Well my entry on the "stocks to double in 2013" ADVFN thread has made a decent start. Up a tad yesterday and a further 10.5% today. Very early days yet, and as I mentioned in an earlier blog, Angle is a punt that could multibag or amount to nothing based on the success of its Parsortix product. I just hope it's the former rather than the latter.
I've made a New Year's resolution to try and post more often on my blog and will aim to write a piece four or five times a week if time permits.
What I've decided to do is to pick out a company from the news stories of the day and write a brief piece about my initial thoughts on the company. Please note that I don't offer any advice just some observations after a cursory glance at recent company news and financials.
Today I am going to start with Chemring (CHG) who announced the appointment of a new Group Finance Director. Steve Bowers joins from UMECO, a company that were recently acquired for £5.50 per share (close to their all-time high of just over £6). Interestingly Steve Bowers was closely involved with acquisitions and disposals whilst with UMECO. I say interestingly since Chemring were recently in discussions with Carlyle Group about a possible takeover. However, talks have subsequently collapsed and Chemring's share price has followed.
Despite a 6.5% rise in the share price today, Chemring's historic p/e ratio is around 6 and if they hold the dividend the payout is nearly 6%. So why do the shares look cheap? Well a recent trading statement stated that 2012 had been extremely disappointing and the market backdrop for 2013 remained challenging.
On a more positive note, they also mentioned that in the final quarter there was a significant cash inflow and that nebt debt would be £250m down £12.7m on last year. They also have a relatively new CEO - Mark Papworth who delivered substantial improvements in profitability in his time at Wood Group.
A bit of a mixed bag, but if nothing else maybe one to keep on your monitor, although no advice is given or intended and the figures I have quoted are directly taken from other sources and need checking.
For those of you who take time to read the blog many thanks and I'll endeavour to keep my New Year resolution.
Thursday, 3 January 2013
Wednesday, 2 January 2013
Gambling vs investing
Hot off the press. Disney have "filed a petition to seek leave for a rehearing en banc with the Ninth Circuit" regarding the award of the damages made against them in favour of Celador.
It shouldn't come as any great surprise. Disney have tried to drag this out for as long as possible. It seems clear that they will pursue it to the bitter end i.e. until every possible option has been closed to them.
I have no idea how long the process could take from here, but I'd be very surprised if the ruling was overturned at any point. Quite frankly it would make a mockery of their judicial system, although Disney are clearly hanging on in there with a faint glimmer of hope!
As I mentioned before, the rapidity with which the ninth circuit rejected Disney's appeal seems to suggest that Disney's arguments against the ruling are weak, and I can't see that another panel of judges will wish to overule a jury, the original trial judge and three of their own judges. It may take some time yet, but I do think the original award will stand and that Avesco will eventually receive their $60m share.
However, the above does illustrate the huge difference between gambling and investing on the stock market.
Avesco is a profitable, cash generative and growing business that is more than worth its current valuation without any payout from Disney. Investors will have bought shares based on Avesco's prospects at present and for the future. However, the gambling fraternity have undoubtedly been buying and selling on every twist of the Disney case. I doubt very much if many of the gamblers have made any decent profits.
I shall sit tight and await Avesco's full year results with interest. Whilst 2013 won't be quite as spectacular as 2012 (the odd year effect), I anticipate that underlying growth will be encouraging and I expect that dividends will continue to rise.
It shouldn't come as any great surprise. Disney have tried to drag this out for as long as possible. It seems clear that they will pursue it to the bitter end i.e. until every possible option has been closed to them.
I have no idea how long the process could take from here, but I'd be very surprised if the ruling was overturned at any point. Quite frankly it would make a mockery of their judicial system, although Disney are clearly hanging on in there with a faint glimmer of hope!
As I mentioned before, the rapidity with which the ninth circuit rejected Disney's appeal seems to suggest that Disney's arguments against the ruling are weak, and I can't see that another panel of judges will wish to overule a jury, the original trial judge and three of their own judges. It may take some time yet, but I do think the original award will stand and that Avesco will eventually receive their $60m share.
However, the above does illustrate the huge difference between gambling and investing on the stock market.
Avesco is a profitable, cash generative and growing business that is more than worth its current valuation without any payout from Disney. Investors will have bought shares based on Avesco's prospects at present and for the future. However, the gambling fraternity have undoubtedly been buying and selling on every twist of the Disney case. I doubt very much if many of the gamblers have made any decent profits.
I shall sit tight and await Avesco's full year results with interest. Whilst 2013 won't be quite as spectacular as 2012 (the odd year effect), I anticipate that underlying growth will be encouraging and I expect that dividends will continue to rise.
Saturday, 29 December 2012
A new ANGLE
Well we've reached the end of December, and still no word on Disney's intentions. The question is, will they try and pursue a further appeal against paying Celador $324m ($60m is Avesco's share).
Disney have managed to drag this out for several years, but it's difficult to see how they could possibly get this overturned now. Even if they launch a further appeal, is it likely that another court and/or panel of judges will overturn the decision of the original judge and jury and now the ninth court of appeals? It doesn't seem likely to me.
Come on Disney, it's time to pay up.
If Disney do capitulate then Avesco is a doubler in 2013. Avesco have aleady announced that results will be ahead of market expectations, which in itself would more than justify the current share price. If Disney pay up then it's worth a further £1.40ish per share to AVS shareholders. As I've mentioned many times before Avesco is a growing, profitable and cash generative company. I'd expect the share price to move above £3. We'll see.
