The Weekend Rebel Review, March 1st, 2025

Spring is here - OTB, MCB, MPAC. WOSG, CMCX, RR., BP., IAG, VCP

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.

Well it’s the beginning of March, the birds are singing, the lambs are in the fields like sweet bundles of cotton wool, following mum around. They days are getting longer and warmer and the blood in my body is being warmed into life by the rich Vitamin D, thrust upon me from that glorious sunshine that picks up this time of year, we all start to feel much happier. Warmer sunnier weather makes us far more positive in my opinion, it’s easier to be glass half full. I have a theory that this affects shares too. If you look at indexes that actually tend to do worse through the summer months but this is due to people holidaying more and having other stuff on their mind. But on individual stock basis, when you read good news from a share during the summer months, I believe investors are far more well receiving of that news and the response is greater. Bigger, faster rallies on good news in my opinion, the one compensation for a market that has a slower period. It makes sense too that if investors are ignoring companies more generally during the summer period, these shares are likely lower values than they might have been with the normal amount of market participants we get during the autumn and winter, so greater scope for a positive surprise. That is nothing scientific, just something I have felt over the years, and even if the summer is notoriously quieter than winter, I still prefer trading/investing in summer to winter as that’s when I remember having some of my biggest stock reactions.

Here's a chart of the FTSE250

The FTSE 250 is no higher than it was at December 2017, over 7 years ago.

Here’s the FTSE250 over 30 years:

The last time the FTSE 250 performed so poorly was July 2007 to Jan 2013. That big decline and recovery was due to the financial crisis. The recent one has been due to Covid and Ukraine. These big events take a long time to recover from. We all think and hope it will be a year or two but invariably it’s the best part of a decade. Of course if you stat investing heavily in the bottom of these dips you can make up those falls in no time.

Here’s the FTSE 100 – 5 years after the 87 Crash, the FTSE100 was trading below the 87 high:

You can see after the 2000 tech boom, the stock market has been on a whole new, much higher scale of volatility but we still haven’t really moved on from the pre-covid valuations. When more companies than I can ever remember are doing share buy back. The FTSE100 has a decent long term curve up on it that looks and feels like it wants to go higher and this should follow through to the smaller companies.

I can’t remember UK stocks buying back so many of their own shares. In $ terms, UK shares are even cheaper and must be looking a steal to businesses in the US imo. We do have the inflation word to deal with and it is clearly going to spike up later in the year, but many co’s use that to their advantage.

Last weekend I mentioned about everyone being an investor or a trader over a different timescale. There are several issues everyone should take into account when trading or investing in my opinion.

Firstly I don’t short. I have done in the past but I’m just no good at it, it feels counter intuitive to me to me to expect gains from failures. My best gains shorting was during the property bubble in the financial crisis. I actually started the Builder shorting thread on ADVFN in 2007, the ticker was SHORT if anyone wants to look back, that was right at the top. It was easy to see builders were over valued and had to fall. It used to have to be so obvious as that for me to short. I’ve shorted occasionally since on certain stocks but I find it too difficult to stay negative. It’s a tougher trade too, for a start you actually pay the divi out when it comes around, rather than collecting it when it goes xd. A second issue is diminishing returns. If you short a stock at 100p at £1 a point, when the stock falls 50% you make £50. The stock is now 50p a share, and if it falls another 50% you only make £25. And this is how it carries on, the smaller the price gets the smaller the cash gain for the same size percentage fall.

This is the opposite to being long. You long at £1 and it rises 50% you make £50. The shares are now 150p and a 50% rise here makes you £75. So as a stock rises your cash return increases as the price rises and being short it falls.

Lastly, the most you can lose being long is 100%. If you short, a stock can go up 20% 500% 1000% which means you could be down 20% 500% 1000% - infinite losses in fact. All of that tells me the gains are stacked in favour of being long. And god help you if you are geared up in a spread bet or CFD.

Another thing to avoid is falling in love with a share. When you have a stock that has done fabulously well it’s worth assessing it’s potential still. Big movers can be great fun to hold but as they get bigger the ability to keep growing at pace weakens. Always look at a stock that has had a good run and ask yourself ‘what is the chance and ability for this stock to do X growth again’ then have a look at everything around to see if your cash can be used more efficiently. It’s amazing how many investors fall in love with a stock that has done them proud over years and they want to keep hold of it, as it keeps hitting new highs. That’s great, but if the time it’s going to take to grow another 30% say is way longer than another share looks capable of doing it then I nearly always go with the faster growth. When you have held a share for a long time that has done you proud, there can be a sense of you ‘owing’ something to that share, to be loyal to it. That share will never be that loyal to you. If you are an investor, be mercenary about it, not sentimental. If you want to be sentimental then sell the shares and buy your wife some flowers or buy the old man a ticket to the football. The day a stock warns or lets you down, it won’t be having heart pangs for you.

