I commented a few days back with the sub-9x forward P/E stocks. I’ve done some additional filtering. This is not perfect, I concede, as it’s a bit shorthand. But ahead of the bank holiday I have done a few additional things;
1) I’ve tightened the market cap range to £25m < X < £400m
2) I’ve crudely excluded any stocks whose last reported net cash or debt position that pushes the P/E above 10x (a bit of a buffer against the 9x initial constraint). For example, Stelrad is on 8.8x FY2 earnings, but at its last report it had £60m of debt before lease liabilities on a market cap of £177m. I am not making any interest charge adjustments for simplicities sake as it’s too complicated for a short exercise, but if I gross up 8.8x P/E for an EV of £236m then the P/E would actually be 11.7x, above the 9x threshold. So this is a quasi balance sheet adjusted set of numbers now. This rules out a lot of the names
3) Each of these stocks that is doing active buybacks now has the word buyback at the end of the row. And if there is a big (>15%) net cash position versus the market cap, that is highlighted. Significant ex-leases net debt is highlighted (>35%)
4) I have added the team’s colour coding at the end
So this is now a short 33 names. DYOR beyond this, as this is very shorthand work and simplified across the board. No surprise that stuff like Reach trades very low. I also note that some stocks have jumped out of the <9x range already, such as Zotefoams (after their good trading update) and Focusrite.
1. Macfarlane Group - Packaging distributor - 8.8x – BUYBACK - GREEN
2. Churchill China - Ceramics manufacturing - 8.8x – 17% NET CASH - GREEN
Ondo tech - they position the patents as important, but if you read the ones they own that isn't the main value. The clip if I remember correctly. The main technical one is old and owned by someone else (temperature change indicating a leak) . It is also very easy to copy for a few pence when it expires. I inadvertently created one while doing something else!
The value in this is the relationship building and business model. I think it needs insurance companies to see the benefits and deploy it for free, because it is expensive as a home owner purchase. However it is a lot to absorb into an annual policy price.
Homeserve who built the product couldn't make it work. I think it is the new CEO who was in insurance and did the RTO.
I'm waiting for a big drop in price or amazing figures to show the financial model is sustainable.
A 4% shareholder half their stake recently. Some warrants added a bit of dilution and post exercise sales I suspect.
Firstly the price fall you reference today was an anomaly. It didn’t actually fall at all. For some reason it was incorrectly shown at close last night at 30p when it wasn’t. So actually slightly up today.
The second thing is the fall from recent highs. It’s just lack of news. The stock was full of impatient “to the moon and beyond….” Types and with the lack of constant news flow to feed them the stock drifts. In my opinion you don’t buy this to watch it go up and down 30%. It is either going to be the go to self install leak detector solution in the U.S. and potentially RoW in which case it will be worth multiples of current cap or it won’t. At present I’d suggest following a lot of US insurer contract wins it is going through a period of gestation. Assuming the take up is going ok then I’d expect this to recover as the numbers come through. I suppose investors with good gains have been top slicing too.
Sound is MUCH better for me Paul. I don't think I'm hard of hearing but enjoy listening on my 'phone without headphones whilst out on my cross country walk or working in the garden.
As you say, people can always turn the volume down but maximum, on my phone at least, was never quite loud enough.
Thanks Laughton! I think the mic settings are about right now - loud enough to hear in a noisy background (with headphones), but sound not distorted. It's a bit tricky as I move about a lot, with different equipment in each place. Trial & error! Best wishes, Paul.
I commented a few days back with the sub-9x forward P/E stocks. I’ve done some additional filtering. This is not perfect, I concede, as it’s a bit shorthand. But ahead of the bank holiday I have done a few additional things;
1) I’ve tightened the market cap range to £25m < X < £400m
2) I’ve crudely excluded any stocks whose last reported net cash or debt position that pushes the P/E above 10x (a bit of a buffer against the 9x initial constraint). For example, Stelrad is on 8.8x FY2 earnings, but at its last report it had £60m of debt before lease liabilities on a market cap of £177m. I am not making any interest charge adjustments for simplicities sake as it’s too complicated for a short exercise, but if I gross up 8.8x P/E for an EV of £236m then the P/E would actually be 11.7x, above the 9x threshold. So this is a quasi balance sheet adjusted set of numbers now. This rules out a lot of the names
3) Each of these stocks that is doing active buybacks now has the word buyback at the end of the row. And if there is a big (>15%) net cash position versus the market cap, that is highlighted. Significant ex-leases net debt is highlighted (>35%)
4) I have added the team’s colour coding at the end
So this is now a short 33 names. DYOR beyond this, as this is very shorthand work and simplified across the board. No surprise that stuff like Reach trades very low. I also note that some stocks have jumped out of the <9x range already, such as Zotefoams (after their good trading update) and Focusrite.
