At least is it a screaming buy for the long term buy and hold investor? There is a case to be made for saying that this is one company which has an ace up its sleeve which could see the share price go a lot higher if ever the value of its 45% share of Verizon Wireless is unleashed.
This is a company that back in the tech boom days, when it was seen as a more of a growth story, did see its share price get to around the 400p level, but that was back in 2000. Since then it hasn't really got close to that price level and as it is now seen as more of a mature company, as such it's not unreasonable to expect to see its price based on a more sensible valuation of its fundamentals. However, Vodafone has one big advantage which in terms of its potential share price appears to be totally overlooked and that is the share of Verizon Wireless that it owes.
The Vodafone share price has recovered recently partly on the back of some deal or takeover being on the cards with Verizon for Vodafone's stake in the company. It is clear that the two companies find it difficult to live in harmony with each other and that both sides might just be edging towards some kind of mega deal that would, or at least should have a dramatic effect on Vodafone's share price.
The key fact seems to be this. Vodafone is valued at a market cap of around £92 billion, but some estimates put its 45% share of Verizon at more than that. In other words, Vodafone's current valuation seems to totally discount the Verizon share, which is quite remarkable when you think about it. This is effectively what US hedge fund manager David Einhorn said back in January when he increased his stake in Vodafone.
http://www.businessinsider.com/greenlights-david-einhorn-bullish-on-vodafone-2013-1
In the meantime Vodafone will no doubt continue to pick up a sizeable yearly dividend from Verizon until the two parties decide what they are going to do. Until that happens its clear that Vodafone is holding a strong hand with its 45% stake, a potential £90+ billion of value which the market seems to be ignoring.
Update 03/04/13;
Thursday 28 March 2013
Monday 25 March 2013
Kentz Corp comes up with the goods
Kentz Corp was previously mentioned in these posts and reported impressive numbers to the market today. Initially the price surged around 4% only to fall back as the day went on as the market decided that concerns about Cyprus and Italy put financial fears back on the agenda. Despite this the shares finished around 2% up. Still, Kentz did more than what the market was expected and still looks value compared to others in the sector.
Kentz Corporation reported a 32 per cent rise in annual pre-tax profits as the engineering and construction group scored new contracts and expanded its operations.http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?csi=1168947&action=news&story_id=20781854
Profit before tax for the year to the end of December 2012 came to $104.8m, up from $79.4m in 2011.
Revenues jumped 6.0% year-on-year to $1.56bn, driven by the award of three technical support services contacts in Iraq.
Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 22% to $118.5m.
"We have ended 2012 with confidence that our future outlook continues to be positive," said Chief Executive Officer Christian Brown.
Video market round up for the week ending 22nd March 2013
A week ending round up of the markets from Steve Briggs YouTube channel. Included this week is a look at the UK mining sector.
Links:
Links:
Steve's YouTube site http://www.youtube.com/user/sjb5555.
Useful charts and analysis can also be found at http://www.flickr.com/photos/stevebriggspics/
Useful charts and analysis can also be found at http://www.flickr.com/photos/stevebriggspics/
Thursday 21 March 2013
32Red - Final Results
32Red was first mentioned here when the share price was around 43-44p, since then it has been a steady riser to around 57p on the expectation that it would probably deliver good results in its final report. Well today we got those good results.
Certainly looks like a decent growth story in the sector and while the fundamentals now look a little stretched from a few months ago, the added attraction here is that it may eventually attract takeover attention. The numbers still look pretty good though.
The gambling sector is not everyone's idea of a good investment, but for those who don't object on morality grounds, 32Red looks a good bet. As always DYOR.
Update:
Just read that Naked Trader Robbie Burns is a fan of this company, he mentions it in his latest update and also talks about how nice it would be if only it could be put into an ISA. As an AIM stock the Government is still in consultation mode on this change and yesterday's budget made no reference to anything happening this year.
http://www.digitallook.com/news/rns/20774871-134513/TTR-Final_Results_htmlCommenting on the results Ed Ware, Chief Executive Officer, said:"The Company has enjoyed another year of considerable progress thanks to the focus and drive of the 32Red team. Not only have we delivered our third successive year of record results in 2012, but we have also successfully launched the 32Red brand in the newly regulated Italian market. Our strategy of increased investment in marketing is delivering strong levels of new player recruitment."This year has started strongly and we are confident of further progress in 2013, both financially and operationally, as we continue to grow the 32Red brand in regulated markets"
Certainly looks like a decent growth story in the sector and while the fundamentals now look a little stretched from a few months ago, the added attraction here is that it may eventually attract takeover attention. The numbers still look pretty good though.
The gambling sector is not everyone's idea of a good investment, but for those who don't object on morality grounds, 32Red looks a good bet. As always DYOR.
