Small Cap Value Report (Thu 7 May 2020) - BOTB, VTU, SDRY, FLTA, HYVE, COST, RCH, WRKS

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7th May '20 by Paul Scott

85 comments 10355 reads

Good morning, it's Paul here with the SCVR for Thursday. In a rare turn of events, I'm up early today & feeling quite perky, so today's report should be earlier than usual & there's stuff left over from yesterday to catch up on too.

Please see the article header for the list of company updates which have caught my eye today.

Estimated timings - most of the article will definitely be up by 1pm today. But I'll probably continue adding sections after that, in order to catch up from yesterday.

Best Of The Best (LON:BOTB)

Share price: 435p (pre-open, likely to go up)
No. shares: 9.38m
Market cap: £40.8m

(I have a long position in this share)

Trading update

Best of the Best PLC, (LSE: BOTB) the online organiser of weekly competitions to win cars and other lifestyle prizes, is pleased to provide the following trading update for the 12 months ended 30 April 2020 (the "Period").

Once again, BOTB has out-performed against forecast. This is becoming a pleasing habit!

The Company's financial performance throughout the Period, and particularly the second half, continued to be strong.
As a result, the Board now expects to report full year revenue and profit ahead of current market expectations.

Note this comes on top of repeated increases in forecasts previously;

Another point to consider, is that these big increases in profitability have been achieved despite the headwind of adverse changes in taxation (remote gaming duty, and VAT).

Forecast - house broker FinnCap is excellent in getting its research out to investors, via both Research Tree, and its own research portal. A brief update today shows a big increase in forecast for FY 04/2020 - EPS is up to 33.2p now, up nearly 91% on last year!

Forecast PBT has gone up 27% on the previous forecast, to £3.8m.

My opinion - this share should fly today, it's way too cheap, in my opinion. It's rated at only 13.1 times newly raised FY 04/2020 forecast. The share price should be double the current level, in my view, since a PER of 26 would be perfectly reasonable for a share that's growing earnings so strongly.

I just emailed the CEO to congratulate him with a simple message, "You guys are on fire!"

This company should be benefiting from more people staying…

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hp01

7th May '20

"And.. just to say... incredible there is at least one forum left that isn't full
of crazed loons."

Let's hope it stays that way!

clarea

The Momentum master is in the house always a welcome addition.

greenhat2

Robbie - it would be great if you could get this on another platform as well as soundcloud - maybe Apple podcasts or even Spotify!

Many people find them much easier to work with.

Patrick L

Re 'moat' - I think you make a fair challenge but Best Of The Best (LON:BOTB) has quite a big selection of prizes - a competitor would need significant early capital to reach a similar level - so I think that acts as a slight barrier to competition. The only other similar competitor I've seen are more expensive with fewer prizes.

Plus the website is very user-friendly.

My bigger worry is regulatory risk, lack of expansion ambition, and how tightly controlled the shares are. But for now I am a happy holder! Every extra bit of revenue feeds almost entirely through to profit given the fairly fixed cost base.

Deegee Eff

The government's plan to avert cope with Cocid is to spend vast amounts of money. Does the government have a plan in the event of a bond market collapse ?

Jonathan C

GreyInvestor, does Bioventix (LON:BVXP) fit the bill for a boring, safe, reliable, dividend paying, environment caring, UK smaller company?

Paul Scott

Why would the bond market collapse, when there is a guaranteed buyer for all Gilts, to an infinite size - the Bank of England?
Why do you think interest rates are zero? It's bizarre, but that's the truth.

Dieselhead2

8th May '20

Hi SaarfLondon,

I just had to have a chuckle at your post and those comments by your daughter, "Only fat old men like you shop there" and your follow-up comments. Maybe it struck a chord with me, although I don't shop in Superdry. I may resemble some of it though! I also agree with your final comment regarding long and short ometimes staring at you in the face.

On a side note, keep up the great reports Paul and Graham. Superb and inciteful reading.......