Having got rid of Churchill and Thatcher’s portraits from number 10 and Parliament, Starmer suddenly thinks he’s Churchill’s replacement, as he talks in Dalek fashion like he is the new voice of Europe and compliments Trump on reinstating the Churchill bust – he has no self awareness at all. Complete codswallop of course because if he’s suddenly going to find another £13bn a year for defence up to 2.5% by 2027 and Reeves is going to meet her fiscal rules, they have a big hole to fill. 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. They can just tax everyone a bit more. Electricity is going up too – remember Milliband saying before the election he’ll cut energy bills by £300? That’s the 4^th rise since getting in I think. Your word is your bond on the stock market and in politics. I would say that if there is a deal over Ukraine there will be a lot of market benefits. Add to this, the government need to start raising £13bn a year to get Defence spending up to 2.5% by 2027. I don’t think the market believes the government can do this just out of trimming aid so it looks like more tax rises even if the gov say they won’t raise taxes – keeping their word isn’t a priority to this bunch. The energy and water price rises later this year will be like taxes in themselves so consumer stocks seem to have had another dose of ‘out of favour’ labelling. I’m more and more looking to international companies andUK property co’s as places that have an advantage and not heavily weighted to the consumer.

The S&P has had a bit of a sell off but must have been due, it had had hardly any pull backs at all. Musk saying the US can’t carry on borrowing like it has done likely spooked investors a tad. The RSI on the S&P is now touching oversold:

A closer recent snapshot shows the S&P going trough the 100 day. This is a big retrace like in August and the previous October to go with the low RSI

The US fear/greed indicator is well into fear now on this pull back, a time when it’s usually better to be a buyer than a seller.

UK markets fall in sentiment but they also fall when the US is rising, eventually that makes for some big, oversold shares. You get the reactions like RR. this week or IAG on the news.

Small caps get hit worse here because they are illiquid, mm’s take advantage to hit the price even on low volume selling to spook stock out cheaply and rebalance their positions. I always watch the volumes. I’ve seen favourite small caps of mine like BOOM, FTC, WJG give back meaningful amounts but the volume is minor. These were rising on 200-1000% normal daily volume when they rallied, they have been falling on 30-80% or so daily volume, that tells me something. The flipside of that is these sort of stocks rally strongest and fastest in the ‘up periods’ so you need to have a strong constitution, not to get too excited in the bull runs and not too down on the bear runs and realise it’s the over all longer trend that matters. I always look back at past charts and you can often see any pull back isn’t something out of the norm. Volatility is unpleasant but the biggest, fastest profits are usually where there is volatility too. I’ve learned not to be mugged out and to take advantage, far more than I used to. Joining the sellers for pain relief usually ends up with huge pangs of regret for me a few days later when ‘Mister Mad the Market’ suddenly regains its composure and I’m buying stuff back higher than where I sold. These are generally the same companies doing the same great business, it’s just the psyche of the investor flipping from glass half full to glass half empty and back again.

The VIX has risen to the 20-25 level that it seems to keep testing then retreating for the past 6 months now.

Meanwhile the FTSE100 is testing the highs, very international.

On to Stocks

Well at last some results and trading updates from co’s in the portfolio to get the teeth into. First up, On The Beach, OTB

On the Beach posted their AGM statement on Tuesday and very good it was too:

Rather amazingly, even though OTB had sold off recently after Jet2’s note of caution about punters booking late, the initial reaction from punters was to sell OTB on the open. This bemuses me, I know punters have the wobbles a bit but please? That statement was “Booking Brilliant” to steal their advertising strapline.

Of course, punters are in bear mode, glass half empty and all that, and they will be thinking with all the doom and gloom around, why would people be affording holidays? I’d say since Covid, people prioritise holidays even more. On top of this, OTB have done a recent deal with Ryanair, settling differences and OTB now selling their holidays with blessing, including Ireland. They have great new proprietary software too which offers the best deals, in fact last week, having told the brother-in-law (bond analyst – bear obviously) he was thrilled that when booking his holiday it was OTB which threw up the bulk of the best prices and free lounge access added on. It’s so strange to see him happy and not sceptical. This is a capital light, pure online holiday travel agent, no longer just focusing on beach holidays but also city breaks.

So let’s have a look at the chart:

OTB did their record performance in 2018:

Revenues £104m

Adjusted earnings per share, 21.2p

Net cast £47.3m

Dividend 3.3p

Fast forward to today’s forecasts

Revenues £149m

Adjusted eps 18.8p 2025, 22.8p eps 2026

Net Cash £93m

Dividend 4.04p

Get the margins back to 2018 levels and eps rises a lot more.

