S&P rose 1.5% on Friday. Trumps with Zelensky in the Oval Office fired up the market For defence stocks. Monday saw BAE Systems, BA. up 15%, Babcock Int, BAB up 5%, Rolls Royce, RR. up 4.5% and Avon up 3.5% and QinetiQ, QQ. Up 13%%. I had been buying RR. BA. and BAB on Friday and added on Monday. I did say in last weeks review: “Anyway, it will likely spike the market for defence stocks like AVON, BAB, BA., QQ, etc so perhaps not a bad place to park a few quid until everyone realises it’s the usual Labour bull and they won’t get to 2.5% by 2027” and so it proved.

I sort of got to thinking, Trump has told Europe they need to spend more on defence, like 3%+ if America is going to keep backing them up. And if they haven’t got the US they are going to need to spend even more. They currently spend 2% so a rise to 3% would increase spending by 50%. Either way, we are going to see huge defence spend increases and a lot of that money will likely come to the UK. Rolls Royce has already been hitting all the bells and whistles and now could see even greater demand for Eurofighter engines.

I made the decision this week to reduce the two stocks I had that I hold that were UK consumer related and put the cash into defence stocks. I reduced OTB by 15% as it was my biggest holding, I still like the stock a lot and would add into any rally but as it was my largest holding, I lightened up, but it is still too cheap, trading on a single digit PE for next year which is crazy with the cash they have. I cut CARD by 80% as they are going to be quite at the coal face of Rachael from Accounts damaging changes , keeping enough to have them on my watchlist but not suffer much pain in a fall. I’ll happily buy some CARD back in April I suspect. Sold IAG on Weds morning. In April the NI rise comes in. Business rate relief for pubs and restaurants comes down from 75% to 40%. Stamp duty goes on properties between £125k and £250k. Add to that the living wage rising in April. Then we have energy and water price rises. All of those coming together to hit consumer businesses and consumers isn’t going to bolster consumer stocks in my opinion. Add to this, the press is reporting Reeves is now going to cut welfare to balance the books (good old Labour principles ah? Bombs not Benefits) - that takes more out of the consumer’s pockets. That’s all headwind for consumer stocks. I’ll obviously return to the sector at some point, after investors have absorbed all the negative news coming in April – it’s not new news really, many investors will have sold before the event in April and that may mark the bottom when everyone is finally awake to the negativity for UK consumer stocks imo. On the other hand, the fact Europe is going to have to increase defence spending massively, one way or another, peace in Ukraine or not, should mean lots more business for defence companies. Some won’t like investing in defence companies on a conscience basis but I would say AVON is pure defence, in that it doesn’t make weapons, it makes helmets and masks which are pure defensive.

Will Trump regret his tariffs? I’d say the market thinks so. In the first 3 days of this week the China 50 was up 3% while the S&P was down 2%. The S&P has continued to fall and to be spooking Trump who has delayed the tariffs on Mexico and Canada. The S&P has done a ‘three times a lady’ over the past few days and bounced off the 200 day average. With Non-farm payroll today there’s a good chance this will be a bottom prior to a next firm rally. The RSI is oversold too. There are no guarantees looking at charts like this but it is good for highlighting potential bounce points where it may be worth having more commitment to buy.

Would also be nice to see the Weis Wave go green. Meanwhile the China 50 has been rallying strongly which I suspect is teeing Trump off no end. If the S&P bounces again today and closes above the 200 day average I suspect next week will be a decent up week.

Fear/Greed has got even lower, hitting 17 on Weds and 18 on Thursday – another good reason to be ready to buy imo, shares are usually cheap short term when fear is high.

The Vix has risen to the Dec highs and looks like it may be topping out here too:

The Russell 2000 has given back nearly 20% which must be nearing a bounce point too and would be a positive for small caps here:

Aim has been the real disappointment, it was making a really nice bowly bottom then Trump and Ukraine clobbered it. There has been some great risers in Aim too so thee must have been some real battering going on elsewhere in Aim, in the loss-making smallest co’s I expect.

On to Stocks

There hasn’t been a lot of news on the stocks I hold or follow closely this week. After a monster week last week:

on Monday, Avon, AVON announced a contract win for Team Wendy, for their next generation IHPS Helmets with an order value of $17.6m. The sector is hot at the moment and likely to stay hot imo.

Two pieces of interesting business news after the AGM on Tuesday:

https://pbsanews.co.uk/2025/03/04/watkin-jones-brings-nine-elms-pbsa-to-market/

https://www.constructionenquirer.com/2025/03/03/watkin-jones-wins-30m-student-digs-campus-upgrade/

Fidelity increased their holding from 10 to 11%

You can read the full results where you read your RNS News.

I thought the results were pretty good with £150m unrestricted cash and eps of 0.8p. There was no presentation with the results that I noticed which was a shame. Also, I need to go through the results fully to see if there is anything about Azzurro Associates dispute with clients that they have bought debt off of via FCH. I was surprised there was £500m of debt when the co says it’s machine learning is so good that they don’t get may defaults so I wanted to square the circle (no pun intended). That led me to think I don’t know the business as well as I should so I am not minded to buy back unless it gets a lot cheaper.

All in all it has been a good week. Filtronic, FTC rose to a new recent high even as David and Monique Newlands top-sliced 1% of their holdings. 6% of the co shares went through in large trades on Weds so somebody was buying heavily – if 6% showed that’s usually 3% of the shared doubled up as the trades usually show the buys and the sells creating double the actual volume going through.

Rolls Royce, RR. hit another new all time high:

DEUTSCHE BANK RESEARCH RAISES ROLLS-ROYCE PRICE TARGET TO 860 (630) PENCE - 'BUY'

UBS RAISES ROLLS-ROYCE PRICE TARGET TO 1000 (640) PENCE - 'BUY'

Audioboom. BOOM, bounced strongly, I suspect traders/investors positioning themselves for the results. Since Covid the results have been in April but prior to that they were in March. So dunno when they will be out but their Q1 t/s will be with it in all likelihood as they have done in the past.

So not a busting lot of news on the news front after a huge lot last week, that’s how it goes sometimes.

If you’d like a bit more on the stocks I have my eye on, I will be on Vox Markets Live at 9.30am on Monday, if any of you want to watch, a lot of the favourites and a few others will be covered.

Have a good weekend

Rebel

Twitter: @rebelHQ