Update:
Just read that Naked Trader Robbie Burns is a fan of this company, he mentions it in his latest update and also talks about how nice it would be if only it could be put into an ISA. As an AIM stock the Government is still in consultation mode on this change and yesterday's budget made no reference to anything happening this year.
For example just recently as those who came to the last two seminars know I was keen on 32 Red (TTR) - results are good but mainly I would hope there is a good chance of it getting bought out by one of the main bookmakers.http://www.nakedtrader.co.uk/
I bought them up mainly for my pension as AIM stocks are allowed in there and got a nice lot at 41 and at 45, and a few more last week.
However as they aren't very liquid IG wouldn't let me have many although lucky for me spreadex did and I built a nice stake with them.
But.. if I could have put them in an ISA I would already be in a very nice tax free profit. So just one example this new freedom to put AIM into ISAs will give me. It reports tomorrow and it could be a down day on a sell on the news thing but I'd be tempted to buy more on any weakness.
Wednesday 20 March 2013
UK Budget update 3 - Countrywide IPO
Well, Countrywide the estate agent picked a good first day to float on the market, or perhaps they knew something?
"According to Bloomberg, Countrywide shares gained 47 to 397p after being priced on Tuesday at 350p, the top of the initial public offering range.
Dealers chased Countrywide higher amid hopes that the company – whose brands include Bairstow Eves, Churchills and Hamptons International – will benefit from an increase in the volume of house sales following the Budget."http://www.telegraph.co.uk/finance/markets/marketreport/9944475/Countrywide-shares-brighten-up-a-grey-day-as-Budget-renews-optimism.html
UK Budget update 2 - Shale gas and IGAS Energy
The UK Government appears committed to spending and offering tax breaks to companies developing sources of alternative energy.
One company to see its share price rise on the back of this today is IGAS Energy. It may well be worth investigating such opportunities further while also recognizing that there will always be a bigger risk attached to them because they are the blue sky type opportunities within their sector.
http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?username=&ac=&csi=112867
Chancellor George Osborne said in his annual budget announcement he will introduce a new gas field tax allowance for shale gas, an industry that he expects can help kick-start Britain's stagnant economy.
"Shale gas is part of the future and we will make it happen," he said while delivering his 2013 budget in parliament.
Britain, Europe's largest gas consuming nation, lifted a ban on shale gas fracking in December and is counting on huge shale gas reserves to help cut its dependence on expensive gas imports and to contribute to state coffers.http://www.4-traders.com/IGAS-ENERGY-PLC-4007726/news/IGAS-Energy-PLC-UK-promises-shale-gas-tax-breaks-public-benefits-16562385/
One company to see its share price rise on the back of this today is IGAS Energy. It may well be worth investigating such opportunities further while also recognizing that there will always be a bigger risk attached to them because they are the blue sky type opportunities within their sector.
http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?username=&ac=&csi=112867
UK Budget update 1 - Construction Sector
One of the biggest announcements made in the budget today was aimed at the UK housing market.
No one should be surprised at Government attempts to prop up house prices under the disguise of "helping" people, usually priced out first time buyers, who are of course priced out for a reason - prices are too high. The immediate effect of this policy has been on the share price of companies in the construction sectors, most of which are seeing a big rise today. Taylor Wimpey, Barrett Development, Redrow and others are all doing well on the back of this news as they are likely to benefit from being in the new build sector.
On the other hand, once the dust settles and people realize that house prices are still too high for those priced out it will be interesting to see how high the take up is and how relaxed the Government are when handing out taxpayers money. The recent history of Fannie May and Freddie Mac is not one that should be held up as shining light of achievement. The UK Government seems to have decided that the UK taxpayer, whether you are currently a property owner or not, will be a potential tax loser if house prices fall.
The Help to Buy scheme improves on a previous scheme known as FirstBuy. It enables buyers to put down a 5% deposit on a newly built home.
Up to 20% of the cost of the home is funded by a "shared equity" loan, which will be repayable when the home is sold.
That loan will be interest-free for the first five years.
Thereafter borrowers will have to pay a 1.75% annual fee, which will then rise by 1% above the Retail Prices Index (RPI) measure of inflation.There is also a new mortgage guarantee scheme that is being compared to Fannie Mae and Freddie Mac in the US.
The chancellor also announced a new mortgage guarantee, which he claimed would dramatically increase the availability of loans. It extends the previous NewBuy Guarantee scheme to include older houses as well as new-builds.
"We're going to help families who want a mortgage for any home they're buying, old or new, but who cannot begin to afford the kind of deposits being demanded today," he said.http://www.bbc.co.uk/news/business-21849974
No one should be surprised at Government attempts to prop up house prices under the disguise of "helping" people, usually priced out first time buyers, who are of course priced out for a reason - prices are too high. The immediate effect of this policy has been on the share price of companies in the construction sectors, most of which are seeing a big rise today. Taylor Wimpey, Barrett Development, Redrow and others are all doing well on the back of this news as they are likely to benefit from being in the new build sector.
