The Weekend Rebel Review Jan11th, 2025

#AVON, #MKS, BOOM, #FTC, CKN

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.

I’ll start this week with a bit of culture:

If you can keep your head when all about you
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too:
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated don't give way to hating,
And yet don't look too good, nor talk too wise;

If you can dream—and not make dreams your master;
If you can think—and not make thoughts your aim,
If you can meet with Triumph and Disaster
And treat those two impostors just the same:
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools;

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
⁠And never breathe a word about your loss:
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
⁠Except the Will which says to them: 'Hold on!'

If you can talk with crowds and keep your virtue,
Or walk with Kings—nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much:
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
⁠And—which is more—you'll be a Man, my son!^[

Rudyard Kippling

It has been a mad old week, and no sooner have we started to get trading updates, which on the whole have been better than expected in my opinion, the market decides the glass is no longer half full and is now half empty. Meanwhile I acquired 250+ subscribers over the past month, 100 of them in the past week. There’s still good appetite for shares, even more so at cheaper prices. There is a thin line between greed and fear at times when markets lurch down or up. The temptation is to sell because everyone else is selling and they obviously, as a collective force, know better than you do. I wouldn’t say don’t sell anything on these occasions but perhaps have a re-assessment of what you hold. Perhaps look at what you have held onto for too long or stuff that really isn’t good value and cash a bit in there so that you have cash to go to the sales when the markets or certain stocks have given too much back. In my experience, if you start selling anything just for pain relief, it is often not long till you are looking around thinking why did I sell this or that.

As I and many have been saying, this government really has no clue so we can’t be surprised that bond yields are firmly on the up. Yields are rising everywhere it seems, if not as fast as the UK, but not everywhere else is up to the gills on debt like the UK and most certainly aren’t raising taxes on the public which will slow growth rather than speed it up. The market is telling the government that you ain’t borrowing anymore without you getting punished. If Reeves thinks she can rattle the can and borrow more then the gilts will fall further and she’ll be paying more in interest – which will defeat any extra borrowing she does if the markets let her borrow more. So the next option is to raise taxes. Here she is limited because she has promised not to raise taxes of ‘working people’ and not to raise taxes any more to business. We know this government is one for sticking to its word though. She has also been told by retail and other businesses that if she raises taxes on business, they will pass it on and that will boost inflation. So that leaves her with government spending cuts – what do you cut without triggering a recession? Well the only place that looks obvious to me is the green energy nonsense and the civil service, that are costing the people and the private sector to subsides. It would help reduce UK energy prices and make us more competitive, boosting growth. If I was to do one thing financially it would be to do everything I could to get energy prices the lowest we can get them. Cut the duty on fuel, aid explorers and producers. Sadly this incompetent government has now run our gas reserves to dangerously low levels and will need to buy energy in from abroad at massively higher prices which the public and business will see in their bills – a stealth tax that will take money out of the pocket that can’t be spent elsewhere. While we punish ourselves to go green, the rest of the world is laughing and growing. Start fracking in the UK too – we could get energy prices way lower and earn revenue while making business more competitive. Reality – it would be nice to be net zero but promising the impossible in an unrealistic timeframe means we will likely never get there at all through making us so poor. They can try cutting benefit but after the pensioner heating allowance fiasco are they really going to do what needs to be done and get abuse for picking on those least able to afford it? It’s a good job Reeves was a chess champion, she has put Starmer in a corner and he’s gonna lose his bishop at some point unless they learn fast😊

Truss lost her Prime Ministership not because of public pressure but because the markets told her where to go with the rise in bond yields. This week has been a mini Truss moment. Unless this government start showing competence the markets will change who is running the show. At that point, you wouldn’t want to be sat all in cash and miss the rally imo, especially if a new or changed government looked like they had financial nous.

As for some of the indicators on the charts, the Russell has been making a firm base recently after the pull back in December.

Meanwhile, the Vix has been elevated but nothing bowly or serious looking there with it sat at 17.7 on Thursday:

The S&P has been constantly pushing at a longer term resistance so a pull back has to be partly expected on there:

Meanwhile it’s the Dow Industrial that has been looking more interesting having recently pushed through long term resistance:

Lastly I’d point out the DAX – all the mess in Germany and it has still been hitting near new highs, so I’d say the market jitters are more UK based:

My verdict on all of that? I’d say there are issues here in the UK and Reeves is in a corner, but businesses are smart and many will be doing well and even benefitting from a weaker £ in a number of co’s who get earnings from the US and overseas perhaps. The US is due a pull back so I’m not yet too concerned there. If things in the world are so bad, why is the German market so strong? They are in a right mess. Perhaps it’s because the left wing party is getting a hiding – there is hope for the UK yet then.

