Weekend Rebel Review, 31th August, 2024

Yawn

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.

With a short week it’s going to be a short review this week, especially with next to no news on Tuesday and Wednesday.  I’ve just basically covered the stuff I hold or have mentioned here in the past. There’s the old saying ‘Sell in May and go away, come back in September for a time to remember’. It isn’t that reliable but it is based on the fact that kids are then back at school and the bods in the City are back too.  There is also a lot of results and trading statements in September, simply because the financial year starts in April and many co years run from then too, so we get and extra number of interims and trading updates during September and October. One real issue for the market is UK pension and the new Labour government. It looks like they may not just control and reduce how large a contribution you can make into pensions but the 25% tax-free lump sum may be limited.  This means many people with private pensions might not be able to withdraw the sort of amount they thought they might be able to after the Budget.  For this reason I think many investors  with pension are making withdrawals before the budget and this may be slowing the market somewhat, imo.

One company that did put out a trading update this week was Focusrite, TUNE.

I have followed these for some time, they make some great music studio kit. Lately since the massive boost in Covid, they have struggled with stock overhang and much higher shipping costs. Shipping has hitting them again and their shares plunged nearly 20%. I’d be wary of any co’s that in the past are very susceptible to shipping costs.

The FTSE250 is up 1% since the election was called

Filtronic announced a further $8.4m (£6.4m), order from SpaceX under their framework agreement on Friday.  Very reassuring rather than a a new order but still very positive and I expect these to increase in number and size going forward.

The eps forecast for this year is 2.57p when they did 1.7p eps in H2 gone.  That looks to me like they have the ability to beat by some way but obviously no guarantees. They are now doing lots of business on much better margins and SpaceX having taken a 9% stake in effect, this is an exciting co to me and I’m still holding having bought back 2 tranches recently.

The company also said “Consequently, we now expect to trade ahead of current market expectation for FY2025.”  Forecasts have been raised - eps forecast raised to 3.2p this year. that's 130% eps growth over last year and Net Cash.

Seeing the forecasts for this year rise circa 20% when the co is just 3 months into the new financial year is very positive and I see some big upgrades coming for 2026 once the interims are out in my opinion. At the current growth rate, 6p+ eps in 2026 wouldn’t be at all fanciful imo, which would sit FTC on a fwd PE of 13 while the earnings growth this year will be at least 130%.  If these were trading in the US with the SpaceX connection too, they would command a rating double and more on the current one in my opinion.

Friday saw Stephen Blair, the CEO of 6 months at Dialight bought 23,948 shares at 198p this week.  This adds to the 18,905 shares at 189p two weeks ago – so nearly 43k shares, over £80k worth.  The company goes to court with Sanmina in two weeks time. This could mean up to $200m in compensation or possibly $8m in losses, or anything in between. I like the odds on top of the fact the co looks lie it may be in a turnaround after the recent ‘kitchen sink’ from the new CEO. I hold, very illiquid though.

Not much else to say really other than I’m still around 60% and not overly fussed to go much heavier into shares still while the gross act of self harm is playing itself out up to the budget.

Hopefully September starting next week will add some life.

Have a good weekend

Rebel