On the other hand, once the dust settles and people realize that house prices are still too high for those priced out it will be interesting to see how high the take up is and how relaxed the Government are when handing out taxpayers money. The recent history of Fannie May and Freddie Mac is not one that should be held up as shining light of achievement. The UK Government seems to have decided that the UK taxpayer, whether you are currently a property owner or not, will be a potential tax loser if house prices fall.
UK Budget day
It's UK budget day today and one of the things that investors should be looking out for is any announcement on whether AIM shares can be included in tax free ISA's. I've read that it might not happen until 2014 and I would expect some announcement today of a likely date. It would be a bonus if it is announced that they will be allowed from next month, the beginning of the new tax year in the UK, but UK investors shouldn't bet on that.
Update: Announcement that AIM shares to be exempt from stamp duty.
Update: Announcement that AIM shares to be exempt from stamp duty.
Tuesday 19 March 2013
Can you be sure of Esure?
It is often the sign of a bull market that you see more IPO's coming to the market. Yesterday was the final day for anyone interested in buying shares in Insurance company Esure to register their interest.
There is talk that the starting price will be around the 270p mark, which if true puts it on a dividend yield of around 6% and prospective P/E of around 10, lower than its market peers. The last big insurance company to float was Direct Line, which also offered a yield of around 6%. There were doubts about Direct Line, but since the IPO the share price has been a steady riser, although the bull run recently should have helped it. Chances are Esure could also be a steady performer, at least while markets are good, and the prospective yield does look good for income seekers at a time of low IR's for savings on cash.
IPO's though seem to be back in fashion, as we also have estate agent Countrywide coming to market this week as well.
Not sure about that UK housing market momentum, but it's perhaps typical of an estate agent it wants the highest price possible at float, so not as attractive for income seekers as Esure.
Insurance firm esure has set a price range of 240p to 310p per share ahead of its much-anticipated London initial public offering.
The mid-point values the company - founded and chaired by Peter Wood, one of Britain's wealthiest entrepreneurs - at £1.1bn.
The home and motor insurer said it would repay "all of esure's outstanding debt" with the £50m it hopes to raise from the sale of new shares.http://news.sky.com/story/1061865/esure-sets-price-range-ahead-of-flotation
There is talk that the starting price will be around the 270p mark, which if true puts it on a dividend yield of around 6% and prospective P/E of around 10, lower than its market peers. The last big insurance company to float was Direct Line, which also offered a yield of around 6%. There were doubts about Direct Line, but since the IPO the share price has been a steady riser, although the bull run recently should have helped it. Chances are Esure could also be a steady performer, at least while markets are good, and the prospective yield does look good for income seekers at a time of low IR's for savings on cash.
IPO's though seem to be back in fashion, as we also have estate agent Countrywide coming to market this week as well.
Britain's biggest estate agent, Countrywide, is poised to sell its shares in an initial public offering on Wednesday at the highest possible price it had planned for, in a further sign that the UK housing market is gaining momentum.
The company is preparing to offer its shares at the top end of the range – 330p to 350p a share, up from an initial 260p-350p – two unnamed sources told Reuters.http://www.guardian.co.uk/business/2013/mar/18/countrywide-flotation-optimism-housing-market
Not sure about that UK housing market momentum, but it's perhaps typical of an estate agent it wants the highest price possible at float, so not as attractive for income seekers as Esure.
Video market round up for the week ending 15th March 2013
A week ending round up of the markets from Steve Briggs YouTube channel. Included this week is a look at UK FTSE stocks Evraz, Aberdeen Asset Management, RSA and United Utilities.
Links:
Links:
Steve's YouTube site http://www.youtube.com/user/sjb5555.
Useful charts and analysis can also be found at http://www.flickr.com/photos/stevebriggspics/
Useful charts and analysis can also be found at http://www.flickr.com/photos/stevebriggspics/
Monday 18 March 2013
Cyprus and the sell off
Well, I suppose it had to happen, the market needed an excuse for a sell off and events in Cyprus gave them as good a reason as any to pull back a little. The question now is whether we are entering into a period of sustained selling, which to some degree after the recent rise in stock markets would not necessarily be a bad thing. The question as always when a down period starts, if indeed that's the case, is how long will it be for?
The Cyprus financial crisis and the events towards the end of last week tell you a lot about how conspiracies start and you can understand why. The decision to place a tax on savings/bank deposits for everyone is an extreme example of David Cameron's "we are all in it together" mentality, when in reality we are not all in it together. Some of us didn't con the system and don't see why we should pay to bail it out in these ways.
