Rightmove released their first half trading results this morning. The highlights include a 20% hike in revenues, underlying operating margins of 74%, underlying earnings up 24% and a 18% dividend hike. Great results, but on all fundamental values the shares look expensive. On last years figures they currently trade on a p/e above 30 with a market cap. approaching £2.3bn and the dividend yield is not much more than 1%.
I couldn't justify paying this price for my own long term portfolio, although I greatly regret not buying them in the depths of the financial crisis when they were less than a fiver. This is surely a Warren Buffet stock. The company boasts an invisible moat, a virtual monopoly in the UK. What's the first website you'd visit if you're looking to buy a property? It's got to be Rightmove.
The company's model ensures outstanding gross margins, it generates copious amounts of cash and has a history of hiking the dividend payment each year. In fact the dividend was held even between 2009-2010.
So whilst I'm not a real buyer (I don't believe that it will multibag in the near future from here), I'm going to add it to the virtual trading portfolio believing that it can surpass the previous highs of this year. As I write the price is £22.96.
Virtual portfolio Price paid Current price Price sold
Vesuvius £4.57 £4.66
Vodafone £2.07 £2.04
Morrison £1.93 £1.73
Rightmove £22.96 £22.96
I don't think it's likely that there will be an opportunity to buy the shares and add them to my real portfolio at the bargain basement price which arose in 2009, but should the opportunity ever present itself when the shares once again look cheap then I'll more than likely snap them up, despite preferring to concentrate my efforts on the small/micro cap sector.
Wednesday, 30 July 2014
Tuesday, 29 July 2014
Virtual trading portfolio update
Some of you may remember that I started a virtual trading portfolio in early June. This was just for a bit of fun, but I thought I'd revisit it this morning to see how it's going so far. This is what I said back in June:-
"On a separate note, my virtual trade in Vesuvius is pretty much flat so far, although I notice that Directors are still keen buyers with a further purchase reported on Friday, and a small tick up of around 3% in the share price.
I am adding Vodafone and Morrison to my virtual trading portfolio. Vodafone is yielding over 5% and is off it's recent highs as investors "park" there special dividends elsewhere. My buying price for Vodafone is 207p. Morrison's I mentioned in my blog 31 May. Just to emphasise that these are all virtual trades, and I'm doing this just for a bit of fun. Of course I will continue to report on my actual holdings and purchases at regular intervals as usual.
Virtual portfolio Price paid Current price Price sold
Vesuvius £4.57 £4.58
Vodafone £2.07 £2.07
Morrison £1.93 £1.93"
Well what's happened since? Not a lot really. The current state of play is given below:-
Virtual portfolio Price paid Current price Price sold
Vesuvius £4.57 £4.59
Vodafone £2.07 £2.02
Morrison £1.93 £1.72
As you can see, both my virtual trades in vod and vsvs are pretty flat and mrw is down. Hopefully today's news from mrw about the appointment of Andy Higginson may provide a fillip for the share price.
As a measure of my success, I am going to assume that I have invested £1000 in each initially. My budget will be £10,000 to start with, and I am going to set a 3 month time limit as my maximum holding period for each share I purchase.
Those of you who read the blog on a regular basis will know that this is not my actual investing style. I try to find small/micro cap companies that I perceive to be undervalued and then hold for the long term. The virtual portfolio requires a totally different mindset, and I'll need to be a little more reactive to news stories and sentiment with my future trades.
"On a separate note, my virtual trade in Vesuvius is pretty much flat so far, although I notice that Directors are still keen buyers with a further purchase reported on Friday, and a small tick up of around 3% in the share price.
I am adding Vodafone and Morrison to my virtual trading portfolio. Vodafone is yielding over 5% and is off it's recent highs as investors "park" there special dividends elsewhere. My buying price for Vodafone is 207p. Morrison's I mentioned in my blog 31 May. Just to emphasise that these are all virtual trades, and I'm doing this just for a bit of fun. Of course I will continue to report on my actual holdings and purchases at regular intervals as usual.
