Weekend Rebel Review

Wading through treacle

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.

There seems to be more volatility in the market in the past few weeks, it seems to me there’s a lot more trading going on.  I’ve been trading a bit more, not that successfully to be honest.  BRBY was a case in point, the chart has done well and I had a fair bit of profit in them until Monday afternoon when a press story came out that they were not in talks with said suitor, the shares went from +35p to -20p in no time. I sold as the shares fell. I hadn’t seen the story but saw the sudden reversal on volume so I sold.   Trading is something I do occasionally but invariably hate more and more compared to buy and hold.  I think perhaps it’s a good point to hold stocks with good upward momentum and just ride out the volatility while the traders rush in and out.  Things with strong upward momentum in an indifferent market are often telling you something imo.

Thinking about the recent budget, I have been looking at retailers who likely get hit from NI and minimum wage.  One retailer that stands out that doesn’t seem to get hit as hard is Watches of Switzerland imo. WOSG.  They have over one third of their stores in the US and Europe and these won’t be hit by the NI and minimum wage.  I estimate they likely see a 2-3% hit at the maximum compared to other retailers. That would clip about £3m off the £97.4m forecast net profit.  I’m warming to what might be a decent recovery play here even having been burnt for 3% at the start of the year by them. I sold out at around £1 higher than where they are today, back then.  The chart is making a long term bowl so I bought a small few to get it onto my watchlist.

I have been watching the chart on Rolex prices and perhaps this is a bowly bottom forming? Too early to call but it will be shallow if it is.

I bought a few small few back but the trading update they normally have in November is late compared to recent years so I’m very cautious.

Having already added more M&S back I bought more on Tuesday at the lows as it hit the long term trendline and bounced. The shares have come off 10% while consensus forecasts have risen 6% - that’s a 16%+ discount to the high basically, on a PE basis. The co had a corporate presentation on Tuesday and it’s on the co website, I suspect the corporates liked what they heard and that triggered the bounce. Premier Foods results this week said that customers are ‘treating themselves more’ with “Mr Kipling Signature Bites and Ambrosia Deluxe more than double in the first half of the year.” Which confirms to me the upper end of the market is set to do better.  Meanwhile B&M Europe seem to be struggling at the bottom end.

The presentation from Tuesday is here:

https://corporate.marksandspencer.com/sites/marksandspencer/files/2024-11/capital-markets-event-2024.pdf

Watch the webcast of the results too imo.

https://stream.brrmedia.co.uk/broadcast/672a124e6ad8ad2999cf3c90/672b50cb5831ad1e8f352207

The funniest thing in the webcasts is Stuart Machin welcoming Tesco on the call in and in the Q&A asking everyone listening to shop at M&S this Christmas, especially the two from Tesco 😊

If you fancy some armchair research, have a look at the Christmas food offer at M&S compared to the competition, especially Waitrose – Waitrose look like they couldn’t be bothered. A lot of M&S collect in-store products for the days before Christmas are already sold out on pre-book.

On Wednesday, Creightons. CRL, posted a trading update.

If everything else is equal, after operating profit, then CRL should do something like 1.5p eps in H1 on £1.5m operating profit.  In 2021-2022 they were achieving better than £5m operating profit and 5.9p eps.

That’s a great turn around from the mess they got themselves into with Emma Hardy and perhaps Pippa Clarke is coming into her own here as CEO after Bernard Johnson had his crazy swan song into becoming an acquisition magnate and paying way over the top.

£23m mkt cap, decent assets, £2.2m net cash in July and they reinstated the divi after two years of no shareholder returns.

These are fully listed – NOT AIM. Everyone is looking for the next W7L – different business model but strong potential growth. Watching the last presentation Pippa Clarke has reduced fixed costs by reducing factory footprint and creating a whole new production line from leftover sections of an old couple of other lines so they really have been cutting overheads and watching capital spend. They also got rid of the night shift and the Emma Hardy offices.

I sold most of my CRL in my dash to cash, bought some back Wednesday at just below where I sold and the rest back at a bit over where I sold so it works out as a little over where I sold in total. Sometimes you make a mistake, but never compound it by not putting it right to avoid dented pride imo.

Results in a fortnight, and a presentation on PI World.

Burberry posted their interims on Thursday which were pretty unexciting

The rest is available to read on the RNS.

