Menu
Close

Dr m discussion board


#1061

IDEA , Ideagen
I mentioned this share many times in here recently as a “rising” share that kept rising and worth buying. I’ve got a decent size holding here. The share continues to do well, worth having a look folks. This company provides software for gvmnt departments and corporations regarding governance, risk and compliance aspects of their operations. All highly desirable issues.

The chart below looks good with sp, 50ma, 200ma, volume and rsi all ok. Worth having a look imo.
DYOR
Good luck :wink:
Dr M

https://charts.moneyam.com/Chart.aspx?Provider=EODIntra&Code=IDEA&Size=700&Skin=BlackBlue&Type=2&Scale=0&Span=YEAR1&MA=50;200;&EMA=&OVER=&IND=VOLMA;AreaRSI;&XCycle=&XFormat=&Layout=2Line;Default;Price;HisDate&SV=0


#1062

I hold this look at these new investment trusts / article what do you think


#1063

@nonhebel11
Leb. They look ok on paper. I await some data in the future before taking part.
Dr M


#1064

Terry Smith speaks to ii research dept. See below

Fundsmith Equity’s Terry Smith reveals top tips for profitable investing
by Helen Knapman from interactive investor | 13th September 2018 09:31
Star manager Terry Smith tells Helen Knapman how he runs his popular and hugely successful fund, and why he’s about to launch a new global small cap investment trust.

What is Fundsmith Equity?

Fundsmith Equity is a long-only global equity fund [meaning it invests with a long-term view in global companies].

What do you look for in companies you buy?

We only invest in good businesses. This may sound blindingly obvious, but you might be surprised how many investors either don’t do this or don’t have a good definition of a high-quality business.

In our view, a high-quality business is one that can sustain a high return on operating capital employed [assets minus liabilities] in cash. In other words, if you take the cash flow it generates each year and divide it by the capital employed in the business, you get a high number – currently about 28%.

We invest in companies where the assets are intangible and difficult to replicate, such as big brands. We want companies that are resilient to change, particularly technological innovation, and with growth potential. We avoid anything that needs leverage or debt in order to generate returns.

Fundsmith Equity held 27 stocks [companies] at the end of August.

It had a 92% active share against its benchmark [MSCI World Index]. Active share measures how much a fund differs from its benchmark index.

Close to two-thirds of the portfolio is in the US – why is that?

We have no bias towards any country, including the US, and are simply looking for the best companies to invest in. We are looking for a combination of high quality and reasonable value, wherever they may be incorporated, headquartered or listed in the world.

At what point do you sell companies?

After managing to buy good companies at reasonable prices (or better), we hope that we need take no further action.

We don’t believe that we, and frankly anyone, has the ability to time the markets. You should think about your investments in the stockmarket on a long-term basis because if you have at least 15 years to invest, you are very likely to make money.

We sell companies when:

They get taken over – if we are offered cash or don’t want to hold the shares of the acquirer.
Managers of the company start making what we consider to be bad decisions about the allocation of our capital.
Something happens to make the business much worse than when we originally bought the shares.
The shares become too highly valued relative to other companies we would like to own.
When we get it wrong and realise we shouldn’t have bought the shares.
The portfolio turnover ratio for 2017 was 5.4%, which is much lower than most funds.
What stocks have you sold recently?

We sold our holding in Nestle after the company announced its acquisition of the distribution rights for certain Starbucks products. This concerned us, as the price paid was high for a very limited range of products, and there is also a royalty payment to Starbucks.

What stocks have you bought recently?

We recently bought Facebook. The tech company produces a high return on capital and has enjoyed a spectacular growth rate.

Although we expect that growth rate to maybe halve to, say, 20% a year, that is still very good. As a result of the recent furore over the use of data, the shares are only valued as an average company.

What has been your best and worst investment decision since starting the fund?

We sold out of our holding in Domino’s Pizza in 2015 as it had reached a valuation that we felt was only justifiable if Domino’s rapid rate of growth was sustainable, which we doubted. We made seven times our initial investment.

