Friday, November 2, 2012

Fri 2 Nov - no news today

Good afternoon. Sorry to report that there are literally no small cap results this morning which fit my criteria (i.e. >£10m & <£200m mkt cap, no resources, financial or biotech sectors, UK companies only).

On a more positive note, I see we've just gone over 100,000 page views here! That's absolutely phenomenal, I'm delighted my Blog has become so popular. Also I had a record month for ad revenues in October, and made £107.
So thanks to everyone who took an occasional interest in the ads. It may not be a fortune, but every little helps - it pays my mobile phone bill, and funds a couple of nights out at the Pub each month!

Have a smashing weekend & see you on Monday.

Regards, Paul.

Thursday, November 1, 2012

Thu 1 Nov - no report today

No report today, as I've been through the list of RNS results, and there is literally nothing that fits my criteria! Never mind, see you tomorrow.

Regards, Paul.

Wednesday, October 31, 2012

Weds 31 Oct - TRCS, IND, SPA, VLX, LOQ, SPA

Firstly, I'm pleased to announce that I've linked up with who are syndicating my content, which will now appear on their Home page, so a warm welcome to our new readers from there.

Also just a quick reminder that this is absolutely NOT a share tipping site, so nothing contained here is ever financial advice. It's just a place for discussion of small caps which interest me. The mantra here is Do Your Own Research! (DYOR).

Shares in Tracsis (TRCS) have performed very well, and am kicking myself for not having bought any when it was recommended to me by a friend some time ago. They are a small software company, supplying mainly systems to manage public transport, especially trains. Serial out-performing trading statements have brought it a loyal investor following & strong share price rises.

The shares are up 10p today to 143p, a mkt cap of £35.6m.
Growth is stellar, with turnover up 112% to £8.7m (only a quarter of the mkt cap though), and adj EBITDA up 164% to £3.3m.

Cash balances are very strong, up £2.9m to £7.6m.
In fact it has a cracking balance sheet, with current assets of £9.1m (incl. £7.6m in cash), and just £3.4m total creditors. So that gives them about £5-6m in surplus cash that could be used for acquisitions or divis/buybacks.

Stingy dividend though, only 0.55p for the full year.

The outlook sounds buoyant, but I wonder how sustainable these figures are? I don't know how much of the revenue is recurring, is there not a risk that at some point the large new contracts could dry up, and profits might vanish?

The bottom line is this. If profits growth can be maintained, then with 10p EPS in the bag for y/e 31 July 2012, the shares are cheap on a PER of 14.
OR, if those profits are unsustainable in the long run, then the company could be set for a fall. On balance I don't want to take the risk, so will pass on this one. But I can see the logic for holding, if you know more about the business than I do, and are convinced it can continue growing.

Note that IndigoVision (IND) - which is my largest market position - has gone ex-divi today, hence the 85p drop. A 5p final, and 70p special divi will both be paid on 30 Nov, if they are (as expected) approved at the AGM on 8 Nov.

To my mind, there is no way the prudent management team would be prepared to give away substantially all of the cash pile that they've carefully built up over 5 years, unless the company is trading its socks off.

Therefore I am expecting a positive AGM trading statement next week. I might well top-up with some more at 410p, having managed to buy a couple of cheap large blocks of stock at below market price yesterday for friends.

I'm surprised they've dropped by more than the divi amount today, but maybe the 17% fall due to going ex-divi spooked some small holders into selling, not realising that it was the divi effect accounting for 75p of the fall? Who knows.

It's back from the dead day, with CPP Group rebounding on news of a possible bid. The shares have risen to 28p, after recent lows of well below 10p.
Dismal (for investors, if not management) CD/DVD distributor Mbl Group (MUBL) has also recovered somewhat, up 21% to 14p today.
Shaft Sinkers (SHFT) is up 8% to 41p, on news that operations have resumed.
Finally, joke stock Pursuit Dynamics is trying to tap gullible investors yet again for more money - this time they want £6m at 3p a share. Wasn't long ago that this perpetual hype machine was over 600p a share.

So having veered away from that last paragraph using my bargepole, let's get back to some decent companies.

Volex (VLX) might be worth a look. They make electrical cables in the Far East, but it'a s UK company. They've had a lousy H1, to 30 Sept, reported today. But the outlook confirms full year revised guidance, and sounds positive for next year. So I'm tempted to dig a bit deeper here, as the fwd PER is showing as about 6, and there's minimal net debt. Could be a nice turnaround story? I shall report back if it floats my boat after more research.

Virtual queuing systems (for theme parks) provider, Lo-Q (LOQ) reports with an in line (haha, geddit?!) trading statement. It's delivered very well indeed, and well done to all my friends who've made a packet backing this one, but with the PER up in the mid-20s, it's difficult to see much value there in the short term anyway.

