Good morning! Here we go again with another packed week (very busy for results this week) of reporting & analysis! My value & GARP approach is making me feel a bit like a fish out of water at the moment, as we're really in a full-on bull market at the moment which is driven more by sentiment than rational analysis of the figures.

That's fine as far as it goes, and I can see the argument for making hay whilst the sun shines, but it's also important to go into speculative things with a clear head, knowing that you are speculating, not investing. The biggest risk is falling in love with the stories, throwing away the rulebook, and then losing all your easy profits in the meltdown which inevitably will happen in the frothiest, most over-priced speculative end of the market. Nobody knows when that meltdown will happen, but it will. So the trick is not to be in the most speculative stocks when they do crash. Value stocks will of course trundle on as ever, paying out divis, and protecting the downside, so I'm not worried about the market overall. It's just a question of being in solid, sensible stocks, when the market does turn down.

 

 

 

Dialight (LON:DIA)

This lighting company has fallen out of favour in the last year as its growth sputtered to a halt, and earnings went into decline. The market cap is at the top end of my small caps remit, being just under £250m currently at 765p per share.

I reported on this stock a number of times in 2013, with a recurring theme that the shares were too expensive, especially when they warned on profit on 12 Sep 2013 I was amazed that the shares only fell to 1150p, putting them on a PER much too high of 27.8 times.

So are they worth a look now that gravity has had some effect on the share price? Broker consensus is for 33.6p EPS for 2013, and the company reports its results for the year ended 31 Dec 2013 today. They don't look great, with underlying EPS at 30.8p (2012: 41.7p), and basic EPS (i.e. pre-adjustments) of 26.2p (2012: 42.0p).

In my report on 8 Jan 2014 I estimated that they looked to be heading…

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