At the time, I said that we sold it with some regret and trepidation. Regret, since it is undoubtedly a fine business and had been our best performing share since the launch of our fund. Trepidation, since selling shares in good companies is something we are justifiably reluctant to do and is almost always a mistake. This was the case with Domino’s, which remains a quality company and has continued to perform strongly.

What opportunities and concerns do you have for the fund next year?

I don’t like to think in terms of years. A year is the time it takes the earth to go around the sun and has no significance in business or investment, except in agriculture.

What is the rationale for launching the small and mid cap focused Smithson Investment trust?

Last year we hired Simon Barnard and Will Morgan from Goldman Sachs to research the opportunity presented by applying Fundsmith’s proven investment process to companies typically smaller than the ones the Fundsmith Equity Fund would invest in, hence the name Smithson. The results were compelling, hence they are launching this new fund.

How could Smithson sit alongside Fundsmith Equity within a broader portfolio?

Our analysis shows that small and mid cap companies tend to have higher expected returns but also higher expected risk, defined as price volatility, when compared to larger companies. However, adding a small and mid cap portfolio to a large cap portfolio can raise expected returns without increasing risk, due to the different risk and return characteristics that small and mid cap companies provide.

What’s your top tip for a beginner investor?

My advice would be to understand what you are investing in. If you have a scintilla of doubt about whether you understand it, you don’t. If you don’t, then opt for a low-cost index tracker fund.

The investment industry is full of unnecessarily complex products that are designed to baffle investors, which is one of the key reasons why I launched Fundsmith.

The man behind the fund

Terry Smith founded Fundsmith, where he is chief executive and chief investment officer, in 2010. Fundsmith’s range includes Fundsmith Equity, Fundsmith Sustainable Equity, and Fundsmith Emerging Equities Trust. Prior to setting up the fund management business, Mr Smith held senior positions at Tullett Prebon, Collins Stewart, and UBS Phillips & Drew. Prior to this, he worked at Barclays Bank, where he became an Associate of the Chartered Institute of Bankers. Mr Smith has a degree in History from University College Cardiff.

Fundsmith Equity: Key stats

Launched: November 2010
Fund size: £17 billion
Ongoing charge: 1.05%
(T share class)
Yield: 1.54% (i) (gross)


#1065

Ben Hobson, the statistician at Stockopedia, talks to ii research dept about Momentum shares in the article below published on Wednesday. Have a read.

Here he goes:

Shares in life sciences company Abcam fell by 15% when it published its full year results this week. In fact, at one point during the day, its price was down by more than 30%.

For random observers, who may not have even heard of Abcam, the cause of this savage drop might have looked obvious - the antibody specialist must have undershot expectations. But that wasn’t the case at all. Abcam’s results were in line with forecasts. Revenues were up, targets were hit and even the dividend was hiked by 18%. So why did the price tumble?

The answer was that Abcam said it was planning to invest more in research, development and expansion. Inevitably that would put pressure on earnings in the coming years, and it was this that rattled the market.

It’s quite common for investors to be left bemused when share prices fall on seemingly good financial results. The causes can be wide and varied, but Abcam is an interesting case. With a market cap now of £2.7 billion, it’s one of the largest companies quoted on the Alternative Investment Market (AIM). It’s also one of the most profitable.

In fact, Abcam has an impressive track record of growing profitability, cash generation and efficiency. This has made it very attractive to many investors - which in turn meant it was particularly vulnerable to a stomach-churning price drop, and here’s why…

Abcam belonged - and still belongs - to a high-flying group of stocks that share a clear investment profile. They have some eye-catching quality characteristics, meaning they’re profitable, often resistant to competition and financially robust. Plus, their strong track records earn them support in the market. Consistent overachievement in earnings growth makes them popular. And that manifests itself in relentless price momentum.

So, stocks like Abcam are appealing for their good quality and strong momentum. But the flipside of the coin is that they can end up looking expensive against regular valuation metrics. But some investors believe that eye-watering prices can be justified if earnings in a company are growing rapidly.

It was that kind of momentum that caused shares in Abcam to rise from £5 to £15 in a little over three years. In that time, its average price-earnings (PE) ratio was well over 20x, and last year it hit 68x. But when the market senses the growth might falter, those kinds of valuations can look stretched. Thereafter, the momentum crash can be swift and startling.