Basically, OTB will have a record or near record high this year. They are also doing share buy backs which will enhance dilute earnings per share.

The punchline is they are trading at around one third of what they were trading at when they hit 650p and set their last record earnings. There’s 20% more shares in circulation now so taking that into account, they are trading around half where they were when they last performed this well, taking dilution into account.

This year they are set to do 18.8p eps, 60% earnings growth on 15% higher sales – that’s operational gearing for you. I think investors could see the operational gearing back then better than they do now. Perhaps recent years under a different CEO has made them sceptical, but since Shuan Morton became CEO he has more than delivered.

To underline this, take a look at the consensus earnings forecasts which have risen 15% since September for this year and over 20% for the year ahead:

I love seeing these lines on a trajectory that is curving up, in my opinion, it tells me the company is telling a stronger story in the ears of those brokers than they make in public, planning to deliver more than they promise publicly in my opinion, which is no bad thing if they are.

So basically 60%+ eps growth on a PE of 12.5 falling to 10.4 plus enhancement from the buy backs. Healthy net cash and a 1.5% yield.

There isn’t many socks about on that low a valuation with that growth going on.

I think the gov-speak re defence and higher energy costs hit a number of consumer stocks so OTB seem to have been one of them after being up on results day. The general market has caused punters to bank some profit where they have it.

As I always say, you make your own decision, I’m a holder so I would say this, I’m likely biased and talking it up is in my interest. Do your own research, it’s like packing your own parachute!

Another of my holdings, McBride, MCB, posted interims on Tuesday, and they were excellent in my opinion:

You can read the rest where you read your RNS news.

This was a strong statement with eps climbing 25% and debt falling £28m. With a PE in the sixes, that is very low, even for a co that never trades on very high ratings due to cyclicality.

Great chart

I feel it’s a hold for me here rather than an aggressive buy and there’s likely sexier stuff that I’d sooner increase my holding in and keep my stock holding numbers smaller. I think probably 175p would be fair value for now given the cyclicality risk imo.

Mpac, MPAC put out news regarding their pension fund on Tuesday:

The pension deficit has been a Raul Paul (a huge drag) on the company profits for as long as I can remember, right back to its days as Molins 25 years ago, so this is a major deal. They paid £2m into this last year. For a co forecast to make £6.3m net profit this year, that £2m is significant and would be an annual saving. Getting shot of this cost and the earnings enhancements from the acquisitions going forward, make MPAC a rather exciting holding –

Equity Developments has a target of 865p.

Rolex, I noticed the chart for Rolex making a nice bowl in recent weeks, first firm up in 6 months. This might bode well for #WOSG who are highly dependent on Rolex sales.

Even though I took a big wallop early last year on these, I’m sure there will be a point where the stars realign and the punters pile in. This is a chart to keep an eye on imo.

I and I am sure many others made a packet on the CMC Markets, CMCX bounce in the first half of 2023. The mood music from the company sounded great right up until July, since then the statements have been cooler, the international trading being described as more a slow burner than the screamer it initially sounded like being.

Out of the blue on Weds they said the CFO Albert Soleiman was leaving with immediate effect. That’s never a phrase you want to here, you want nice orderly resignations, pre-advised. So it leaves investors wondering why? Has the expansion into Asia and the corporate trading been a duffer? Personally, if I was holding I wouldn’t wait to find out, especially as the shares have nearly halved since November. After an initial tanking down to 183p they climbed back 20p to £2. I think they are an avoid until the co says more.

Rolls Royce Plc, RR.

Rolls Royce posted some stunning results on Thursday:

You can read the rest of the results where you read your RNS News.

This really has been one of those ‘Page Three Stunnas’ as far as UK shares go. If you were part of the wide-awake club at the low 30 months ago you could have picked these up at 70p on that wonderous bowly bottom and today you will have 10 bagged them:

I never bought till 140p and sold the last of them at around £6. Great gains and I’m happy with what I made, you can’t beat yourself up for missing a bit more.

Turbo Tufan has really lived up to his name.

The cash generation at RR. has been pretty fab and I’d probably hang my hat on that rather than the PE ratio which might look a tad rich now.

Well done to anyone that bought at 70p and are still holding. With a 6p divi now and £1bn in buy backs starting you are getting circa 10% return on your initial investment in income too.

Would have been nice to have spotted the bowl a bit earlier and been a bit braver but that is something you always end up saying when an investment comes good in a big way.

There were a few big broker upgrades on Friday.

