Friday Morning Review

Good morning! It should be a good day too, as there was a strong rally in the last couple of hours of US trading last night, plus another big rise in the futures overnight, so the FTSE100 is forecast to open UP 110 points at 5598! This seems to be on some optimism about the EZ crisis possibly now coming to the end game - talk of a breakthrough overnight.


Certainly my feeling is that there is so much deep value out there in small caps, that it's better to be long of the cheapest stocks, whilst keeping some powder dry in case there is a EZ melt-down to pick up even cheaper bargains.
Although having said that, I'm fully invested, as the value is so good in small caps, I'm prepared to look through & past the EZ crisis - which one way or another has to get sorted out.


Loads of results this morning. Here are the ones that caught my eye;


Betfair (BET) £761m mkt cap at 735p/share, reports decent results for y/e 30 April 2012. Underlying EPS is up 21% to 41.1p. Shares are priced at 735p, so that's a PER of 17.9.
Divi is up 19% to 10.2% for the full year, for a yield of an unexciting 1.4%.
Good current year trading too, revenue up 18% so far.
Balance sheet looks OK at a quick glance. Depreciation & amortisation charges quite high, and internally generated capex needs scrutiny.
Shares look priced about right to me, perhaps 20% upside, so nothing too exciting.


Housebuilder results are always interesting, for a view on the overall health of the economy & consumer confidence. Berkeley Group (BKG) reports this morning. At 1365p it is capitalised at £1,792m.


The figures look remarkably good. Revenues are up 40% and pre-exceptional operating profit is up 44% at £196m. NAV/share is 839p, so the share price seems to factor in quite a lot of future profit.


They refer to healthy demand in London & the S.E. from British and overseas buyers. All very well, but in my view it's an artificial market, with ultra-low interest rates propping up prices which are now out of reach for ordinary people. We are becoming a less & less equal country, which can only lead to serious problems in the future. If someone as right-wing as me is worried about this, then there really are big problems.


Berkeley Group seems over-priced to me, given the serious risk of a housing market correction once interest rates normalise. Where is the upside, when it's trading on a high PER, and a considerable premium to net assets?


Very brief, in-line trading statement from Clarkson (CKN).
It's on a forecast PER of about 11, probably priced about right.


Lots of other results, but all in companies I've never heard of!


Have a good day & a pleasant weekend, and thanks for visiting, I hope these morning reports are useful. I'll be doing some individual stock analysis too soon, but have just been busy doing other things this week.


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I shall probably be buying more HOME this morning at the open - it's fallen all the way back to 80p, despite the recent pivotal trading statement which showed that sales have stabilised at Argos, and confirming profits for the year. The business is in for free, since the mkt cap is only equal to their storecard debtor book + net cash. There is no debt. The pension fund deficit is equal to freehold property. So a real copper-bottomed opportunity, and it's the UK's 2nd largest internet retailer. I will be going to the AGM next week, so will publish a report here afterwards.


Regards, Paul.