How to handle high flyers

Although severe, the price fall at Abcam only wiped out three months’ worth of gains. Holders of the stock will now have to decide whether the company’s high-flying growth profile really has changed.

Some companies can sustain their high quality, strong momentum (but often expensive) investment profiles over many years. Just a few past examples include the likes of Domino’s Pizza, JD Sports, Next and Rightmove. These kinds of stocks can compound returns over long periods but they need to be watched carefully. When the investment case changes, their expensive valuations can lead to sudden price reversals.

With that in mind, this week’s top 10 takes Stockopedia’s quality, value and momentum rankings to pick out stocks which share the profile as potential high flyers.

Name Mkt Cap £m Quality & Momentum Rank Value Rank % Price Chg 1 year PE Ratio
Craneware 847.9 100 4 140 69
Electrocomponents 3,242 99 22 13.7 25
Victrex 2,722 99 19 38.7 23
Hargreaves Lansdown 10,454 99 6 57.4 44
SSP 3,209 99 24 31 32
Kainos 516.4 99 9 49.2 44
Pagegroup 1,876 99 31 17.8 19
Burberry 8,602 99 27 16.4 24
Robert Walters 559.1 99 41 41.4 17
Whitbread 8,535 99 27 23.1 17
Source: Stockopedia Past performance is not a guide to future performance

The kinds of stocks passing these rules are often well known to investors. Companies like Craneware, Electrocomponents, Victrex and Burberry are well-followed stocks with reputations for being high quality businesses.

In bullish conditions these types of firms can see their momentum accelerate as investors move into the market. Their quality should, on average, mean that they are less likely to deliver nasty surprises.

But it’s important to know that high flyers will usually falter eventually. Missed expectations, changes in management, strategy or market conditions can unsettle the market. As investors in Abcam found out recently, the impact on share prices can be big. The question then is whether the investment case has genuinely changed or if the market is offering a momentary chance to buy at a slightly lower price.


#1066

FTC Filtronic. A share mentioned here previously, I bought a small entry amount. See below Ed Jackson writes for ii research dept about FTC.

Here he goes:

Does a spike in the AIM-listed shares of wireless systems group Filtronic signal capability to leverage value for a near-£50 million business? Alternatively, is this merely speculation on small-cap tech shares in a late-stage bull market, hence liable to plunge once liquidity preference kicks in?

It’s a typical dilemma where cautious investors can end up regretting selling too soon; but how do you know if a new chapter in a company’s history will prove financially exciting or if it’s mainly driven by hope?

New antenna grasps imaginations

Filtronic has entertained investors with varying technologies for over 20 years, its penny stock status nowadays – currently around 22p – comparing with my recollection of over £20 at the peak of the 1999-2000 tech boom.

More recently, the 2015 financial year brought losses as demand from the original equipment manufacturer (OEM) customers Filtronic serves, fell short of expectations. To a large extent this company is at the whim of such OEMs following shifts in global trends but, if the timing is right, then profits can swing nicely.

Its latest technology gobbledegook is “Massive MIMO” (multiple input/multiple output) antennae for 5G rollout where a full grasp of what’s involved is frankly unnecessary; the crux being the extent of global roll-out for this next generation of wireless capability and what extent of profit can emerge for Filtronic.

The story is quite easily latched onto by investors. It originated last April in an RNS announcement about collaboration with Nokia based on Filtronic proprietary designs, significantly increasing network capacity thus “a compelling business case for mobile network operators… a major step in the development of dense 5G networks”.

Financial upshot remains speculative

Scope for scaling up as 5G capability evolves makes for tantalising figures: Nokia will supply T-Mobile with £2.7 billion of network equipment as part of T-Mobile’s first nationwide 5G rollout in the US. Meanwhile, the financial upshot for Filtronic and how long it might last before some other technology advance is highly speculative.

Filtronic declared initial production orders for its Massive MIMO antenna product in early August, then at the month-end a deal with a major European manufacturer. Altogether, it’s £2.4 million of revenue or about 10% of recent annual total.