Talking of doublers in 2013, I notice that there is a thread on the ADVFN bulletin board for suggestions of shares that may increase 100% during 2013. I could nominate Avesco of course, but instead I am going for ANGLE.
Amongst my share purchases this year, I've made two very speculative additions to my portfolio. One I've already mentioned in a previous blog - Avanti Communications and now Angle.
Angle was a red hot stock earlier this year. Great excitement surrounded its Parsortix product when the company released several news stories to the market about its success in capturing circulating tumour cells (CTCs) in various forms of spiked and patient blood. The share price shot up above 90p at one stage as investors speculated about the possible returns from a product that could be launched to a research market worth £250m per annum and the later launch of a clinical product to a market estimated to be worth £6 billion per annum.
Angle also had two other products of note - Geometrics (Computer graphics) and Novocellus (IVF) both of which had/have the potential to generate significant revenues and profits.
So why has the share price capitulated to its current 27p?
Well one reason appears to be that Novocellus has effectively been shelved for the forseeable future, and secondly (possibly) that a Parsortix device was scheduled to be delivered to the research market a month or so earlier than it has been.
Stocks, such as Angle, are in my experience highly volatile and the share price is highly sensitive (more than most) to perceived good and bad news. Hardly surprising since this type of stock is impossible to value on fundamentals. It has a reasonable balance sheet, but burns cash and won't make profits for some time yet.
So why I have bought stock. Quite frankly I've taken a punt.
My only justification is that with a Parsortix device now with their research partners, if successful then it's potential is massive. Without being too dismissive, my impression was that Geometrics and Novocellus were very much secondary to their investment in Parsortix, and the original rise in the share price all centred around this product.
Clearly Angle isn't for widows and orphans since if it all goes pear-shaped with the Parsortix device then (imo) Geometrics by itself won't prop up the share price. However, success with Parsortix will see a multi-bagger.
One other caveat is that Angle will undoubtedly have to raise more cash at some point (unless they make a Geometrics trade sale which they mentioned in the final results - although I have no idea how much that would raise?), but hopefully any placing will be above the current share price of 27p.
Anyway, Angle is my speculative doubler for 2013 and if the Parsortix device does what they hope it can do, it will be a feel good factor from so many perspectives.
A very belated Merry Christmas and a Happy New Year.
Disney have managed to drag this out for several years, but it's difficult to see how they could possibly get this overturned now. Even if they launch a further appeal, is it likely that another court and/or panel of judges will overturn the decision of the original judge and jury and now the ninth court of appeals? It doesn't seem likely to me.
Come on Disney, it's time to pay up.
If Disney do capitulate then Avesco is a doubler in 2013. Avesco have aleady announced that results will be ahead of market expectations, which in itself would more than justify the current share price. If Disney pay up then it's worth a further £1.40ish per share to AVS shareholders. As I've mentioned many times before Avesco is a growing, profitable and cash generative company. I'd expect the share price to move above £3. We'll see.
Talking of doublers in 2013, I notice that there is a thread on the ADVFN bulletin board for suggestions of shares that may increase 100% during 2013. I could nominate Avesco of course, but instead I am going for ANGLE.
Amongst my share purchases this year, I've made two very speculative additions to my portfolio. One I've already mentioned in a previous blog - Avanti Communications and now Angle.
Angle was a red hot stock earlier this year. Great excitement surrounded its Parsortix product when the company released several news stories to the market about its success in capturing circulating tumour cells (CTCs) in various forms of spiked and patient blood. The share price shot up above 90p at one stage as investors speculated about the possible returns from a product that could be launched to a research market worth £250m per annum and the later launch of a clinical product to a market estimated to be worth £6 billion per annum.
Angle also had two other products of note - Geometrics (Computer graphics) and Novocellus (IVF) both of which had/have the potential to generate significant revenues and profits.
So why has the share price capitulated to its current 27p?
Well one reason appears to be that Novocellus has effectively been shelved for the forseeable future, and secondly (possibly) that a Parsortix device was scheduled to be delivered to the research market a month or so earlier than it has been.
Stocks, such as Angle, are in my experience highly volatile and the share price is highly sensitive (more than most) to perceived good and bad news. Hardly surprising since this type of stock is impossible to value on fundamentals. It has a reasonable balance sheet, but burns cash and won't make profits for some time yet.
So why I have bought stock. Quite frankly I've taken a punt.
My only justification is that with a Parsortix device now with their research partners, if successful then it's potential is massive. Without being too dismissive, my impression was that Geometrics and Novocellus were very much secondary to their investment in Parsortix, and the original rise in the share price all centred around this product.
Clearly Angle isn't for widows and orphans since if it all goes pear-shaped with the Parsortix device then (imo) Geometrics by itself won't prop up the share price. However, success with Parsortix will see a multi-bagger.
One other caveat is that Angle will undoubtedly have to raise more cash at some point (unless they make a Geometrics trade sale which they mentioned in the final results - although I have no idea how much that would raise?), but hopefully any placing will be above the current share price of 27p.
Anyway, Angle is my speculative doubler for 2013 and if the Parsortix device does what they hope it can do, it will be a feel good factor from so many perspectives.
A very belated Merry Christmas and a Happy New Year.
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