Taxing everyone in this way and giving them in return shares in dodgy banks, treating everyone to a bit of the pain of austerity is not only grossly unfair, but also counter productive. It has brought back the spectre of bank runs, the fear that other countries with much greater problems will try the same, who's next? Greece? Spain? Italy?
The conspiracy side of it comes from the belief that TPTB (The Powers That Be), whoever they are, have deliberately done this to Cyprus to test the water. Cyprus is a small country, where any public revolt against this may be controlled, if necessary by force. The country has a history of military coup, rule by force, so if this turned out a disaster they know how to control things. It would be more difficult to do that in Spain or Italy.
However, if they were to get away with this tax, then a precedent has been set. Financially it might work, but that doesn't take away the fact that it is totally, morally wrong. Politicians have a habit of using precedent to do things again once they see that it "works".
Taxing everyone for the mistakes of a financial elite that took us all up the yellow brick road to their fantasy land of prosperity will only disgust anyone who feels that this is another kick in the balls of justice and what is right and wrong. The people of Cyprus are right to be outraged and the politicians should take note of the potential for trouble that they are unleashing in taking such measures.
But this is also the problem with conspiracies, are they really that stupid? Or perhaps "they" want more bank runs? The start of a new EU crisis? You can go round in circles on this one, but this tax is madness in its attack on Mr and Mrs average, the little guy, the person who was prudent and honest while others conned the system for all they could get pre-financial crash and carry on conning the system today. The former are the people we should be on the side of and its the latter that should be pursued, financially and legally.
The Cyprus financial crisis and the events towards the end of last week tell you a lot about how conspiracies start and you can understand why. The decision to place a tax on savings/bank deposits for everyone is an extreme example of David Cameron's "we are all in it together" mentality, when in reality we are not all in it together. Some of us didn't con the system and don't see why we should pay to bail it out in these ways.
Taxing everyone in this way and giving them in return shares in dodgy banks, treating everyone to a bit of the pain of austerity is not only grossly unfair, but also counter productive. It has brought back the spectre of bank runs, the fear that other countries with much greater problems will try the same, who's next? Greece? Spain? Italy?
The conspiracy side of it comes from the belief that TPTB (The Powers That Be), whoever they are, have deliberately done this to Cyprus to test the water. Cyprus is a small country, where any public revolt against this may be controlled, if necessary by force. The country has a history of military coup, rule by force, so if this turned out a disaster they know how to control things. It would be more difficult to do that in Spain or Italy.
However, if they were to get away with this tax, then a precedent has been set. Financially it might work, but that doesn't take away the fact that it is totally, morally wrong. Politicians have a habit of using precedent to do things again once they see that it "works".
Taxing everyone for the mistakes of a financial elite that took us all up the yellow brick road to their fantasy land of prosperity will only disgust anyone who feels that this is another kick in the balls of justice and what is right and wrong. The people of Cyprus are right to be outraged and the politicians should take note of the potential for trouble that they are unleashing in taking such measures.
But this is also the problem with conspiracies, are they really that stupid? Or perhaps "they" want more bank runs? The start of a new EU crisis? You can go round in circles on this one, but this tax is madness in its attack on Mr and Mrs average, the little guy, the person who was prudent and honest while others conned the system for all they could get pre-financial crash and carry on conning the system today. The former are the people we should be on the side of and its the latter that should be pursued, financially and legally.
Thursday 14 March 2013
Kentz Corp announces "significant" Canadian contract
I mentioned Kentz Corp a few days ago in this post about Wood Group. The general feeling being that ahead of its results to be announced on 25th March it was being overlooked by the market. Certainly and barring no surprises in those results, it looks undervalued compared to other similar companies in the sector which have seen a significant rise in their share price after their result announcement and sometimes before with the market anticipating the good news. By comparison Kentz has been in the doldrums in the last few weeks, which is surprising for a share that is usually quite volatile, both up and down. Today it had an announcement of further good news ahead of those results.
Still worth noting that date of 25th March to see what the company announces in its results.
Kentz Corp., the holding company of the Kentz engineering and construction group, has announced the award of a commissioning agreement with Imperial Oil Resources Ventures, covering services in the Athabasca oil sands in northern Alberta, Canada.http://www.digitallook.com/news/20759331/Kentz_unveils_significant_contract_in_Canada.html?username=&ac=
The contract, which is described as having a "significant" value, will run until 2016.
Under the agreement Kentz will provide management and discipline specialists to support electrical, instrumentation, mechanical, systems completions and start-up assistance. The contracts will be executed through Kentz's Technical Support Services (TSS) business unit.
Michael Murphy, the Chief Operating Officer of Technical Support Services for Kentz, said: "Kentz is delighted to be awarded an additional and significant contract by Imperial Oil.
Still worth noting that date of 25th March to see what the company announces in its results.
Wednesday 13 March 2013
Morrison and Ocado to get together?