Over six weeks the stock has doubled from about 11p to over 23p, adding £22 million in market value, although an analyst at Panmure Gordon, Filtronic’s broker, has yet to raise forecasts. Flat earnings per share (EPS) of 0.6p is projected from 2018 to 2020 despite some Massive MIMO orders being fulfilled this financial year, since revenues from legacy filter products will correspondingly tail off. However, it does admit that “we now believe our forecast for the 2020 financial year may prove conservative.”

• Stockwatch: Snap up this AIM recovery story

• Is Filtronic on the right wavelength?

• Is Filtronic’s crash an opportunity?

The market is seeing through this to reckon Panmure is being prudently cautious like it should as company broker, otherwise raising hopes which could create a rod for its client’s back. But if Massive MIMO technology gains further acceptance, then revenues from 2020 onwards should be interesting.

Potential was evident a year ago

I drew attention last September at around 12p a share, with the rationale that key elements of a turnaround had been achieved after Filtronic had slumped into losses (see table). 4G rollout was proving a driver with management preparing also for 5G as IT hardware becomes integrated, where “Filtronic is well placed to play a part in this major market development.”

Elsewhere, we had a £4.8 million supply deal with a major European defence equipment manufacturer, buttressed revenues, and investment in international sales & marketing contributed to “a growing opportunity pipeline”. I thought the market was barely noticing the industry positioning, thus Filtronic rated a steady “accumulate”.

Its stock rose to 16p by end-2017 though had halved near 8p, mid-2018, showing how sentiment can be fickle despite no adverse news. Presently, there’s some doubt about whether the boom in Nasdaq stocks can hold, and whether a shake-out must follow.

However, tech specialists say it will more likely encourage better stock selection, although you might argue that “they would say that, wouldn’t they,” if tech is broadly in a late-stage bubble. Doubtless the telecoms industry will advance whatever prevails in the stockmarket, though it remains to be seen exactly what Filtronic reaps from 5G.

Source: interactive investor (*) Past performance is not a guide to future performance

Revenue guidance understandably vague

In its end-August contract announcement, management said that Massive MIMO demand would follow customers’ normal buying cycles, hence there will be no further “new order” announcements unless outside the expected pattern or being material relative to expectations.

“There is no certainty that production orders will continue at the current rate” (i.e. two in a month), although such a caveat was likely insisted by advisers for prudent caution. Notably, the chief executive concluded how this current product is “the first offering from our Massive MIMO antenna range” describing the technology as “key to the densification of 4G/LTE networks and a cornerstone for future 5G networks.”

Quite rationally the market is factoring in hope value until Filtronic either beats or disappoints it, and it remains to be seen whether over £20 million on the market cap risks exuberance. As yet, the financial upshot is impossible to reliably predict. You have to decide your risk preference, whether to hold or manage a position, or with fresh money wait for current interest to ebb.

Filtronic - financial summary Broker estimates
year ended 31 May 2015 2016 2017 2018 2019 2020

Turnover (£ million) 17.5 13.6 35.4 24.0 24.7 25.5
IFRS3 pre-tax profit (£m) -11.0 -7.0 2.2 1.2
Normalised pre-tax profit (£m) -10.8 -6.5 2.1
Operating margin (%) -61.7 -47.7 4.8 5.0
IFRS3 earnings/share § -10.2 -3.2 1.5 0.6
Normalised earnings/share § -9.9 -2.9 1.5 0.6 0.6 0.6
Price/earnings multiple (x) 36.7 36.7 36.7
Cash flow/share § -3.6 -3.2 1.7
Capex/share § 0.4 0.3 0.4
Net tangible assets per share § 5.0 2.2 3.5 4.0
Source: Company REFS Past performance is not a guide to future performance

Broadly a ‘hold’ stance

A general stance for enterprising investors would be ‘hold’, for if this new series of antennas proves the industry standard in a substantial roll-out, there’s little point trying to out-guess volatility, just tuck Filtronic away.

A more conservative stance would be: you can’t be reasonably sure what financials will ensue or if technology will move on, so when presented with a chart spike use it to lock in some gains – taking out an element of initial cost.

