Small Cap Value Report (Mon 7 Mar 2022) - VARE

7th Mar '22 by Paul Scott

68 comments 10814 reads

Good morning, Paul & Jack here with Monday's SCVR.

The futures are pointing to another bumpy day, following on from another panic sell-off last week. Absolutely hideous market conditions.

Agenda -

Various Eateries (LON:VARE) - results for FY 10/2021 shows losses, but the year was impacted by covid. Also, it's quite an early stage business, with only a small number of sites, but more in the pipeline, so there's not much financial track record yet. Despite big fall in share price recently, it still doesn't strike me as a bargain.

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.

Various Eateries (LON:VARE)

57p (Friday’s close) - market cap £52m

Final Results

Various Eateries PLC, the owner, developer and operator of all day club, restaurant and hotel sites in the United Kingdom, announces its results for the 53 weeks ended 3 October 2021.

The share price here has been dropping relentlessly, but that doesn’t necessarily mean there’s anything wrong with the company - it’s an increasingly unpleasant bear market, so practically everything is falling, often irrespective of the company fundamentals.

VARE is too early stage to analyse meaningfully from these accounts, which are also impacted in part by covid. Although they do remind us that this is still quite a small business, and not yet profitable -

Revenue £22.3m

Adj EBITDA £1.2m (which ignores a lot of real world costs, so is not meaningful)

Loss before tax £(3.7)m

Benefit…

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Bronstein

7th Mar '22

It's not so much I wish I had liquidated into cash as wish I'd moved into commodities. A month ago I looked at ii recommendation WISDOMTREE Enhanced Commodities UCITS ETF which was at a record highs and growing. I thought I was too late but it's up another 14% since then. Has it peaked now ? I think the only certainty is there will be more volatility so maybe the best strategy is to sit tight and remember the intrinsic value is still there.

grumpy5

Shame the UK small/mid-cap market makers don't have as big balls as the Ukrainian Defence Force - liquidity has all but dried up.

Tommy H

Hi Bouncing Back,

There was a bit of a discussion at the end of last week. I think in Friday's SCVR. I hold City Of London Investment (LON:CLIG) obviously should have sold early last week, looked to sell this morning and Halifax were not getting any bites and I do not like putting through a sell at any price order, so still hold.

Current ex dividend, I (well mum) hold for income, it is a medium size (was ~6% prior to going south, to guessing nearer 4% now).

The main points were this is typically a fairly volatile share anyway, daily movements are often higher value, never a few pence always 10's and it usually has a fairly large spread too. So depending on what the last order of the day is (buy or sell) it can look like there are big movements anyway, and guess that the current situation is making it worse with more sellers and not many buyers...

Not that thought makes it any easier, good company, makes a profit, not 100% supportive for the acquisition but understand the rationale. Will see where tomorrow goes.

Tommy

BouncingBack

From what I can understand, this is a well run company and I've held for a couple of years. I'll continue to hold - and keep my nerve!

cmpeckham

Doom and gloom in the markets and no one can say for sure how it will turn out, but I think it's worth bearing in mind that things could change very quickly. When I look at Russia's demands, what I see is a realistic basis for negotiations on both sides. I'm surprised how little they are asking for as an opening position. The foreign ministers are due to meet in Turkey and something could come out of that. I'm not downplaying the gravity of the situation or the abominable behaviour of Russia, but thinking about how it could play out, I can see a way for both sides to claim victory and avoid the otherwise inevitable increase in bloodshed. Ukraine wont like the demands but my guess is that they would come under pressure from the west to accept some compromise (realpolitik and all that).

If the reports of Russia's demands are correct, then of the many ways that this could turn out, I personally thinks that a peace deal is the most likely (even though I wouldn't bet the house on it). If a ceasefire is agreed as a step towards that, stocks would generally take off and the hedges that have been doing well recently would tumble.

TheFloatingInvestor

No one..who is truthful..is doing ok atm would say

Boon

And yet, having opened down nearly -3%, the FTSE100 may yet end the day up 0.5%-1%.