WM Morrison will report to the market tomorrow and the numbers are not expected to look good. Morrison has lagged behind its competitors for a while, losing market share, the market will probably be more interested to hear what it plans to do to put things right as much as the numbers delivered. One area where the company has lagged behind has been in having no web presence while its competitors are well established and looking to move ahead.
One possibility that has been muted before is a possible takeover of FTSE250 Ocado, although there is a case to be made that the numbers don't add up, that Morrisons might have to pay too much for a company that is struggling to make any profit. However, it does look like they have been talking about a "partnership" and it will be interesting to see what comes of it, although Morrisons are keen to emphasize that they have an alternative strategy that doesn't include Ocado.
If the figures are bad tomorrow, Morrisons will have to impress with their future plans for expansion online. Failure to give the market something positive in that direction could see a big, negative reaction. They may not need Ocado, but they do need to go online.
One possibility that has been muted before is a possible takeover of FTSE250 Ocado, although there is a case to be made that the numbers don't add up, that Morrisons might have to pay too much for a company that is struggling to make any profit. However, it does look like they have been talking about a "partnership" and it will be interesting to see what comes of it, although Morrisons are keen to emphasize that they have an alternative strategy that doesn't include Ocado.
Wm Morrison, Britain's fourth-biggest supermarket chain, is in talks over a partnership with Ocado that would involve utilising the online retailer's warehouse capacity and technological expertise as it plays catch-up with its larger rivals.
I have learned that Morrison's, which will on Thursday announce its intention to launch a fully-fledged online grocery business, is in detailed talks with Ocado's management team about the joint venture.
The details have not yet been finalised and the negotiations will not be completed in time for an announcement to be made tomorrow, according to insiders.
One person close to the talks said that while they had been taking place for some time, the talks might not lead to an agreement, and added that Morrison's online strategy was not reliant on striking a deal with an external partner such as Ocado.http://news.sky.com/story/1064266/morrisons-in-talks-over-ocado-venture
If the figures are bad tomorrow, Morrisons will have to impress with their future plans for expansion online. Failure to give the market something positive in that direction could see a big, negative reaction. They may not need Ocado, but they do need to go online.
FTSE250 Update
In trading there is a saying "climbing the wall of worry", well the FTSE250 looks like it is taking baby steps up a hill of worry. Worry in the sense that at some stage traders know that there has to be a correction and as the trend gets longer there is the risk of being caught in a bigger sell off. MACD looks to be weakening, but like the FTSE100, the 250 could fall quite a lot and still be bullish overall. Given that this current trend started in mid November we are now about 5 months in to a very stretched bull move that having hit 14,000, a nice round number, put on almost 2000 points in that time. No one should be surprised if we get a little pullback from here.
 |
| FTSE250 - Daily |
FTSE100 Update - Will market again buy on the dip?
FTSE100 reached the psychologically important 6500 and then sold off. Hardly a surprise considering the recent run, chart still looks quite bullish although the MACD indicator is suggesting weakness again. The last time this happened on the daily chart we had a period of consolidation between 6300/400, before the move up to 6500. The 20 and 50 dma still looks quite positive and I would look to a move below them before declaring this trend move over. The FTSE has room to move down to around 6300 before hitting the tramline on the chart. So far the dips have been bought and fairly quickly, so we shouldn't have long to wait to see if this is the beginning of something more than a dip.
 |
| FTSE100 - Daily |
Thursday 7 March 2013
Latest FTSE100 reshuffle
The latest quarterly review of the FTSE100 sees the following changes.
Out
Kazakhmys
Intu
In
Easyjet
London Stock Exchange
It's possible that there may be some volatility around these stocks as FTSE100 and tracker funds buy and sell to re-balance. Could be a positive for those entering the index as they get bought. Easyjet has just about doubled in price in the last six months, while the London Stock Exchange share price has gone from around 1000p last December to over 1382p today, so we have a couple of strong momentum stocks entering the index. Relegated Kazakhmys has been a bit of a disaster of late, down from around 820p at the start of the year to 547p as of today.
For more on the FTSE game of relegation and promotion see this post.
If you want to see some of the names from FTSE100 in 1999 look here.
Out
Kazakhmys
Intu
In
Easyjet
London Stock Exchange
It's possible that there may be some volatility around these stocks as FTSE100 and tracker funds buy and sell to re-balance. Could be a positive for those entering the index as they get bought. Easyjet has just about doubled in price in the last six months, while the London Stock Exchange share price has gone from around 1000p last December to over 1382p today, so we have a couple of strong momentum stocks entering the index. Relegated Kazakhmys has been a bit of a disaster of late, down from around 820p at the start of the year to 547p as of today.
For more on the FTSE game of relegation and promotion see this post.
If you want to see some of the names from FTSE100 in 1999 look here.
Aviva disappoints, another big dividend yield bites the dust
Aviva reported to the market this morning numbers that probably came as a bit of a shock.
