Tuesday, June 26, 2012

Tuesday Morning Review

Good morning! Euch, terrible night's sleep, only managed about 3 hours, my mind was whirring, thinking about all sorts of things. So annoying when you can't shut down for the night.

Futures are indicating a benign start, with the FTSE 100 up 12 to 5463 after yesterday's miserable performance. This Eurozone crisis just seems to grind on forever, although it surely cannot be long now until a climax? The sooner the better - I foresee potentially massive upside on small caps once the fog has cleared, and growth resumed.

Only time to review 5 or 6 RNSs each morning, these ones caught my eye;

Toumaz Microsystems (TMZ) has put out a positive-sounding RNS about "multiple major design wins" for its "system on chip" semiconductors - which it needs to in order to justify a £74m mkt cap, despite only £4m turnover last year, and more than that in continuous losses every year. A friend I respect tells me that it's a very exciting company - which it needs to be, with figures like that! Not for me at such a racy price.

A lot of my friends will be excited this morning, as Lo-Q (LOQ) puts out its interim results. It's an impressive little company that provides virtual queuing systems for theme parks. Most of these are presumably closed over the winter, judging from their results, which show losses and tiny turnover (although up on previous year). Surely they could choose a year-end date which splits the year into two roughly equal halves, rather than have almost all their turnover in one half, and negligible amounts in another?

The outlook statement is therefore of all importance, and it sounds OK - with a reassurance of in-line expectations.
Share price at 304p looks up with events (if not maybe a bit toppy?) given that it's 22 times forecast earnings, and no dividend seems to have ever been paid, and none is likely in the medium term, per this morning's RNS.

Two companies whose shares continuously defy gravity, and any kind of logic, also report this morning - Ocado and Carpetright. Sooner or later shorters will clean up on both these massively overpriced shares.

Ocado's figures are laughable. It barely scraped a profit before tax of £0.2m for the half year (stated as 24 weeks, am I going mad?! Why not 26 weeks?) on turnover of £332m. Net debt grew several fold to £71m. The mkt cap is a nonsensical £600m at 108p a share. This one is just an accident waiting to happen, so stand well clear! Forecast PER for next year is 165. Enough said.

To continue the insanity theme, I'm having a good laugh at Carpetright (CPR) figures for the 52 weeks to 28 April 2012. Absolutely dreadful figures, with underlying profit falling from £16.9m to £4.0m, or 4.5p a share.
So have a guess what the share price is? 50p would look about right to me. No, they are 653p, or a mkt cap of £452m! Total insanity.

Admittedly, net debt has been reduced greatly from £66m to £19m, on the back of store sale & leasebacks. Outlook sounds unexciting. When will the bubble eventually burst? Who knows, but again my view is to stand well clear, or be short (which I'm not at the moment).

They say things always come in threes, and sure enough we have a third joke company announcement, this time from perpetual jam tomorrow Earthport (EPO). A partnership in Singapore has been announced. Big deal, or rather it probably won't be, like all the other deals they've announced over the years. Earthport just manages £2m turnover every year, with usually about £5m losses. Wave after wave of mug investors put more cash into it, and so the fun carries on.

Allocate Software (ALL) has put out a positive-sounding, in line trading update. At 72p the share price is on a forecast PER of just over 10, so looks good value - worth a further look. Talks of continued growth in today's RNS. I notice that shrewdies Hargreave Hale hold about 10%, a good sign.

That's all I have time for before the market open. Hope you have a good day!

1 comment:

  1. Hi Paul,

    Questor (Daily Telegraph) covered Carpetright today:

    "This is baffling. The shares are as expensive as a Persian rug, trading on a forward price/earnings multiple of 72 times, which falls to shag-pile thick 45 times in 2014. And the once generous dividend has been cut to nothing."


    Cheers, Anthony.