Market correction watchlist
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
“Current trading and outlook
· The FY22 order book for the core business, excluding the effect of the recent Salter acquisition, is ahead of this time last year
· Shipping availability continues to present challenges with forward orders from the Group's retail customers being prioritised ahead of stock purchases. Management expects that global shipping will remain disrupted until after Chinese New Year (February 2022)
· Current trading remains in line with expectations, with growth expected in FY22 both from the core business and through the acquisition of Salter
No Change in Analyst consensus. Results out Nov 2nd. At 176p share price is at 200day moving average so could rally from here. Id prefer to wait for any weakness, looking to buy around 150p which would be 14.2 P/E which would give more margin for error.
Property Franchise (LON:TPFG) – 276p
Market Cap - £88m
Forward P/E – 12
3 yr av. ROCE- 21% Latest 24
3yr av. Net Margin – 31 Latest 33
Latest comment “Trading has remained encouraging into the second half, with all brands performing well, notwithstanding the expected slight softening in the holiday months of July and August. This good performance, together with the record results of the first half and healthy demand levels, mean the Board now anticipates its full year profit performance will be ahead of market expectations.
In the longer term, whilst we anticipate a gradual move towards more normal market conditions over the coming periods, and there remains some uncertainty as to how external market conditions will develop, we expect the Group to continue to grow materially driven by our strategic growth initiatives.
….................................We continue to have a substantial growth opportunity ahead of us and have thus far demonstrated our ability to deliver on the strategic initiatives that allow us to capitalise on that opportunity. Our ultimate purpose remains to support our franchisees and to help them become more successful, an ethos that drives forward all our central team and that we are excited to deliver on further going forwards.”
Analyst upgrades in the last month. Possibly forming a bottom since results sell off (down 12% or so in last 3 weeks) Volume increasing. 200d MA 250p, tho looks oversold on RSI
Will housing market slow? Is this priced in? Looks good value to me so have taken a half position with the option to bail out if the chart makes new lows.
Market cap - £116m
Net Cash
Forward P/E – 11
3 yr av. ROCE- 9% Latest 18
Op Margin – 5.3
Latest Comment “Outlook (May- No trading update since that I can see)
The Group has entered the second half of the financial year ahead of previous management expectations, in a solid position and expects, with our £371.6m order book providing visibility of earnings, that the Group will report further profitable growth during 2021.
I remain optimistic about the prospects of the Group for the year ahead and, along with my colleagues at Sureserve, will continue to focus on our vision to be the supplier of choice to communities across the UK for their compliance and energy services, becoming market leaders through excellence in service delivery, innovation and customer service and thereby enhancing value for shareholders.”
Analyst upgrades in last month.
Directors buying at 80p+. Winning contracts. Harwood and Slater own 33% of shares. Slater said they killed off a bid at 70p a while back. Bob Holt stepped down in March. Margins pretty low.
Its broken the uptrend but RSI looks oversold. Chart looks awful but volume picking up, my guess is Downing selling remaining holding. Trading update probably within next week
If the price is right, ie. another leg down, others I think worth watching are-
Games Workshop (LON:GAW)
Argentex (LON:AGFX)
Avon Protection (LON:AVON)
Cmc Markets (LON:CMCX)
Boohoo (LON:BOO)
Jarvis Securities (LON:JIM)
Volex (LON:VLX)
Somero Enterprises Inc (LON:SOM)
Science (LON:SAG)
K3 Capital (LON:K3C)
Strix (LON:KETL)
Capital (LON:CAPD)
Vertu Motors (LON:VTU)
Scs (LON:SCS)
Goodwin (LON:GDWN)
Portmeirion (LON:PMP)
Dunelm (LON:DNLM)
Ig Group (LON:IGG)
Polar Capital Holdings (LON:POLR)
Fonix Mobile (LON:FNX)
Frp Advisory (LON:FRP)
Begbies Traynor (LON:BEG)
M Winkworth (LON:WINK)
Watkin Jones (LON:WJG)
Persimmon (LON:PSN)
Halfords (LON:HFD)
Special situations-
Logistics Development (LON:LDG) (12.2p- 18.5p cash)
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45 comments
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?
Up Global Sourcing Holdings (LON:UPGS) nice bounce yesterday after the update, supplies issues don’t seem to be a major issue.
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.
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.