Like RSA Insurance, Aviva had been sitting on the attraction for investors of a big dividend yield for some time, but there was always talk of underlying problems, a "value trap" in the making and thus today's reduction in the dividend shouldn't really come as a total surprise. Anyone who shifted their funds out of RSA into Aviva a few weeks ago will have been hit hard by this double whammy.
Shares in Aviva crashed 15pc in early trading on Thursday after the insurer revealed a 44pc cut in its final dividend from 16p to 9p, reducing its total dividend from 26p last year to 19p for 2102 – a drop of 27pc.
Aviva said it had rebased the dividend to give certainty to shareholders and reduce debt, putting the insurer in "a sound position for the future".
Pension funds, fund managers and small investors, who have held the company's shares because of its 7pc dividend yield, were expected to offload the shares on Thursday.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/insurance/9914400/Aviva-shares-tumble-as-slashes-dividend.htmlRSA Insurance upset investors last month by lowering its dividend by 33pc. The surprise cut resulted in a 14pc drop in the insurer’s share price in a single day.
Like RSA Insurance, Aviva had been sitting on the attraction for investors of a big dividend yield for some time, but there was always talk of underlying problems, a "value trap" in the making and thus today's reduction in the dividend shouldn't really come as a total surprise. Anyone who shifted their funds out of RSA into Aviva a few weeks ago will have been hit hard by this double whammy.
Tuesday 5 March 2013
Wood Group produces, but what will Kentz Corp announce?
Wood Group announced pretty good numbers this morning and the market has responded positively with a rise thus far of around 7.5%.
It is often the case that share price will jump on the announcement of a good result, especially if it comes in ahead of expectations. This can also be the start of a new trend as the share price goes higher. Often however, the market will anticipate the good news so to some degree it may well be priced in. Wood Group has been another steady riser, with dips along the way, for a few years. After today's price move there may be more to come, but are there others in the same sector who just might come in with decent numbers when they announce them and so far it isn't totally reflected in their share price?
International energy services company Wood Group, posted a 20 per cent rise in revenue from continuing operations in its full year ended December 31st, boosted by growth in all three divisions.http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?csi=48822&action=news&story_id=20737594
Revenue from continuing operations totalled $6,821.3m (2011: $5,666.8m), while earnings before interst, tax, and amortisation (EBITA) from continuing operations came in at $461.1m (2011: $341.6m), up 35%. The EBITA margin increased from 6.0% to 6.8%.
Profit from continuing operations before tax and exceptional items was $362.7m (2011: $254.1m), up 43%, and adjusted diluted earnings per share were 85.2 cents (2011: 60.2 cents), up 42%.
The total dividend for the year was up 26% at 17 cents per share (2011: 13.5 cents), following a final dividend payment of 11.3 cents, reflecting the company's "confidence in the longer term outlook for the group".
It is often the case that share price will jump on the announcement of a good result, especially if it comes in ahead of expectations. This can also be the start of a new trend as the share price goes higher. Often however, the market will anticipate the good news so to some degree it may well be priced in. Wood Group has been another steady riser, with dips along the way, for a few years. After today's price move there may be more to come, but are there others in the same sector who just might come in with decent numbers when they announce them and so far it isn't totally reflected in their share price?
Video market round up for the week ending 1st March 2013
A week ending round up of the markets from Steve Briggs YouTube channel. Included this week is a look at the banking sector. The video also regularly looks at the currencies, gold and silver.
Links:
Steve's YouTube site http://www.youtube.com/user/sjb5555.
Useful charts and analysis can also be found at http://www.flickr.com/photos/stevebriggspics/
Steve's YouTube site http://www.youtube.com/user/sjb5555.
Useful charts and analysis can also be found at http://www.flickr.com/photos/stevebriggspics/
Monday 4 March 2013
Debenhams, snow problem
Debenhams updated the market this morning with a profit warning, which they put down to snow.
Blaming the weather seems to be a regular tactic from High Street retailers, especially in winter, when things go wrong. Unfortunately such excuses, especially when snow is mentioned as the specific reason, opens them up to ridicule. After all, some retailers did ok, the snow didn't seem to affect them. Of course, this might be simplistic as some areas of the country had bad weather while others had it more mild. One major retailer near where I live I find I cannot get to if there are several days of rain beforehand because flooding usually makes the only route other than a long time consuming journey around it, impassable. When that happens I shop elsewhere and they lose my custom, I'm sure for others its the same.
The trouble is that blaming snow in winter comes across as a lame excuse, because, well, we are likely to have snow in cold weather. Fair enough, say that bad weather probably encouraged people to decide to stay at home in the warmth, after all, judging from Centrica's recent profits announcement that's exactly what a lot of people must have done, but they should leave the snow out of it. Bricks and mortar retailers have no choice but to live with the weather good or bad.