Basically a 20.8p eps loss with a forecast of 2.2p eps for the year, so they need to do 23p eps in H2 to meet forecasts.  I was looking for a more cheerful update personally, to inspire me to hold. As it happens, as I posted above, I sold when the shares started plunging in the week not knowing if I would regret it, and as it turns out I don’t. The outlook isn’t too upbeat but the shares are well beaten up and there’s a bowl so it will be interesting to see what the chart does in the coming weeks and whether the bowl holds up.  Initial reaction was a 17% rally by 9 am which I missed, having sold earlier in the week  - that’s investing for you!

I mentioned IAG last week along with JET2 and CCL.  While all charts continue to look great, IAG really is curving up fast. This week, IAG have picked up 5 upgrades all circa 50% higher than the current share price:

JPMORGAN RAISES IAG PRICE TARGET TO 3.40 (2.90) EUR - 'OVERWEIGHT'

BARCLAYS RAISES IAG PRICE TARGET TO 320 (290) PENCE - 'OVERWEIGHT'

BERNSTEIN RAISES IAG PRICE TARGET TO 270 (230) PENCE - 'OUTPERFORM'

BOFA RAISES IAG PRICE TARGET TO 300 (240) PENCE - 'BUY'

GOLDMAN RAISES IAG PRICE TARGET TO 300 (285) PENCE - 'BUY'

I have increased my holding here this week as the bowl and break out intensifies

Thursday saw interim results from bus and train company First Group plc. FGP.  The results looked pretty decent to me for a company that’s on a PE of 7.7 and a yield of 6% + share buy backs, - saying they were slightly ahead.  The interim divi was raised from 1.5p to 1.7p.

The rest of the results can be read on The RNS.

I dunno, eps up nearly 5%, a 6% yield and a PE of 7.7 with near half the years forecast under the belt in H1 together with the co saying they were slightly ahead.

Not a OBIAY but what is at the moment, in a Scrooge market?  Compared to what you can get on fixed interest at the moment, it doesn’t seem a bad place to stick cash until the market improves to me. The price of oil dropping must help them out on the diesel front going forward I would think once they re-hedge.

Obviously, do your own research in my opinion and don’t trust my word, just highlighting the potential value.  Not one that would excite me longer term.

A nice little bowl on the chart imo:

Lastly, one to watch over the next few weeks – Bodycote, BOY.

I noticed this recent bowl on the chart:

The company had a new CEO 9 months ago, Jim Fairbairn.  His past involved being Global MD at Howdens and Exec  Director of Power, Environmental division from 2009 to 2017 while the shares 10 bagged:

Howdens, HWDN, arrows indicate Fairbairn’s time at Howdens

I thought the last results sounded upbeat with talks of getting operating margins back to 20%, currently 11.7%.  EPS had halved in H1 hence the wallop the chart has taken but the forecasts have hardly change and they never guided lower.

The Chairman bought 36k shares in October, increasing his holding by 50%, £200k worth.  The co has a trading update around Nov 20th normally.  It may be one to watch out for so I just thought I would highlight it for your radars to look out for.

I’m currently trying to avoid Aim stocks unless they are actually compelling.  Trying to pick winners in a falling market is a tough sport.  Here is the Aim index over 28 years – how can an index be down over that time?

The constant reduction in the quality and required hurdles you need to float on Aim has destroyed the index performance imo.  Of course the best stocks on there that do come good, likely leave and move to a full index or get taken over so it constantly leaves a pool of swamp creatures headed up by a lot of dodgy directors in many cases, which you need to wade through to fine the few really good companies.  For this reason I would prefer to buy in the Fledgling, Small Cap or mid Cap indexes.  With the CGT and IHT stuff that has been going on, that has made things worse.  I’d be inclined to be super judicious on stock picking on Aim imo. Trying to be a winner in a market going against you is difficult.

Thank you to all the readers on my Substack, subscriber numbers went through 3k this week, up 45% in 3 months. Thanks for all the great emails too from readers that have enjoyed it and profited from it, as well as all those that have lost a fortune 😊

I should also add this little bonus for readers: Have yourself a 50% discount at the Mello 10^th anniversary event at Derby using the discount code – REBEL 50

https://melloevents.com/mello10/

Have a great weekend

Rebel