An RNS cites Cannacord Genuity reducing its equity exposure from 10.5% to 9.2% on 10 September on behalf of discretionary clients. Who knows if Nasdaq might crater one day or Filtronic be challenged to grow into its market valuation.

Small beast to put hairs on your chest

More positively, the price/earnings (PE) ratio could drop nearer a standard growth multiple around 20 times if revenues ramp up, so if markets turn jittery then Filtronic is well worth watching as a fresh buy.

Mind the company’s long-term history has involved plenty of high hopes being dashed - as recently as 2013-15 the stock fell from an 80p range to below 5p. This goes with an industry of classic “creative destruction”. Filtronic is a small beast nowadays but can still put hairs on your chest. Hold.

*black lines show levels of previous technical support and resistance.


#1067

Funsmith…
XXXX
That is a good read Marksman thanks for posting .
Another who thinks its about Time .


#1068

This is a jam tomorrow company CLSU would you buy

Robert Vale, CEO of ClearStar, commented: “In our core growth streams of medical information services and direct sales, we saw a strong increase in revenue as we capitalised on our competitive-lead in product offering and our expanding brand awareness. This revenue growth, combined with a stable cost base, has enabled us to deliver our stated aim of translating higher revenue into EBITDA earnings. We also established new channels-to-market and implemented measures to strengthen our sales & marketing infrastructure, which are already helping to add to our pipeline. With good visibility over revenue and increasing interest in ClearStar’s services, especially for medical screening, we are confident of achieving full year 2018 revenue growth in line with market expectations and being EBITDA positive, and we expect to deliver accelerated revenue growth in 2019.”


#1069

@nonhebel11
No I’m not a buyer. Chart is ok. But im not in the mood at the mo.
A lot of my shares are stalling so a bit cautious.
This Brexit thing is becoming a difficulty for our shares.
And the trade war is getting worse.
And emerging markets currency crisis could lead to a short term volatility.
I have a lot of cash in my account, but just watching at the moment.


#1070

I’m not in the mood either to buy at the moment but if I was I might think of KNOS. Cash seems a good option till the world sorts out a bit (hoping it does or things for us lot will get bumpy).
Lorinnae.


#1071

Hi all, found this catchy article in The Motley Fool by Ian Peirce

Considering the FTSE 100 has only returned just north of 12% over the past five years, it’s no surprise that domestic investors are desperate for growth stocks to beat this pitiful performance from the LSE’s large-cap index.

Thankfully, there are two stellar small-caps I’ve got my eye on that are already thrashing the FTSE 100 and could continue to do so for a long time to come.

Dialing up growth in spades The first is £230m market-cap customer communications specialist IMI (LON:IMI) Mobile (LSE: IMO). The company helps major clients such as Vodafone (LON:VOD), Just Eat and Tesco (LON:TSCO) keep in touch with their millions of customers online and through text messages. That includes everything from sending discount offers to booking appointments and providing updates on parcel delivery schedules.

In the year to 31 March, the company’s revenue rocketed 46% higher to £111.4m, thanks 7% organic growth and bolt-on acquisitions. Thus far, these acquisitions have been used to both broaden the company’s suite of products and move into growth markets like the US, Canada and Asia.

While profits last year grew more slowly than revenue, with adjusted EBITDA up 17.4% to £13.4m, the market clearly thinks this strategy has merits. Over the past year, the company’s share price has increased 89% and I see good potential for this tremendous growth to continue.

For one, the company is finding great success in signing larger contracts with existing customers as well as moving into new markets, like healthcare via a contract with the NHS. Plus, with some 85% of its revenue last year recurring in nature, it boasts high revenue visibility, solid margins and positive cash flow – which together, with a net cash position at year-end, provides further firepower for acquisitions.

IMI Mobile is not cheap (at 24 times forward earnings) but with a great record of organic and inorganic growth and a management team that owns a significant stake in the business, I see plenty of reasons to expect good things from the company in the future.

Painting a pretty picture Another small-cap trouncing the FTSE 100 is cosmetics business Warpaint London (LSE: W7L). Since listing its shares in December 2016, their price has rocketed over 80%, well ahead of the meagre 5% return from the FTSE 100 over this period.