So – if you can keep your head while all around are losing theirs…….

On to stocks:

We have ended the phoney war over Christmas and now the real market trading has started to kick off, expect lots of trading updates over the coming 4-6 weeks and lots of reactions, more positive than negative hopefully. When markets sell off in panic and then stocks post great updates, there is often some extreme bounces.

On a couple of days this week, with clear skies, it was almost still light when the market closed which is always a milestone in my book and something to feel positive about.

Kicking off the news was Avon Technology on Monday. They announced an $18m Helmet Order in line with their framework agreement with the US Dept of Defence:

It’s good to get these confirmation of orders, this is the second from their framework agreement, the last being in July for $29m

In November the co said this:

“As a result of the progress made during the year, we see the potential to reach our medium-term operating margin and ROIC guidance target ranges a year early, in 2026. We also expect the transformation programme to be largely complete by then, with an accompanying significant decrease in transformation cash costs providing the platform for a broader capital allocation strategy."

That all looks good and I’m awaiting the AGM and the company presentation on investormeetcompany they have announced for the same day on Jan 31^st.

Having broken through resistance, AVON is testing the 3 year highs again.

Gratifyingly, AVON announced a further contract with Thales on Thursday which they have been serving for 10 years. It was a continuation of a contract they already had and worth $10m over 6 years so some good forward revenue visibility.

All in all AVON has been making new recent highs as the market went into sell off. Avon has a lot of staff and sales in the US and those workers won’t be subject to the NI raise. The pound has fallen 10% v the $ too recently which means in £ terms any earnings will be boosted.

Great long and short term bowls on the chart, enough to cure erectile dysfunction I’d say (did I say that out loud?)

Audioboom put out a statement on Tuesday ahead of their Jan trading update this coming Weds 15^th Jan together with a presentation on investormeetcompany the same day.

I will be looking forward to the update on Wednesday, the bowl looks great imo.

I noticed Filtronic, FTC looking firm on Monday and Tuesday and a glimpse at Stocko showed a big hike in forecasts to 3.9p eps from 1.75

The chart broke out on Tuesday, a trading update is normally in February. Jeff Bezos is launching satellites to compete with Musk with Project Kuiper satellites now being launched. Will they be coming to Filtronics too? Will Musk take FTC over in order to corner the market in their unique RF technology? I don’t know but it’s definitely a strongly growing market FTC is in and I bought back seeing that forecast hike in the week and added more on the break out.

The bowl on the chart has carried on and broken out through a 13 year high – now testing a 16 year high and has been a cracker of a share over 1 year, up 350% and still in a steep up trend.

The Year in Space: Amazon’s Project Kuiper revs up to join the megaconstellation market

https://www.geekwire.com/2024/year-in-space-amazons-project-kuiper/

Bowl winners like this make up for a lot of stocks that might go badly.

On Thursday , M&S announced their latest trading update:

You can read the full narrative of the RNS where you read your news but suffice to say I was pleased with the update and they had performed the best out of all the food retailers. So having said that, the market duly sold M&S off 8% which seemed weird and still does. I know the market is wobbly and I can only put it down to traders who wanted more of a beat than these results were. Over a two year rally, a lot of traders have got used to buying before news and getting a pleasant push north but perhaps they just expected too much. Forecasts have been constantly rising.

Stuart Machin was upbeat, perhaps the physical stores sales for cloths and home being lower was the reason but online and elsewhere is making up for that and there was no mention of margins and profits are about both sales and margins and forecasts suggest margins are holding up well. I think many traders may have just wanted to sell the news on a day like Thursday anyway so I am not too bothered, quality gets sought eventually.

I think let the traders dump their shares and perhaps try to add on the lows if I can catch it. First I have seen is a slight tick up in forecasts for this year and the coming year on broker consensus. MKS did the same last January, came off for a month or two then made a bowly bottom and rallied – history never repeats but it often rhymes.

Lastly, in the stock news, Clarkson, CKN, said on Friday that trading was slightly ahead of expectations. They featured in last week’s bowls – a scruffy bowl due to the illiquidity but nice to see one give out a positive update.

So we end the first full week with the market in a poor state but for me I’ll hang tough, kill a few trades, raise a little cash and add to my long term fave investments when the time is right.

As ever, none of this is investment advice, only you know your risk/reward profile so do your own research, know what you are buying or selling and trust nobody but yourself I and others get things wrong.

A lot more trading updates next week so perhaps a chance to get some shares cheaply.

Have a good weekend and thank you to all those that donated to my Village Hall fund – the work here takes a lot of time and its nice to be appreciated.

Rebel