The Weekend Rebel Review Sept9-10th, 2023

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.Well the rain has killed any hope of doing anything meaningful outside today so time for a weekend review again this week.  There’s a fabulous feeling about the market currently imo, tho many may not feel it. When investors/traders sell off just because they cannot take anymore, when they just want ‘pain relief’ or 5% guaranteed from gilts looks attractive compared to fluctuating equities that may fall at times and not even pay a yield, you know there’s a lot not participating long in this market.  So why do I feel bullish (apart from the fact that I am always optimistic and often get called a perma-bull) ?

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Doesn’t time fly when you are having fun. September is now here and there has been a fleet of results, trading updates and notice of forthcoming results. Compared to recent weeks this has been astronomical but nothing like the weeks to come. With the financial year starting April 6th it’s little wonder so many business years end late September early October so there will always be lots of trading updates around now and some results too.

I have to say that these results and updates have been greeted more positively tho not gung-ho. It takes a while for battered bears to grow horns and become bullish but you can sort of feel it. The market may not feel like it wants to race away here but it definitely feels like it doesn’t want to go down imo Volumes remain hideously low. If you look at the daily volume in most companies, at the end of the day, you’ll see it is usually a half to a third of average volume. Mostly, people are not selling, they just aren’t participating. There s a lot of cash parked in fixed interest or on deposit. When the market does turn up, volume will become above average for many of these companies just to return overall averages over time back to the norm. This is why early bull markets are so exciting, being in there when others want to join you, beating the FOMOista.

There wasn’t much big data this week but from the UK view I did notice Construction PMI was 50.8. While this was 0.9 lower than last month it was 1.0 better than expected and signalled growth still rather than recession in construction. Services PMI came in at 49.4, above the 48.7 of last month and the 48.7 expected.

One other thing that did happen was the ONS revised up UK growth, where they had been underestimating it. I was Brexit supporter and don’t want to get into the ‘who was right’ argument here. We are where we are and as much as many will keep moaning, the best businesses recognise we are where we are and they embrace it and make the most of it.

Basically the UK has grown faster and stronger than the rest of the big EU countries.  The press has been banging on about how we have underperformed the EU, based on faulty ONS data. Any wonder investors have sat on the sidelines?  Investors have been artificially depressed and their expectations are lower than they might have been.  This bodes well for results beating expectations.

A large number of traders/investors are finding it tough.  Traders have had some great times and tend to think they are great traders.  The reality is, most traders are average.  They do well when markets are great, rising fast or falling fast, volatile basically. The problem for many is that  if they have  been ‘long only’ investors or traders, we have had two years of no rises, trading long has been tough.  For those that short they have had many shorting opportunities but in the last 6 months the FTSE250 has gone sideways with few large moves that triggered enough emotion to move stocks far enough to  make short term money. 

So the market has more than enough despondency priced in from overly gloomy macro data and not enough confidence to buy the market.  The market high was 27 months ago – if people were living off their trading or investing they’ve had a very tough 2 years – many will have thrown the towel in.

Meanwhile, many companies that have seen their shares fall 30-40% or more are now doing record earning so there lies the clue that the market is mad imo.

The Russell 2000 bowl flopped but the chart now is on a great up trend around here imo

Dow Transport off near 10% from the high but still way above the May low.

So on to company updates in the past week.

SDRY – came back out of suspension – these look like a dead business whistling in the dark imo.  I’ve listened to Dunkerton many times and don’t believe him. On investormeetcompany he blows away bigging it up but the fact is they can’t appeal to 50 year old blokes and 17 year old kids with the same product. They aren’t a scarcity brand like Rolex.  I see these going under within 18 months myself, probably some pre-pack thing,  not much fun for shareholders imo.

LUCE – put out good interims.  The 1.5p divi maintained, adjusted earnings better than expected.  5p eps in H1, with shipping costs plunging and acquisitions adding to earnings while customer destocking will all boost earnings going fwd. Brokers consensus forecasts have been raised from 9.5p to 10.2p after the numbers. Fab cashflow too. These were doing 17p eps in 2020 on £172m sales.  They now do £206m sales and margins are rising. Traders bought before then sold. It’s a big holding for me, I will be adding at some point – a 4% yield.

MPAC, a bit light on enthusiasm and no news on Freyer – I sold a couple of months ago as the shares fell through support. A great little business, just need to hear the new CEO sounding like he may deliver imo.

HFD – looked rather good but saying the good news is 6 months out, meanwhile H1 will be weak.  Confident fwd outlook tho.  Worth keeping on the watchlist imo

DLAR – announced everything was as they had laid out previously. Trading in-line. A DLAR update that didn’t disappoint, not had that from DLAR in years. Expecting to break even in H1 and make a small profit in H2 but next year earnings jump from 0.7p to 5.8p or goes from a PE of 90  to 9. At this point investors will wake rapidly imo.

Recent director buying in VINO, ANG, GMS and JDW all caught my eye.  I have a longer term holding in JDW, I have bought starter positions in the other three.  GMR results this week, VINO and ANG in October – all 4 stocks have bowl charts.

Took a small position in ROO this week, great bowl, update in a month

JET2 – how weak is the mkt?  They put out a big earnings upgrade and still share price hardly flickers. There will be a time to buy again in the coming months.

MRO good update but cheaper/better co’s in the mid to large caps imo.

I feel the market is still on the up.

That’s it for now – expecting a very busy week next week for news.

I’ll be presenting a stock on Mello Monday on Monday evening so do have a watch if you can – for viewers of my Substack I can give you a 70% discount code for Monday

Code:  RebelMM70

https://us06web.zoom.us/webinar/register/WN_WpdKy_YUTd6NB-IO1khw-Q#/registration

Have a good weekend

Rebel