The Week Ahead 29 Sep - 3 Oct: QTX, TSCO, JDW

A few weeks ago, I joined Instagram for the first time. I’ve steered clear of social media because of all the negative press which surrounds it: it’s bad for your concentration; it makes you question life decisions; if you’re not having to pay for something, you are the product. To name a few.

But now that (I hope), I have something moderately interesting to say, and because I want to reach a nice big audience as I run around the UK, I have decided the time is right to take the plunge. I’ve made an account, I have started making videos and I am following other users who are creating content that I feel like I can learn from.

At first I was quite pleasantly surprised. There is more good on Instagram than I realised. Interesting, helpful and sometimes inspiring content. But my pleasant surprise has turned into horror in the last few weeks. The people whose good content I was seeing have huge audiences (which is why I am seeing their content) and they have huge audiences because they post so much content. I’m blown away by how much is being pumped out by some accounts. The volume is extraordinary and it feeds the addiction that many Instagram users struggle with. There is always something new to watch on Instagram. Literally every second of the day, there is something new. And so it’s worth it for people to open the app constantly.

Meta Platforms (NSQ:META) - the company which owns Instagram - is currently trading at all time highs. The share price is up 25% in the year to date and the company’s market capitalisation is knocking on the door of $2trn. And I can’t see what’s going to stop that momentum as long as people keep using Instagram to share literally every second of their lives.

A lot of the accounts that I am following belong to seemingly quite ordinary people with no particularly phenomenal talent aside from an ability to create content that other ordinary people are addicted to consuming. It means that a lot of these people have been able to give up their jobs to become full time influencers - paid to go about their ordinary lives, as long as they are wearing the latest pair of fancy trainers.

It’s an evolution in the marketing world which has impacted some of the larger and more established brands across many different markets. I’ve noticed it particularly in the world of sportswear. Now that brands no longer need to rely on sporting superstars for their marketing, it has been easier for more companies to enter the sportswear space. And so, despite phenomenal strength in the sports market in the last few years, established brands like Nike (NYQ:NKE) and adidas AG (ETR:ADS) have struggled. The former has results next week and it will be interesting to see if the difficult decline in revenues and profits has continued.

I’ve also had interaction with Apple (NSQ:AAPL) this week because I bought a new iPhone. I’m quite proud of how long my old iPhone survived. I would guess it was close to eight years, a few drops, and a couple of accidental trips into the sea. But with a battery that only lasted about two hours, my phone was not well suited to my new nomadic lifestyle and so I invested in a new one. And because I am a fully invested member of the Apple walled garden, swapping over to my new phone was almost worryingly easy. Everything is synced so well between my tablet, laptop and phone, as well as all the files I keep in the iCloud, and so it would take an awful lot for me to hang up on Apple products.

Just like Meta, shares in Apple are up near all time highs. And with an administration which continues to blindly support home grown companies (this week, to the detriment of international pharmaceutical companies). I can’t see what will stop the relentless upward march of Apple.

I continue my quest for British companies which match this sort of complete domination. But it is hard not to be distracted occasionally by the might of companies in the US. The good news is that Europe are currently three matches up in the Ryder Cup, so hopefully that dominance can at least continue in the world of golf.

Onto next week when the deadline for UK listed companies with a financial year which ends in December to have announced their interim results is on Tuesday. And it shows. I count 24 companies set to publish numbers on the last day of September. On Wednesday there’s just one.

As ever, let us know if there are any companies that we might have missed in the calendar below.

Economic Calendar

Companies Reporting

Quartix Technologies (LON:QTX)

Vehicle tracking group Quartix has performed spectacularly well since the company;s founder Andy Walters returned to the executive team. It’s one of the 16 companies to have appeared on Roland’s ‘riding the rally’, momentum screen.

With a price to forecast earnings ratio of 25 times, the valuation has started to get a little stretched, which means Quartix will need to hit its expectations in order to keep that momentum up. But consensus expectations aren’t currently overly optimistic, so I am looking forward to having a proper read of these numbers next week. (I hold).

Tesco (LON:TSCO)

Another stock with strong momentum behind it is the UK’s largest supermarket chain Tesco. Last time I wrote about the company, I commented on the power of the ‘members club’ that the group has created with its clubcard. It helped the company take even more market share from other stalwarts in the market and kept it resilient to the threat of competition from European groups.

Tesco shares still aren’t super expensive and earnings expectations have been creeping upwards of late. We’ve also recently seen how much Next benefitted from the cyber attack which hurt Marks & Spencer, so there might be a short-term benefit for Tesco too.

J D Wetherspoon (LON:JDW)

I like Wetherspoons, but it hasn’t done much to endear itself to shareholders in the last few years. The pub industry is tough, although I continue to believe that these difficult conditions will benefit the larger players like Wetherspoons in the long run. As more smaller pubs go out of business, big chains will be able to fill in the gaps in the market.

The trouble is the wafer thin margins at Wetherspoons which mean the company has struggled against inflationary forces. The company prides itself on its low prices for customers, which means it is hard to raise prices to protect profits.

And there will no doubt be some interesting political commentary from founder Tim Martin.