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!
Tharisa (LON:THS) and Novacyt Sa (LON:NCYT) for me
Petrofac, SFO case has ended.
Gazprom and Petrofac create strategic partnership
DYOR
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
He bought £SCS.
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
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.
Sureserve (LON:SUR) up 13% today on update and director buy.
Sosandar (LON:SOS) up 18% on H1 report.
Great post Gringo.
I agree with many on your list and would add the following as top ups or new holdings;
Redde Northgate (LON:REDD)
Saga (LON:SAGA)
Sanderson Design (LON:SDG)
Smiths News (LON:SNWS)
DYOR
Richard
Regarding Up Global Sourcing Holdings (LON:UPGS) - something I am digging in to now. Has potential, HOWEVER:
None of their brands are currently offering international shipping. in fact, they're not even offering shipping outside of the UK. theres a small notice on their Salter website, and i contacted customer services who said this is a recent change and it affects all of their brands e.g if you try to buy a blender via Salter / Giles and Posner, it is UK DELIVERY ONLY. They also said this will not change until AFTER CHRISTMAS (but i suppose this isn't set in stone).
Looking at their Interim results, for the 6months to Jan 2021, international sales were 31.4 % of total sales. the previous year it was 34.8% to Jan 2020 and 36.0 % to july 2020.
In my opinion, this is significant. perhaps it may not impact the Final results on 2 November 2021 as the support agent said this change is recent, however im of the opinion it will have a significant impact going forward, and would not be surprised by a profit warning in their forward statement.
As usual, DYOR and let me know your thoughts. i'd be interested to know if anyone has done more deeper research in to this.
thanks for this!
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.
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.
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.
Some great companies on this thread. I am watching closely the following and have been a while, waiting for an entry point:
Polar Capital Holdings (LON:POLR) - a really well managed tech fund which is also now moving into ESG/emerging markets as a diversifcation.
Electra Private Equity (LON:ELTA) - sum of parts valuation for hotter shoes and TGI Fridays should be way greater than current price.
Chamberlin (LON:CMH) - Chamberlain, left field but "expected earnings per share for the current financial year ending 31 May 2022 of not less than 1p." and also looking at its substantial property assets. Current price is 8p.
Frontier Ip (LON:FIPP) - holds multiple early stage investments. From admission, Frontier IP will be interested in 1,564,800 ADSs in Exscientia. Based on the initial public offering price of $22 per ADS, Frontier IP's holding is valued at $34.4 million.
I am also actively looking to add existing holdings on weakness and have over 30% cash now. Portfolio for disclosure is below. Also hold ITs such a Scottish Mortgage Investment Trust (LON:SMT), £US, Oakley Capital Investments (LON:OCI), Pacific Horizon Investment Trust (LON:PHI), Jpmorgan Emerging Markets Investment Trust (LON:JMG)
Sosandar (LON:SOS), Tekcapital (LON:TEK) , Steppe Cement (LON:STCM), Phoenix Copper (LON:PXC), Kr1 (OFEX:KR1), Quiz (LON:QUIZ), Scs (LON:SCS), Anglo Asian Mining (LON:AAZ), Steppe Cement (LON:STCM), Oryx International Growth Fund (LON:OIG), Wentworth Resources (LON:WEN), Great Eastern Energy (LON:GEEC), East Imperial (LON:EISB), Guild Esports (LON:GILD), Secure Trust Bank (LON:STB)
re Polar Capital Holdings (LON:POLR) market cap of their main fund has dropped 10% in the past month so their associated fees will also take a 10% hit. I agree they are a great company but with cash coming out of the market it will have a significant impact on their numbers.
what a great post gringo - thanks.
My only worry is that everyone seems to have cash to buy more, so surely we can't be at the bottom anytime soon then...
Save to the extent that everyone keeps selling to turn more holdings into cash
I added Volex to my beaten up purchases this morning in the hope that the 50 dma will provide support. Left 25% still to buy on further weakness
Some more falls today, Vertu Motors (LON:VTU) was up around 7% this morning but now back down to +2%.
I took a position in Vertu Motors (LON:VTU) first thing this morning at just over 50p.
Hopefully see a retest of recent highs at some point.
What a good post. Will be adding some of the mentioned stocks to my watch list.