Had a quick glance at interims from 1Spatial (SPA) a management consultancy & software business. They just about managed to scrape into the black at the EBITDA level, so a £14m mkt cap doesn't look interesting to me.

OK that's it for today. Thank you again for all the kind donations to my charity fund-raising efforts in advance of my first ever Half Marathon attempt in Feb 2013. The training runs are going really well, and managed my longest & quickest to date last weekend, running 7.5 miles in 1hr 21mins. Not too bad, considering I'm 44, and 2 stone overweight, so not built for running! Your donations are certainly spurring me on, thanks! If you would like to show some support, please donate via this link to my JustGiving page.

Regards, Paul.

(of the shares mentioned above, Paul holds a long position in IndigoVision only, and no short positions)

Tuesday, October 30, 2012

Tue 30 Oct - no report today, sorry

Hi folks! To save you looking back, this is just a short message to say that I'm too busy to write a report today, and have had a quick skim of the RNS, and don't see anything of particular interest. So see you tomorrow.

Regards, Paul.

Monday, October 29, 2012


Good afternoon. Lots of discussion about Trinity Mirror (TNI) over the weekend on the bulletin boards. The shares have bounced this morning, up 7% to 54p, possibly as a result of bottom fishing from people who believe the hacking situation may not be as bad as feared. Also there is an announcement this morning that TNI are in discussions about taking a minority stake in a new company which will own the regional newspapers of Northcliffe Media (currently part of the Daily Mail group). As long as they don't overpay, then this should be positive as the regional newspapers market consolidates.

As an aside, there have been one or two really silly comments on some bulletin boards concerning my posts & TNI. To emphasise, that this is NOT a share tipping website. It's just a free Blog, where I air my opinions on shares of interest. Nothing written here is ever a recommendation, and readers invest at their own risk & must do their own research, and make their own investment decisions. I don't ask, and don't want people to blindly follow me in & out of shares. The emphasis is to DYOR!

I never advise anyone to do anything, let's be 100% clear about that. And if it becomes too much hassle, then I'll just close this Blog down. The one criticism that I do accept, is that perhaps my analysis didn't put enough emphasis on the risks from phone hacking. However, the bottom line is that the shares are still more than double the entry price flagged up here a few months ago.

The market has reacted positively to a trading statement from internet video company, Blinkx (BLNX), with the shares up 8p to 60p, valuing it at a hefty £217m.

Revenues are ahead of expectations for H1, at $80m, but this only delivers $2.4 profit before intangibles & one-offs. They expect H2 to be about the same as H1. I know growth companies always look expensive during the growth phase, but I'm not convinced by this company. Their product just seems to be an inferior version of YouTube, but perhaps I've missed something?

A company in which I hold shares, Staffline (STAF) announces another acquisition - of a company called Select Appointments Ltd, which operates franchised-based recruitment of white-collar workers (whereas STAF is mainly for blue-collar). No details are given as to the cost, which is being met through the existing bank facility. It is expected to be earnings neutral in the first year, and earnings enhancing thereafter.

Interestingly, STAF say they plan on tripling the number of franchises in the acquired company over the next 3 years. This reinforces my view of STAF as a well-managed group, with ambitious management. It's a long-term hold in my portfolio, and hopefully I can persuade their CEO to do a MelloCast video interview with myself & Dave Stredder. We are being highly selective about who we want to interview, and Staffline is at the top of my wish list! I think it would be great to get their message out to investors through a Mellocast video, but it's up to them.

I see that Brewins are changing their name yet again, to the even more silly "N+1 Singer". Sounds like some backstage instructions from X-Factor. What was wrong with "Brewin Dolphin"? It was a nice name that everyone could remember & was used to. Branding can go haywire sometimes, what on earth were they thinking?

GB Group (GBG) puts out an in line trading statement. I held shares in this years ago, and am wishing I'd kept them, as they've shot up in the last couple of years. At 93p the mkt cap is now £101m, which is starting to look pretty warm for a forecast turnover of £40m this year, with forecast profit of £5.1m. That works out at a PER of 21 times broker consensus. Difficult to see much upside from that price.

Tristel (TSTL) shares are up 2p to 38p (£15.4m mkt cap) on the back of results for y/e 30 Jun 2012 which are "ahead of adjusted market expectations".
Adjusted EPS is up 39% to 1.77p, so that puts them on a hefty PER of 21 times.
I don't know anything about their products or markets, so can't really comment on whether the growth is likely to continue or not. The valuation is too rich for me to spend the time finding out.

The market also likes results from Lok'n Store (LOK), up 5p to 120p (for a £30m mkt cap). The divi is up 67% to 5p, which looks pretty good. Quite a big discount to adjusted NAV of 229p per share. Might be worth a deeper look, possibly? I don't have time today, but if anyone else fancies doing some research on it, would be interested to hear what you think.

That's it for today, have a good day everyone!
Regards, Paul.