......and now after reading your post Purpleski, I've got tears rolling down my face! Superb entertainment!

I have just heard an online interview between Zeus and Mr Forrester from Vertu Motors. I found it very good watching and listening. I look forward to your comments Paul on Vertu......

Johnandlou8

In my opinion one factor overlooked going forward is how many tickets they manage to sell from deserted airport terminals and shopping centres. When passengers or shoppers are present the challenge of achieving a socially distant lottery ticket transaction should not be ignored. It could be an avoidable hassle. Add to this whether you have never stumbled across their super-car lottery ads whilst on the internet; I haven't and hopefully this is the area they have managed to expand rapidly. Is there not a risk that the business model has collapsed post Covid and it could take time to recover sales. (I have no financial interest in these shares).

Etonkush

worth reading previous trading update. There are no retail sites left, now 100% online with social media growing exponentially

Terry Dickens

As we have already seen with many comments here over the past month or so, pretty much everyone trying to predict it has called the market wrongly.

Please see my post on the 20 March called CALLING THE BOTTOM. https://www.stockopedia.com/co...

Just saying - not everybody called it wrongly.

simoan

What does this prove? If you have 1,000 chimpanzees throwing darts at a dartboard, one of them will hit the bullseye, eventually.

Update on BOTB post seeing just how easy it was to find online.

According to their 'about' page, BOTB went totally online at some point, they do not operate out of airports or shopping centres anymore. They were also top of the shop with its advert for what looks like good old fashioned spot the ball.

This is clearly a much better state than suggested by my post below which was an honest comment based on this page's info.

Mr. Simoan

Are you calling me a monkey..... LOL

Jamie Green

Listened last night, absolutely brilliant!

Howard Gilbert

Listened this morning Great Music lots of fun . It was like Radio 2 Jeremy Vine with pearls of wisdom, examples of good and bad decisions, lessons learnt and a few stock reviews too. Very enjoyable. thanks Robbie.

10th May '20

No. Why do you think my post was about you? The point I was making was that predicting future market movements is a mugs game, and the market makes monkeys of us all on a regular basis if we try. You clearly didn't read the Howard Marks memo which quoted a section from https://psmag.com/social-justice/confident-idiots-92793

"An ignorant mind is precisely not a spotless, empty vessel, but one that’s filled with the clutter of irrelevant or misleading life experiences, theories, facts, intuitions, strategies, algorithms, heuristics, metaphors, and hunches that regrettably have the look and feel of useful and accurate knowledge. This clutter is an unfortunate by-product of one of our greatest strengths as a species. We are unbridled pattern recognizers and profligate theorizers. Often, our theories are good enough to get us through the day, or at least to an age when we can procreate. But our genius for creative storytelling, combined with our inability to detect our own ignorance, can sometimes lead to situations that are embarrassing, unfortunate, or downright dangerous—especially in a technologically advanced, complex democratic society that occasionally invests mistaken popular beliefs with immense destructive power."

All the best, Si

Trident

I recommend 'Thinking Fast and Slow' by Daniel Kahneman

Essentially posits that human access quick decision making processes innate in their systems. These have a usefulness in a % of situations, but present bear traps for problem solving, or making choices etc.

Fear of loss is one of factors which affects people he argues more than making a gain.

I find this aspect of his observation to be painfully true!

11th May '20

Yes, I read it years ago and am aware of loss aversion although it's very difficult to fight against it. With regard to investment no-one should be using System 1 as it doesn't really seem appropriate. It's not the easiest book to read and as far as investing is concerned I think there are probably more appropriate books to read e.g. Richard Thaler - Misbehaving, Dan Ariely - Irrational series etc. Anyway, you should be asking timarr about this subject, not me :)

Small Cap Value Report (Thu 7 May 2020) - BOTB, VTU, SDRY, FLTA, HYVE, COST, RCH, WRKS

Best Of The Best (LON:BOTB)

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Paul Scott

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