Somero Enterprises Inc (LON:SOM) is my biggest holding and I've added more in the dip. Super company in the right sector. Its money saving technology for the warehouse construction industry and returning a lot of cash.
Good advice from Paul on SCVR to buy back in small bites incase its not the bottom. Im starting with Sureserve (LON:SUR) ,it looks very oversold to me unless there is something dreadful going on behind the scenes. (but the directors wouldn't have bought shares at over 80p if that were the case).
I agree, buying in 2 or 3 lots is the way I like to do it too.
I agree re Somero Enterprises Inc (LON:SOM). A lot to like about this company. One of my favourites as well.
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.
You can get a nice dividend yield of over 5% while you wait for capital appreciation from Ig Group (LON:IGG) and Polar Capital Holdings (LON:POLR) which both look good value to me.
Thanks Doug, I've added them.
Very nice yield and both look good value plays. Ig Group (LON:IGG) should be seeing plenty of trading right now
Good post. My correction buylist in priority order,
Warpaint London (LON:W7L)
Somero Enterprises Inc (LON:SOM)
Sureserve (LON:SUR)
Macfarlane (LON:MACF)
Halfords (LON:HFD)
Impax Asset Management (LON:IPX)
Oryx International Growth Fund (LON:OIG)
I agree about Games Workshop (LON:GAW) however look at the chart last year around March, this could go a lot lower but certainly one to watch.
I have been buying Begbies Traynor (LON:BEG) at around 133p, could go lower but I think they are going to be very busy over the next year or two.
A few others to watch are Braemar Shipping Services (LON:BMS), Belvoir (LON:BLV), Gear4music Holdings (LON:G4M), Joules (LON:JOUL), Redde Northgate (LON:REDD), Halfords (LON:HFD)
Focusrite (LON:TUNE) are beginning to look more interesting.
To be honest there are loads at the moment, Sosandar (LON:SOS), Naked Wines (LON:WINE), Clipper Logistics (LON:CLG), Vertu Motors (LON:VTU), Morgan Advanced Materials (LON:MGAM), Howden Joinery (LON:HWDN)
I agree with your list, I do hold all of those apart from Sureserve (LON:SUR), Games Workshop (LON:GAW) (sold), Up Global Sourcing Holdings (LON:UPGS) (sold recently) and Argentex (LON:AGFX)
I agree there's lots which are looking much better value lately.
I could probably make a list of 30 or 40.
2 more to consider Royal Mail (LON:RMG) and Cvs (LON:CVSG)
Good post. As it happens I’ve picked up the following from your list at around today’s prices - plus I already own a big (for me) position in Boohoo
Avon Protection
Luceco
Somero
Argentex
And one not mentioned - Strix
I don’t try to time the bottom. I’m happy to enter within 10% - though that doesn’t always work out.
Also initiated in a couple of growthier names on recent pullbacks:
Cambridge Cognition
Made.com
PCI-PAL - looks incredibly cheap if you can stomach the current patent dispute
The Hut Group
The latter has tumbled to a level far below analysts’ sum of the parts valuation. Bit of a black box but selling looks overdone on the chart technicals and could be an interesting trading name
I really like £KETL
Will steal your suggestion and add to the list.
Under £3 and I'd start to look for a possible entry.
You’re welcome. I also forgot to mention I’m a long term holder of K3 Capital (from your original list) and added more recently. I would be all over it if it weren’t already a substantial holding.
Games Workshop (LON:GAW) , such a hot tip you thought you should mention it twice?!
Gus.
This is a very useful exercise which I started last week. Initially I started with 2 lists - one where I already hold so I know more about the share which helps, and one which I would like to own. Here is my list #1 without any further info but target prices. Similarly list #2
£stem
£tpfg looking for 240p here
£polr looking for sub 700p
£slp under 80p
£jlp under 14p
£apf under 130p
list #2
£ba. Under 540p
£hwdn under 800p
£n91 under 240p
just off out to footie, more comments on your very excellent list if I can later
steve
When markets were tanking last year I made a couple of lists. As you've done set prices... based on fundamentals and chart...at a price I'd be interested. Then setup alerts so I didn't have to watch them every day.
Was very useful as it's easy to get sucked into daily movements and tinker too much.
Ive also set alerts for unusual volume on certain companies, which was helpful
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
A good idea but I would prefer equal £ amounts in each stock. I take it those are today's prices?
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.