Wednesday, October 17, 2012

Wed 17 Oct - 888, SDY, TNO, BEG, VTU

Good afternoon! I'm thrilled with the increase in readership here. Yesterday was the best day ever, with almost 2,000 readers! Great stuff, the more the merrier, it certainly motivates me to keep going, knowing that people find my posts interesting.

Also a big thank you to those of you who have already donated to my chosen charities in advance of my Half Marathon in Feb 2013 (see box to the right --->). Your donations are hugely appreciated, thanks so much! Keep 'em coming, but we're already 5% of the way towards my target, not a bad start!

Comments are now open - at the request of a reader, I've removed the restrictions on posting comments after all posts here, so comment away if you have something useful to add!

uk-analyst.com - this is an excellent end-of-day round-up of stock market news service (free), and if you don't already subscribe to it, it comes highly recommended by me. You get the occasional ad/promotion emailed to you by them also, but that's a small price to pay for great quality free content.

I only recommend things that I use, and are genuinely good. They haven't paid me anything to say nice things about them, it's just an excellent service, so worthy of a mention.

OK, on to today's news.

Kicking myself for having sold 888 (888) in a margin-related incident a week or two ago, as I reported on it being a good company here not long ago (use search function on right hand side of this page to search for any old articles).
They've issued a positive Q3 trading statement, saying that "... we now expect EBITDA for the full year to be significantly ahead of current market forecasts".

I just cannot bring myself to buy back in 20% higher than I sold at recently, but the shares could well be worth another look even after today's 10% rise to 102p, as existing broker consensus is for 6.9 EPS this year, so significantly above that must be in the 8-10p range I would guess. So a PER probably not much above 10 looks pretty tempting.

I see that Speedy Hire (SDY) are following the latest fashion for giving a trading update a heading, which is supposed to tell you how to feel about it!
So they title their RNS, "Trading Update - Maintaining Momentum"!

The market has treated this PR spin with the contempt it deserves, and marked the shares down a penny to 30p. That's a mkt cap of £155m, up 50% in the last 12 months, not bad.

They do however say that they are "confident of meeting ... expectations for the financial year".
At broker consensus the shares are on a PER of about 13, with an unremarkable 1.8% yield. I can't see much value there, unless you factor in a cyclical recovery in earnings.

It amazes me how incompetent firms of accountants often are at managing their own affairs. RSM Tenon (TNO) is the latest in a series of such firms which expand too fast, over-gear, and then end up teetering on the brink of insolvency - not exactly a great advertisement for their accountancy & business advisory services! Mind you, having trained at a chartered accountancy firm myself (Price Waterhouse Coopers), I know that they tend to be full of bookworms, who've never actually run a real business in their lives. So quite why their advice is so highly valued, I have no idea.

Vantis of course went bust in 2010, and there have been others, but I cannot remember the names.

RSM Tenon state that the continued support of their bankers is "critical", hence to me that makes the shares uninvestable. Debt has increased further to £78m.

I remain a shareholder in Begbies Traynor (BEG), which is a specialist insolvency accountant, and is well run, also paying a generous dividend, and with debt under control. So I'll stick with that one.

My beief that the UK economy is coming out of Recession is reinforced by improved labour market figures today. Vertu Motors (VTU) interim results also reflect an improving car market, with an excellent 7.9% LFL new retail volume increase. Pretty impressive. They indicate that full year results will be ahead of expectations.

So I'm increasingly feeling that now is the time to be buying bombed out cyclical shares, which will benefit most from an improving economy.

Right, that's it for today. Apologies for lateness again (I seem to say that every day!).

Regards, Paul.

4 comments:

  1. Hi Paul any chance you could run your finger over JKX? They released a pretty positive IMS yesterday after having a bad couple of months. I think the company could be on the turn!

    Thanks, Professor X

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    Replies
    1. Hi Prof!

      I don't normally cover Resources sector shares, but had a very quick look at JKX and it does look very cheap on a PER basis.
      Although it seems to be based in Russia, so personally I wouldn't invest in anything in Russia or China - too dodgy.
      No divis either.
      But that ultra low PER does look tempting!
      Regards, Paul.

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  2. Thanks for the reply Paul. Yes it is extremely cheap even on current production alone. This is expected tin increase by at least 50% over the coming months making it even more appealing. It also has operations in Hungary, Bulgaria and the Ukraine as well as the Russian field which is the one which could become quite exciting. The chart is starting to look promising as well.

    Big thanks too you for the heads up on TNI a while back. I owe you a drink or two.

    Professor X

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  3. Loving the blog.

    Is there any way to order the search results, e.g. by date?

    Also does the Professor always include a kiss when he writes to you? :-)

    Keep up the good work dahlink Mwah!

    Phil

    ReplyDelete