Good morning. I often do this strange thing, where for no apparent reason, I start humming or singing a tune. On stopping and thinking what tune it is, the lyrics are always something directly relelvant to whatever I happen to be doing or feeling at the time. This morning, Bill Withers song "Lovely Day" popped into my head, and it was just after reading the trading update from KBC Advanced Technologies (KBC)!
Their statement today indicates 2012 ended strongly, with a $100 contract award from EP PetroEcuador (previously announced). KBC provides software & consultancy services for optimising profit from oil refineries. Results for y/e 31 Dec 2012 are expected to be slightly ahead of forecast.
I bought shares in KBC recently, after they announced that humungous contract win. Even after an initial big surge in share price, the valuation was still cheap - as is often the case when really significant news comes out - the market takes time to digest news, people stop buying the shares after a (say) 15-25% rise in share price, yet if the previous valuation was really bombed out, and the news is really good, then that can often still be a buying opportunity even after the initial rise.
I've just bought a few more KBC at 66p this morning. The 2012 forecast PER is 10.7, falling to 8.4 for 2013. That's too low considering how well they are trading, in my opinion. They also just moved net cash positive, per today's RNS. I expect them to reinstate a divi soon, a further upward catalyst.
It's very surprising that the initial rise in SP this morning has since fizzled out, and this represents a buying opportunity at 65p in my opinion. However, please DYOR as usual. I'm adding it to "Paul's Picks" at the current offer price of 65p.
Another example of shares continuing to rise after positive trading updates, recently was Regenersis. I flagged it here on the morning of their results in Sept 2012 as being good value at 96p, and the shares have since continued rising to 171p. Am still kicking myself on that one - I not only spotted it was cheap, wrote about it here, but for some bizarre reason it didn't occur to me to buy any shares! Proverbial wood & trees perhaps? Somebody give me a kick…
About the Author
Paul Scott
I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for Stockopedia.com on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »
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