Half-year results released by the company this morning show why the market has so warmly embraced it. In the six months to June, sales rose 38.7% to £18.4m, thanks to strong like-for-like expansion of 7.3%, the acquisition of a competitor, and the purchase of its US distributor.

The acquisition of new brands pushed margins down during the period and adjusted operating profit of £2.8m was lower than the £3.1m notched up this time last year. However, the group made good progress on proforma margins. It should also benefit from rising margins again as it begins to sell these brands through its distribution network and cuts down on redundant costs.

Looking ahead, there’s great potential for the company as it benefits from fast-increasing demand for make-up products from young people, and pushes into massive markets such as the US and China.

At its current valuation of 17 times forward earnings, I think Warpaint London is attractively valued considering its record of growth, profitable nature, net cash position, high insider ownership, and small-but-growing 1.68% dividend yield.

Best Regards @ValueSeeker8


#1072

Hi Marksman.
Just an idea check the chart on IDP .


#1073

@Ripley94
The chart below is ok, worth watching. The 50 ma (red line) is rising which may be significant.
Thanks for the head up.
Dr M

https://charts.moneyam.com/Chart.aspx?Provider=EODIntra&Code=IDP&Size=700&Skin=BlackBlue&Type=2&Scale=0&Span=YEAR1&MA=50;200;&EMA=&OVER=&IND=VOLMA;AreaRSI;&XCycle=&XFormat=&Layout=2Line;Default;Price;HisDate&SV=0


#1074

My pleasure Marksman .
Well i am here to try and help others and not mislead , i actually got impatient and took a small profit couple of weeks back.
My mistake but pleased if others can use charts ect to make some gain .
I thought it must look good , ill point out when i see things like this.
Ripley .


#1075

EKT do you own / rising share down today Elektron Technology creates and develops products and services that Connect, Monitor and Control. The operational and financial resources of Bulgin, its established business allow it to invest in Checkit, an early stage high growth business that provides a real-time operations management system. In addition the Group owns a designer of ophthalmic screeners, Elektron Eye Technology.
Results today a long term buy I think “Strong double digit sales growth during the first half of the year is representative of the continuing multi-year transformation of our business. The Board retains its positive outlook for the medium to long term prospects of the Group.”


#1076

@Ripley94 IDP is covered by Small Caps Markets Report from Stockopedia this lunchtime. It’s rank is low at 17.
Take what you like out of this. I watch.


#1077

@nonhebel11
Yes I’ve held EKT for a long time now and in good profit. I continue to hold.


#1078

Never looked at the site , looked quickly ( do you pay £ 220 per year for it ? )
says its a "sucker stock " there was i regretting i’m out of it .
Are they just all share tipping sites .
Are they any good ? had a broker ring me month ago informing me RBW would fly ??
Hes been to uni studied and passed industry exams ?
Unfortunately i have found they are no better at it then me i haven’t studied investing at all just learnt through experiences.
I bought one today that i actually wanted to own since talking to my friends wise old father SAV , another sucker stock they say .
Ill be holding that one just like David suggested ( looks like he was correct with sxx )
ill let you know if there correct and its a sucker .


#1079

@Ripley94
No I’m not a subscriber to Stockopedia, just registered user for free. I get daily report by email on small caps. Very useful. Two writers there, Paul Scott and Graham Neary. Worth it and it’s free and no hassle.

People who subscribe to Stockopedia like it very much because of many things including their stock ranking. I have no experience with this and therefore no opinion. But it is good I’m sure.


#1080

@nonhebel11
Leb. The EKT chart below. I bought a ekt a year ago as a “rising” share. It continued to rise so I bought quite a few more shares. My purchase price on my large holding is 25.9p ie up 70%. This has been a success story for me.
Today it’s down 8%. The outlook is good so I keep going. DYOR
Dr M

https://charts.moneyam.com/Chart.aspx?Provider=EODIntra&Code=EKT&Size=700&Skin=BlackBlue&Type=2&Scale=0&Span=YEAR1&MA=50;200;&EMA=&OVER=&IND=VOLMA;AreaRSI;&XCycle=&XFormat=&Layout=2Line;Default;Price;HisDate&SV=0