Stock market volatility is now mimicking crypto markets...

Only two sensible ways to trade atm. Either day trade if you have the abilities, data, and connectivity. Or sit tight and hold on for the storm to pass. The worst approach is to try to time the market as an amateur.

Brookeda

Although its early days there are signs this isn't going Russia's way by any means and so you would expect their demands to decrease as they look for a way out that allows them to keep face and keep putin in power which seems to be the only objective.

I do think though Ukraine will see this weakness as an opportunity to push for a deal that doesn't compromise their integrity or ability to make their own future.

In essence I think we may well have another week or two of bloodshed before one of them is forced to negotiate.

Helvellyn

I have been doing some screening for cheap looking stocks and am getting some odd 'dividend yield' numbers. For example Rank (LON:RNK) is quoted as yielding over 2% but hasn't paid a dividend for over two years and as far as i can see there is not one in the pipeline either. This has happened on a number of stocks that have filled my criteria . I have raised a green button query but does any other subscriber have an answer as to why this happens or what Stocko's position on this is?

Richard

The Phoenix

Emerging market exposure

Great platform, terrible customer service

Henry Walpole

Dire customer service from IG. It took them 6 months to exercise some warrants for me (HL - where I also had the same warrants had it all sorted in a few weeks). I spoke to more than one member of staff who didn't even seem to understand what a warrant was.

Silver Moon

Hardly a level playing field now with the two Donbas Republics and Crimea already in Russian hands and Ukraine left with colossal infrastructure damage caused by Russia's hostile invasion.

Revs8

Being positive.

Out of adversity comes opportunity....

Some good quality shares trying to find a bottom today. Indivior (LON:INDV) (i hold) showing a strong bounce off support around 253p. Sales should be largely unaffected by Ukraine conflict and forward forecasts are superb.

Somero Enterprises Inc (LON:SOM) (i hold) I think it will bottom out at 400p. I'll be increasing stake around this level. Forecast div over 8% if held in a SIPP.

Others showing signs of life Legal & General (LON:LGEN) high wave signal today. Bulls looking for a bargain. If it opens above 244p then it will be an even stronger buying signal. Forecast div between 7 and 8%.

£SNEW remarkably resilient share price over the last few days (although it has dropped circa 20% in last few weeks). Bulls definitely supporting this one at 33p for now. Forecast div over 7%.

Saga (LON:SAGA) (i hold) Incredibly volatile. A bargain if cruises can return to normal. 50% upside in short term and 100% in medium (months) if travel sector returns to normal. Signs of support today but I'd like to see more before increasing stake.

I'll be increasing high quality oversold shares first (Indivior (LON:INDV) Somero Enterprises Inc (LON:SOM)).

For me the hard part now is trying to work out which stocks are being sold off simply because money is leaving the market v those that will struggle in the world of higher energy, wages and inflation.

Rusty2

The problem with IG is everytime you reply to an email, you get a different person responding, l must have contacted over 20 different people, most don’t have a clue. It is such a minor matter to sort out, HL would have sorted it in a day.

CremeDeMenthe

There is an update on their website. They say there is no direct exposure to Russia and only 0.25% exposure via their subsidiaries. I view this share as an important part of my investment portfolio and think the drop is way overdone, but so are so many others. I am holding for the income.

barnakles

Re £RNK Stocko's data has it that a dividend is forecast to be paid. This would be from broker forecasts, but it is no longer possible to tell (on Stocko) which brokers cover the stock. The yield quoted in the 'Growth & Value' panel is the 12 month forecast yield.

Camtab

8th Mar '22

Can someone tell me the difference between "finding the bottom" and "catching a falling knife". I have always endeavoured to find the bottom but never catch a falling knife.

ezlifeme

The safest thing to do with falling knives is obviously to pick them up when they are stuck in the ground (at the bottom) However you may not be quick enough and others will undoubtedly try and get there first

bryans1311

Simple really. Become skilled in hindsight trading!

Small Cap Value Report (Mon 7 Mar 2022) - VARE

Various Eateries (LON:VARE)

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Paul Scott

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