Virtual portfolio Price paid Current price Price sold
Vesuvius £4.57 £4.58
Vodafone £2.07 £2.07
Morrison £1.93 £1.93"
Well what's happened since? Not a lot really. The current state of play is given below:-
Virtual portfolio Price paid Current price Price sold
Vesuvius £4.57 £4.59
Vodafone £2.07 £2.02
Morrison £1.93 £1.72
As you can see, both my virtual trades in vod and vsvs are pretty flat and mrw is down. Hopefully today's news from mrw about the appointment of Andy Higginson may provide a fillip for the share price.
As a measure of my success, I am going to assume that I have invested £1000 in each initially. My budget will be £10,000 to start with, and I am going to set a 3 month time limit as my maximum holding period for each share I purchase.
Those of you who read the blog on a regular basis will know that this is not my actual investing style. I try to find small/micro cap companies that I perceive to be undervalued and then hold for the long term. The virtual portfolio requires a totally different mindset, and I'll need to be a little more reactive to news stories and sentiment with my future trades.
Monday, 28 July 2014
Snoozebox - trading statement
Snoozebox is a small company with interesting prospects over the longer term, and the company issued a positive trading statement this morning.
Essentially the company supplies portable hotel accommodation to the events sector. The model sounds interesting, and there is clear demand for their services.
I expect the share price to rise slightly on today's news.
However, it's not one that interests me. Firstly, at a market cap. (yesterday) of around £17m, but with adjusted EBITDA losses expected to come in at £1.6m in the first half of the year, the company still looks expensive.
They have recently raised £11m to fund the construction of their next generation of hotel room stock and hospitality units which is necessary for their growth, but I'd be very surprised if they didn't need further funding rounds in future. This company is capital intensive and needs to generate large amounts of cash to be self-funding. I don't see them being able to generate sufficient cash in the near future given today's statement regarding a negative adjusted EBITDA for the first six months of this year.
It's always good to read between the lines of a trading statement as well. Note the following from this morning:-
"the Company has made demonstrable progress in the development of its event
programme and is creating a platform for growth and profitability."
In other words growth and profitability are someway off at the moment, and if in any doubt then:-
"I believe the progress made in the underlying operating model, combined with the launch of the Next Generation Portable Hotel in the autumn of this year, provides the platform on which to transform the performance of the business in 2015 and to scale it in 2016."
Longer term, and at a lower price, the company may become interesting, but at the current valuation, a loss making capital intensive company which is consuming cash and valued at over £17m is not for me.
This doesn't suggest I'm bearish either, but I always consider the number of companies out there that are valued similarly and are profitable, cash generative and arguably have better growth prospects.
Essentially the company supplies portable hotel accommodation to the events sector. The model sounds interesting, and there is clear demand for their services.
I expect the share price to rise slightly on today's news.
However, it's not one that interests me. Firstly, at a market cap. (yesterday) of around £17m, but with adjusted EBITDA losses expected to come in at £1.6m in the first half of the year, the company still looks expensive.
They have recently raised £11m to fund the construction of their next generation of hotel room stock and hospitality units which is necessary for their growth, but I'd be very surprised if they didn't need further funding rounds in future. This company is capital intensive and needs to generate large amounts of cash to be self-funding. I don't see them being able to generate sufficient cash in the near future given today's statement regarding a negative adjusted EBITDA for the first six months of this year.
It's always good to read between the lines of a trading statement as well. Note the following from this morning:-
"the Company has made demonstrable progress in the development of its event
programme and is creating a platform for growth and profitability." In other words growth and profitability are someway off at the moment, and if in any doubt then:-
"I believe the progress made in the underlying operating model, combined with the launch of the Next Generation Portable Hotel in the autumn of this year, provides the platform on which to transform the performance of the business in 2015 and to scale it in 2016."
Longer term, and at a lower price, the company may become interesting, but at the current valuation, a loss making capital intensive company which is consuming cash and valued at over £17m is not for me.
This doesn't suggest I'm bearish either, but I always consider the number of companies out there that are valued similarly and are profitable, cash generative and arguably have better growth prospects.
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