ODDO BHF RAISES ROLLS-ROYCE PRICE TARGET TO 880 PENCE - 'OUTPERFORM'

JPMORGAN RAISES ROLLS-ROYCE PRICE TARGET TO 900 (655) PENCE - 'OVERWEIGHT'

BOFA RAISES ROLLS-ROYCE PRICE TARGET TO 1150 (830) PENCE - 'BUY'

All in all, I prefer international companies at the moment due to this government’s ineptitude so I think I’ll be having a few RR. back (Edit -grabbed some late Friday). The co buying back shares are going to make it firmer still. It sort of feels now with these broker upgrades that RR. probably has a tenner written on it eventually, especially if they start seeing big SMR nuclear orders.

BP plc, BP.

I covered the bowl on this chart which has been going well and after going XD it has come back a lot. They announced they are dropping all the green nonsense saying they are rolling back green energy to increase profits. They have joint ventures in wind power, they have a solar energy business and car charging. I think this is a great move but short term there are likely a number of investors with ESG as a high priority and investing in BP for the green angle especially institutions where they have sold their funds to people on the basis of ‘eco friendlier investing’. That will likely create a short term drag on the share price while these funds sell down in my opinion but it likely makes BP. A much better investment if you are looking for a co that earns profit rather than wants to be all eco-lovey – do your best to protect the environment but remember there is always a trade off. I’ll likely be buying the dip with that bowl type chart having had a big pull back, having sold on the XD last week. Just my opinion of course.

What are you investing for? To make money or to be some sort of social philanthropist? What are these funds doing? Making sure we are forced into investing green or trying to make us money? Every company that reports now has to report its ESG performance and it has crept higher and higher up the results pages in the accounts. I know I’ll upset some but all this net zeros is bulls***. Every warming period the planet has had has seen warming followed by a rise in CO2. This time CO2 has risen followed by warming apparently. Ask scientist why that is and they don’t know. The WEF, Davos and the greed machine love a story. They learned this with the millennium. Y2k was going to see planes fall out of the air, the world was going to grind to a halt. Nothing happened except lots of tech co’s made lots of money and we all bought new PC’s out of fear - Bill Gates never forgot it. Then we had the re-run with Covid – the pockets of everyone ripped apart to throw money at the virus, the public milked and big business gorged. Now we have global warming – scare us all into throwing so much money at EVs, solar, wind that we are getting skint while Charlse Swab, Bill Gates and George Sore-Arse make fortunes, growing fake meat, making chemicals preventing cows breaking wind then telling us we need to eat less meat. The planet has regulated it’s climate for mammals for millions of years, just fine – now we need Bill Gates to save us when he can’t get Windows to run for two weeks without a patch. We need a sensible fossil fuel policy where we try to reduce dependency, we regulate to prevent pollution but we don’t destroy the economy doing it or else we don’t have the money to do anything. You can have all the goodwill in the world and all the laudable aims to protect the planet but unless you create the wealth to do it first, you can do nothing. We have to have a measured pace, not a number 2050 plucked out of the air by Boris and rushed through the commons in 30 mins, as it was done.

BP. Has suddenly become investible again imo.

More fab news from IAG this week right after RR.

You can read the full results here:

https://www.rns-pdf.londonstockexchange.com/rns/7988Y_1-2025-2-27.pdf

On a PE of 6.6 and a 3% yield. Generating fabulous cash and paying debt down by £2bn Euros.

Given back35om Euros since November and giving back another 1bn Euros this year on top of the regular divi.

Increasing operating margins, growing sales, reducing debt significantly all bodes well for broker increases in forecasts in my opinion.

Forecasts rose 50% from Jan to Jan:

One of the best features in Stocko is their analysis in charts and graphics. I really like their quality indicator which I pay attention too and this one was great before today’s numbers:

I took a lot of profits at near the highs here on his great bowl chart, having been up well over 60% since November (less than 3 months and really not knowing why other than relentless broker upgrades going higher and higher.

https://cockneyrebel.substack.com/p/weekend-rebel-review-nov-8th-2024

I decided to have a lot back this am, rather lucky to get them lower than where I sold in this instance, unlike I’ll do at RR.

IAG start their 1billin Euro buy back from Wednesday, so them and RR. will have more than just the punters buying.

Victoria, VCP - having highlighted the bowl a month or so ago I should point out that it is now rolling back over. Very low to zero assets mean it’s high risk as I said back then. If their refinancing didn’t go through or they had to pay a lot more than hoped in interest, it could get messy.

Worth being careful here, I don’t want to put holders off but make sure you have done your research. I was in and out a while ago as it is high risk so never wanted to hang around at the party too long.

Phew!

And that is about it for this week. I did say when co’s posted results there will be a lot of positive surprises that move the share price and Rolls Royce definitely underlined that this week.

March tomorrow - results to to flow more here onwards.

Enjoy your weekend

Rebel

Twitter @rebelHQ