Small Cap Value Report (Fri 3 Mar 2023) - FNX, CPI, NEX

3rd Mar '23 by Paul Scott

81 comments 8059 reads

Good morning! It's just Paul here today, with plenty on the agenda from catch-up items from earlier this week.

Mystery shares in this weekend's (5 March) podcast are -

ME International (LON:MEGP) - see Wednesday's report. I'm really impressed with performance, and the future looks bright, with higher margins from raising prices, and the fast-growing laundry division is catching up with the core business, so it's no longer a one-trick pony. Shares have risen a lot of late, so it may need to consolidate, but valuation still looks good value, and I like the longer term outlook.

National Express (LON:NEX) - briefly covered in Friday's report. I think this looks a good recovery share, but need to do more work on it.

Capita (LON:CPI) - also briefly covered in Friday's report. Strong recovery in earnings, and previous concerns about excessive debt have now been fixed. Could be interesting, but again, I need to do more work on it, so more than ever, please make sure you DYOR.

Explanatory notes -

A quick reminder that we don’t recommend any stocks. We aim to review trading updates & results of the day and offer our opinions on them as possible candidates for further research if they interest you. Our opinions will sometimes turn out to be right, and sometimes wrong, because it's anybody's guess what direction market sentiment will take & nobody can predict the future with certainty. We are analysing the company fundamentals, not trying to predict market sentiment.

We stick to companies that have issued news on the day, with market caps up to about £700m. We avoid the smallest, and most speculative companies, and also avoid a few specialist sectors (e.g. natural resources, pharma/biotech).

A key assumption is that readers DYOR (do your own research), and make your own investment decisions. Reader comments are welcomed - please be civil, rational, and include the company name/ticker, otherwise people won't necessarily know what company you are referring to.

Paul’s Section:

National Express (LON:NEX)

139p (rose strongly yesterday)

Market cap £856m

Final Results

I should emphasise that this is the first time I’ve looked at this international bus & rail operator. That’s because it’s been too big for the SCVRs here,…

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Harry Hindsight

3rd Mar '23

Happy the MC has been raised to £1b. This brings in the likes of Currys (LON:CURY) - a recent contributor said "could we do without this company" as a consideration. For me the choice, finance options, physical stores (AO World not comparable) it would be a sad day if this goes under. The only place to see a laptop, camera, TV etc in the flesh and may see something didn't know existed online.

Revenue has been consistent even through covid but went from good profit to bad loss in 2019, and debt went through the roof thereafter.

Maybe another pension fund with a company attached. No accountant so leave that to you chaps if interested.

ayresomeangel

4th Mar '23

There are two threads running on Lemon Fool website regarding the wind down of NB Global Monthly Income Fund (LON:NBMI) which may be of interest.

One is in the Gilts and Bonds folder in thread “NBMI Proposed Managed Wind - Down”

https://www.lemonfool.co.uk/vi...

The other is in the Investment Trusts and Unit Trusts folder in thread “NBMI - NB Monthly Global Income Fund”

https://www.lemonfool.co.uk/vi...

GeeBee

Interesting cover on National Express. My wife and I travelled by them for a flight from Heathrow, travelling from Leicester. Coaches both ways were full which I think is possibly due to them capitalising on the rail strikes. I have to say that I was impressed with the service, much cheaper than rail or driving and parking. One to watch as I will definitely be using them again, might be a turnaround if they can provide a reliable and competitive service and fill coaches?

Silver Moon

I think Currys (LON:CURY) is getting its s--t together, better salesperson training perhaps but I have found it hard to go to just have a look-around inside without coming away with the most suitable thing for me.

This would be the stuff of nightmares so no thanks :-(

EdwinMoney

I'm no expert, but have researched extensively into this stock, including speaking to a few direct employees (albeit not at a level that I would class as "insiders").

This has a high insider and institutional ownership (about 95%), low daily trading volume and shorts currently borrow at least 2.5%.

The last institutional sell was in May 22 and the price at that time was around the £2.40 range. Since then the price has been halved and only just started to recover after Thursday's results. It appears to me that the drop has been caused largely by the shorts cleverly manipulating this down whilst 95% of the stock has remained unmoved.

I'm not sure if shorts still see money to be made here, but those results suggest this is undervalued to me and there's the added variable that in January Bloomberg said this was one of the top 10 most likely take over targets (again this could be a reason for the price being driven down, to make an offer seem more generous).

I'd be happy to be corrected by those who know more, but just thought I'd share my view from the research I've done.

Rusty2

I avoid Currys (LON:CURY) like the plague.

Caduceus

What are the factors that create this opinion if I may ask please Rusty2?

5th Mar '23

He's not a fan of spice

Snowbum

For purchases I like to visit to do some window shopping but usually revert to online thereafter.

Chart looks promising though…. If it can break above 87p, I’d consider a trade here on a retest and hold of that price point.

Agreed

Why does that response make too much sense? Lol

Paul Scott

Hi EdwinMoney,

I've being trying to guess which stock you're talking about! From deduction, I think it must be £NEX ?

Please can people try to remember to always put in the company name or ticker into every comment, because it's not obvious for some readers, depending on which layout you're using.

So whenever you find yourself typing "This company", or "this share...", etc, try to remember to replace that with the company name, before publishing your comment.

Thanks!

Paul.

Hi GeeBee,

Yes I agree, I also use Nat Exp coaches when I fly from Gatwick or Heathrow. The service from Bournemouth really is excellent, and round the clock. It's pretty comfortable too, with a plug socket handy for charging phones, and allegedly they have WiFi, although I've never managed to get it working! Comfortable & quiet, and even with a decent loo at the back.

As you say, it's much cheaper and easier than driving up, and paying extortionate parking charges.

I hadn't realised that NEX also has so much international operations. I must listen to the recent results webinar, that's on my to do list for today!

Regards, Paul.

Past experience. Bad service, salesstaff who are clueless. Checking recent reviews seems things have not change. There are other shops to use, for TVs you can go to Argos, for expensive TVs then an audiovisual dealer woukd probably be better if you have one in your area. For computers I would use online.

I like spice, prefer Thai to Indian curries.

Sorry you're right it was £nex I was referring to. Just replying to the original article so hadn't realised it would cause confusion. Thanks for the tip.

And remember stocko doesn't use £ anymore when tagging companies. Use @ instead.

Whoops. Not s good start at all. National Express (LON:NEX) sorry

6th Mar '23

How did your further @nex research go Paul?

WDWombat

6th Jun '23

Capita CPI is the ghastliest British company with which I have had the displeasure to deal. It is a monopoly unable to produce consistent earnings, nor shareholder value nor indeed satisafaction for any account. A classic exaple of failed British capitalism at its worst. Get thee gone o foul demon.

Small Cap Value Report (Fri 3 Mar 2023) - FNX, CPI, NEX

Paul’s Section:

National Express (LON:NEX)

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Paul Scott

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