Is Vodafone a screaming buy?

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;

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. 

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. 

http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?csi=1168947&action=news&story_id=20781854

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:

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/

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.

Commenting 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"

http://www.digitallook.com/news/rns/20774871-134513/TTR-Final_Results_html

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.

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.

http://www.nakedtrader.co.uk/

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.

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.

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.