1. Macfarlane Group - Packaging distributor - 8.8x – BUYBACK - GREEN
2. Churchill China - Ceramics manufacturing - 8.8x – 17% NET CASH - GREEN
3. Billington Holdings - Steel manufacturer - 8.7x – 43% NET CASH – AMBER
4. Supreme - Vapes / other distributor - 8.6x - AMBER
5. Van Elle Holdings - Construction - 8.5x - GREEN
6. Epwin - Building products - 8.4x – BUYBACK - GREEN
7. Costain - Construction - 8.2x – 54% NET CASH - GREEN
8. Topps Tiles - Building products - 8.0x – AMBER/GREEN
9. Pebble Group – Promotional materials – 7.8x – BUYBACK – 31% NET CASH – AMBER/GREEN
10. Brickability - Building products – 7.8x - GREEN
11. Staffline - Recruiting – 7.7x – BUYBACK – 18% NET CASH - AMBER
12. Norcros - Building products – 7.6x - GREEN
13. M&C Saatchi - Marketing – 7.5x – AMBER/GREEN
14. NWF Group - Fuels, feeds etc distributor - 7.4x – AMBER/GREEN
15. Yu Group - Utilities - 7.2x – 30% NET CASH - AMBER
16. Sanderson Design Group - Fabrics/Wallpaper - 6.9x – AMBER/GREEN
17. McBride - Whitelabel household products - 6.7x – LARGE NET DEBT - AMBER
18. Ultimate Products - Value, branded consumer goods - 6.0x – BUYBACK - AMBER
19. Eurocell - Building products - 6.0x – BUYBACK – AMBER/GREEN
20. Card Factory - Card retailer - 5.9x - GREEN
21. Smiths News - Newspaper distributor - 5.9x - AMBER
22. Inspecs Group - Eyewear manufacturer/distributor - 5.8x – LARGE NET DEBT - NONE
23. Ebiquity - Marketing – 5.7x – LARGE NET DEBT - AMBER
24. Knights Group – Professional Services – 5.6x – LARGE NET DEBT - AMBER
25. Team Internet – Advertising and domains – 5.6x – BUYBACK – LARGE NET DEBT – AMBER/RED
26. TT Electronics – Electronics manufacturing – 5.4x – LARGE NET DEBT – AMBER/RED
27. RWS Holdings – Translation services – 5.1x – AMBER/GREEN
28. STV Group – Media – 4.8x – LARGE NET DEBT - AMBER
29. Next 15 Group – Media – 4.3x – LARGE NET DEBT (including contingent consideration) - AMBER
30. Mission Group – Media – 4.3x – BUYBACK – LARGE NET DEBT - AMBER
31. S4 Capital – Media – 4.0x – LARGE NET DEBT – AMBER/RED
32. Capita – Outsourced services – 4.0x – AMBER/GREEN
33. Reach – Newspapers/Media – 3.4x - GREEN
Eric
General ‘wisdom’ seems to be to wait 2-3 days after a profit warning until you buy to give a chance to most sellers to get out
Ondo tech - they position the patents as important, but if you read the ones they own that isn't the main value. The clip if I remember correctly. The main technical one is old and owned by someone else (temperature change indicating a leak) . It is also very easy to copy for a few pence when it expires. I inadvertently created one while doing something else!
The value in this is the relationship building and business model. I think it needs insurance companies to see the benefits and deploy it for free, because it is expensive as a home owner purchase. However it is a lot to absorb into an annual policy price.
Homeserve who built the product couldn't make it work. I think it is the new CEO who was in insurance and did the RTO.
I'm waiting for a big drop in price or amazing figures to show the financial model is sustainable.
A 4% shareholder half their stake recently. Some warrants added a bit of dilution and post exercise sales I suspect.
Would agree, the sound was absolutely fine
Hi Paul - you asked re Ondo
Firstly the price fall you reference today was an anomaly. It didn’t actually fall at all. For some reason it was incorrectly shown at close last night at 30p when it wasn’t. So actually slightly up today.
The second thing is the fall from recent highs. It’s just lack of news. The stock was full of impatient “to the moon and beyond….” Types and with the lack of constant news flow to feed them the stock drifts. In my opinion you don’t buy this to watch it go up and down 30%. It is either going to be the go to self install leak detector solution in the U.S. and potentially RoW in which case it will be worth multiples of current cap or it won’t. At present I’d suggest following a lot of US insurer contract wins it is going through a period of gestation. Assuming the take up is going ok then I’d expect this to recover as the numbers come through. I suppose investors with good gains have been top slicing too.
Sound is MUCH better for me Paul. I don't think I'm hard of hearing but enjoy listening on my 'phone without headphones whilst out on my cross country walk or working in the garden.
As you say, people can always turn the volume down but maximum, on my phone at least, was never quite loud enough.
Thanks Laughton! I think the mic settings are about right now - loud enough to hear in a noisy background (with headphones), but sound not distorted. It's a bit tricky as I move about a lot, with different equipment in each place. Trial & error! Best wishes, Paul.