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11506189The strong sales momentum reported on 8 January 2013, with Group like-for-like sales up 2.9% for the first 18 weeks of the half, initially continued at a similar level with Debenhams making further market share gains in key categories*.In the latter part of January, however, the UK business was severely disrupted by the snow which fell across the country. Whilst Group like-for-like sales grew by c.3% for the 26 weeks, during the snow-affected period of 14-27 January UK like-for-like sales were down by c.10%.
Blaming the weather seems to be a regular tactic from High Street retailers, especially in winter, when things go wrong. Unfortunately such excuses, especially when snow is mentioned as the specific reason, opens them up to ridicule. After all, some retailers did ok, the snow didn't seem to affect them. Of course, this might be simplistic as some areas of the country had bad weather while others had it more mild. One major retailer near where I live I find I cannot get to if there are several days of rain beforehand because flooding usually makes the only route other than a long time consuming journey around it, impassable. When that happens I shop elsewhere and they lose my custom, I'm sure for others its the same.
The trouble is that blaming snow in winter comes across as a lame excuse, because, well, we are likely to have snow in cold weather. Fair enough, say that bad weather probably encouraged people to decide to stay at home in the warmth, after all, judging from Centrica's recent profits announcement that's exactly what a lot of people must have done, but they should leave the snow out of it. Bricks and mortar retailers have no choice but to live with the weather good or bad.
Friday 1 March 2013
Trading serious numbers
There is an old saying that you have to speculate to accumulate and in the game of trading if you are ever going to make serious money then ultimately you have to be prepared to risk serious money.
It might be possible, actually desirable, especially if you are new to trading or a day trader placing hundreds of trades a week that the amounts you are trading are relatively small. After all, if you are spread betting the FTSE100 and placing 10 trades a day, a few pounds a point can return you a decent amount if you are actually good at it.
However, if you are trading more long term and placing fewer trades in the process, then ultimately the chances are that a pound or two a point isn't going to return you big money. Yes, it can still be very profitable, but to make the big money, sooner or later the chances are that bigger stakes will have to be used.
Trading bigger amounts does require a psychological requirement that you do not fear doing this. Trading and investing probably has the same psychological effect on us as other things in life. If our experience is bad it effects us to the negative and warns us off next time. If our experience is good, the effect on our future actions is more positive. In trading terms this negative and positive reaction to prior events will play out in how we act in the future.
Which brings me to a couple of stories that I came across this week. The first is a trade placed by the Naked Trader Robbie Burns, which chances are many of us would not have made. I mentioned in this post on Greencore Group how the share price had been affected by the horse meat scandal, at one stage falling nearly 30% in the day. I also mentioned that Burns had indicated on his site that if the company fell into the 80p region he would buy it big time. At that stage the horse meat scandal news had not hit the company, the following day it fell to below 80p on that news.
If you want to know the full story of what happened next, then I suggest you download the latest addition of Spreadbet Magazine (it's free - link here along with other free online trading magazines). Needless to say, the Naked Trader did buy big time and in the article he talks about how he made so far around £10,000 (on paper) on the bounce that came from what was essentially a falling knife of sorts. Accept that in his mind it wasn't really and he gives the reasons in the article.
Of course, to make that much money in such a short space of time requires the type of stakes that most spread bettors would probably shy away from. It requires a willingness to take on a level of risk which many probably couldn't handle, but in the case of the Naked Trader we are talking about someone who has already made a large amount of money from trading shares. As his returns got bigger he has clearly increased his stakes.
Which brings me to the second story which can be followed in this blog, Barefoot Spread Betting. Again serious amounts are being staked in the experiment and thus far serious returns being made.
Now, such stories should always come with a financial health warning. Anyone starting out in trading or investing should start with amounts that you feel comfortable handling. There is nothing wrong in starting small and building up, in fact in 99.9% of cases it is probably advisable. Trading and investing is a confidence game, which will often only come with experience and time. Trading big amounts is not advisable for those without the experience to take on that risk. It is great to read about those having success, but the trading game is also full of those that have lost big and it's not something we should forget.
It might be possible, actually desirable, especially if you are new to trading or a day trader placing hundreds of trades a week that the amounts you are trading are relatively small. After all, if you are spread betting the FTSE100 and placing 10 trades a day, a few pounds a point can return you a decent amount if you are actually good at it.
However, if you are trading more long term and placing fewer trades in the process, then ultimately the chances are that a pound or two a point isn't going to return you big money. Yes, it can still be very profitable, but to make the big money, sooner or later the chances are that bigger stakes will have to be used.
Trading bigger amounts does require a psychological requirement that you do not fear doing this. Trading and investing probably has the same psychological effect on us as other things in life. If our experience is bad it effects us to the negative and warns us off next time. If our experience is good, the effect on our future actions is more positive. In trading terms this negative and positive reaction to prior events will play out in how we act in the future.
