5th Oct '21 by gringo

45 comments 6606 reads

With supply chain problems, energy price increases, inflation concerns finally forcing the uptrend in markets to take a breather, I thought it would be worth everyone sharing a few companies which people may be interested in buying if theres a further sell off.

Times like these can be used away from the hourly movements of individual shares, preparing for potential opportunities.

Ive written a few potential buys which interest me below. I only took half an hour to get the basic numbers so may not be accurate.

Looking for low/no debt, low to mid teens P/E and trading well (excluding short term supply chain problems). Ideally paying a dividend

Growth at a reasonable price is what I'm looking for.

Please contribute any companies on your watchlist you think others may be interested in taking a closer look at.

Luceco (LON:LUCE) – 310p

Market Cap £488m

Net Debt - £24m

Forward P/E -15.3

3yr av. ROCE- 17.3% . Latest 35

3yr av. Net Margin - 4.8% Latest 15.8

Latest comment - 'COVID has also brought severe supply chain disruption to our industry, driving significant cost inflation and making it harder for all participants to serve the customer. We have navigated these challenges comparatively well, adjusting inventory cover, production levels and prices proactively. We have managed to protect our overall margins and deliver strong profit growth in favourable market conditions. Cost pressures are expected to increase in the near-term as the global economy gathers steam at the end of the pandemic. Our gross margins will inevitably see some temporary compression during this phase, but I expect this to be compensated by good operating leverage from sales growth. '

Share price has been whacked, down almost 40%. Analyst consensus stable for now.

Ideally Id like to start buying under 15x P/E so <300p

Possibly starting to form a bottom at current price, tho could get hit on earnings downgrades even tho they've flagged margin squeeze in previous comments.

Likely to be a trading update in a couple of weeks.

Up Global Sourcing Holdings (LON:UPGS) – 176p

Market Cap - £160m

Forward P/E - 17

3 yr av. ROCE- 52% . Latest 34.4

3yr av. Net Margin -5.1 Latest 5.7

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Glen Whelan

7th Oct '21

In case you find it helpful, i added a benchmark position watch list with some of the great ideas above. Thanks to all for these

Rusty2

Sureserve (LON:SUR) up 13% today on update and director buy.

Sosandar (LON:SOS) up 18% on H1 report.

A good idea but I would prefer equal £ amounts in each stock. I take it those are today's prices?

mikebianchi

So where did Paul's French Connection cash pile go then ??????

A standout share for me with potential perhaps 1-2yrs is AGFX metrics are uber solid and its still trading just above its 2020 lows there can be few shares still rated so lowly, its does though need business to pick up. Cash flow was poor last year as they have bought a new office, lets hope its not a palace, its normally time to sell when a palace is purchased.

What a dreadful months its been

Midday price Ray, some great plays, I fully expect that we will find some better entries over the next 3 weeks. As soon as the US have sold their grannies, we can afford some conviction trades. Aside from the obvious oil players, I’m looking at companies in the list that cannot be impacted by our governments ir35 self inflicted supply chain issues.

He bought £SCS.

nanotrader

thanks for this!

jonno

I agree that Argentex (LON:AGFX) looks a good shout at he current price. Hopefully the new office is not management hubris? Fingers crossed; I hold

Consultgreg

Petrofac, SFO case has ended.

Gazprom and Petrofac create strategic partnership

DYOR

epo001

8th Oct '21

Happy holder of UPGS for some time now and have a limit buy in case it falls to 150 again.

The international shipping thing is a red herring, Brexit has made it complicated to export to Europe and renders many goods uncompetitive. Many European companies simply can't be bothered to ship here and many British companies feel the same about the reverse direction.

Secondly, and how can I put this delicately? UPGS sell to the more price conscious end of the market, the appeal is low price and many of the brands are known solely within the UK. Extra shipping costs applied to low price goods would simply make them uncompetitive.

Many (most?) of their products are made abroad and they would do best to establish a European hub to service the EU if that is where they want to sell. (EDIT) their website talks about 4 continents and 38 countries, I can't imagine they service those from UK stocks.

Pound shops are forever. I bought UPGS because I expected them to thrive during lean times. Covid and Brexit should enable them to do very well indeed, though transport limitations might be an issue. However and luckily, they do not (I assume) ship directly to retail premises as they supply the supermarkets and discounters and therefore ship to their depots.

Caper4

Tharisa (LON:THS) and Novacyt Sa (LON:NCYT) for me

BnB

I started a position in UPGS this morning, buying 25% of the full potential position. Short-term technicals are now favourable and yesterday's sell-off in the face of a market relief rally felt like capitulation - or maybe holders were getting out to join the rally in everything else. Either way, looks like a potential entry. The next is at 145p.

The FT reports indicators suggesting the sell-off is coming to an end.

https://on.ft.com/3mATbW4

Sods law means it could be time for another lurch down but tech and high growth names have adjusted to the recent spike in bond yields while plenty of quality industrials are down 10%-20%.

I started buying a fortnight ago and have been accelerating purchases this week - so sods law will probably prevail!

gringo

Bought some Scs (LON:SCS) yesterday which Im happy to hold longer term.

My buy order on Luceco (LON:LUCE) was filled, tho I'll use a stop loss on this one until the fog clears.

Was quite tempted by Up Global Sourcing Holdings (LON:UPGS) but Id rather wait to see what the supply chain issues are from companies reporting first.

Added to Sureserve (LON:SUR) first thing after a reassuring update.

Property Franchise (LON:TPFG) is doing OK, although its risen on very low volume.

Unless theres another sell off that'll do me for now I think.

johnsmith68

13th Oct '21

Hi Andy, that's a great spot but I presume that would only be direct to consumer sales? i.e. if I was a German resident trying to order a toaster or whatever then they won't ship to me. I imagine this would only be a minuscule portion of sales. I assume the 30+% international sales figures are those to foreign supermarkets and discounters etc. that are either drop shipped or wholesaled direct from the UK. I would think that if the company decided to cease all international sales then it would require a trading statement as this would be very significant.

Leebod

29th Oct '21

Agreed about the office - seems an expensive folly. Now 86p and following the co-chairs sell off at 80p this must be close to a bottom.

Focusrite (LON:TUNE) is one that has come onto my radar, has fallen back 26% on supply issues probably.

Gear4music Holdings (LON:G4M) don't seem to be suffering from theses issues yet, so maybe a read across to £TUNE some of their products are stocked by Gear4music Holdings (LON:G4M) I believe.

stevenhume

3rd Nov '21

Agree re Somero. Everything is right about this company. No competitors offering such a broad range of solutions (18 products) to the construction sector. Only 3% growth forecast for next year which will surely be upgraded leading to a re-rating. Big dividend / great margins / cash in the bank / ROCE >50%, I could go on.

Up Global Sourcing Holdings (LON:UPGS) nice bounce yesterday after the update, supplies issues don’t seem to be a major issue.

Shaun Oswal

11th Nov '21

I bought Sureserve when it was trading at around 68p and again at 86p. I have 10000 shares.

So what is your say on Surserve Group - is it a long term hold? Or should you wait till Full Year Earnings Release on the 31st of January 2022 and hopfully take some profits?

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Gringo

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Gazprom and Petrofac create strategic partnership

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