Which brings me to a couple of stories that I came across this week. The first is a trade placed by the Naked Trader Robbie Burns, which chances are many of us would not have made. I mentioned in this post on Greencore Group how the share price had been affected by the horse meat scandal, at one stage falling nearly 30% in the day. I also mentioned that Burns had indicated on his site that if the company fell into the 80p region he would buy it big time. At that stage the horse meat scandal news had not hit the company, the following day it fell to below 80p on that news.
If you want to know the full story of what happened next, then I suggest you download the latest addition of Spreadbet Magazine (it's free - link here along with other free online trading magazines). Needless to say, the Naked Trader did buy big time and in the article he talks about how he made so far around £10,000 (on paper) on the bounce that came from what was essentially a falling knife of sorts. Accept that in his mind it wasn't really and he gives the reasons in the article.
Of course, to make that much money in such a short space of time requires the type of stakes that most spread bettors would probably shy away from. It requires a willingness to take on a level of risk which many probably couldn't handle, but in the case of the Naked Trader we are talking about someone who has already made a large amount of money from trading shares. As his returns got bigger he has clearly increased his stakes.
Which brings me to the second story which can be followed in this blog, Barefoot Spread Betting. Again serious amounts are being staked in the experiment and thus far serious returns being made.
Now, such stories should always come with a financial health warning. Anyone starting out in trading or investing should start with amounts that you feel comfortable handling. There is nothing wrong in starting small and building up, in fact in 99.9% of cases it is probably advisable. Trading and investing is a confidence game, which will often only come with experience and time. Trading big amounts is not advisable for those without the experience to take on that risk. It is great to read about those having success, but the trading game is also full of those that have lost big and it's not something we should forget.
Taylor Wimpey, impressive results, bull run to continue?
UK FTSE250 builder Taylor Wimpey produced an impressive result today, purely looking through the numbers it's difficult to see anything wrong and there are a lot of things going right for the company it would seem.
Here's some of the highlights;
44% increase in operating profit* to £228.8 million (2011: £159.3 million)
Completed 10,886 homes at an average selling price of £181k (2011: 10,180 homes at £171k)
Extensive strategic landbank of 100,340 plots (2011: 86,236)
Total order book value increased by 14% to £948 million at 31 December 2012 (2011: £835 million)
Customer satisfaction increased to 93.2% (2011: 92.1%)
Reduction in net debt to £59.0 million (31 December 2011: £116.9 million) with further improved debt efficiencieshttp://www.digitallook.com/news/rns/20729318-10332/TW_-Results_for_the_year_ended_31_December_2012_html
What is interesting is that despite a largely stagnant UK housing market, quite a few of the listed FTSE construction companies have actually defied the bearish calls of why they should still be falling in price and actually done rather well in the last few years. Of course, like the banks lots of them fell off a cliff back in 2007-8, but since then many have recovered well often on the back of good numbers.
The company doesn't offer a great dividend at less then 1%, but in terms of price growth it has been steady as you go for the past couple of years.
Below is the impressive weekly chart showing the clear momentum.
US budget - down to the wire again
No one should be surprised that the latest news on deadlock over US budget cuts seems to be going down to the wire again.
The pattern of leaving things to the last minute is well set in US politics and historically some sort of deal is usually, eventually, cobbled together. Markets seem quite relaxed thus far about the lack of agreement, but as everyone knows this can quickly change. It's possible that what we are seeing is a calm before the storm and that markets at some stage will use any US budget impasse to sell off and correct the impressive bullish run of the last 2-3 months. Markets may want to give the politicians a reminder of their power at some stage if no decision is forthcoming, so we all should be ready for at least the possibility of a wild ride in the markets going forward.
The US Congress has adjourned for the weekend without reaching a deal to avert steep automatic budget cuts.
The cuts, worth $85bn (£56bn), are due to take effect on Friday. Democrats and Republicans are blaming each other for the deadlock.
President Barack Obama has invited congressional leaders to the White House for negotiations.
Mr Obama warned that the cuts will harm the economy. The IMF said they could have a global impact on growth.
On Thursday budget bills from both parties were defeated in the Senate.http://www.bbc.co.uk/news/world-us-canada-21610813
The pattern of leaving things to the last minute is well set in US politics and historically some sort of deal is usually, eventually, cobbled together. Markets seem quite relaxed thus far about the lack of agreement, but as everyone knows this can quickly change. It's possible that what we are seeing is a calm before the storm and that markets at some stage will use any US budget impasse to sell off and correct the impressive bullish run of the last 2-3 months. Markets may want to give the politicians a reminder of their power at some stage if no decision is forthcoming, so we all should be ready for at least the possibility of a wild ride in the markets going forward.
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