I first heard of Reach plc at the first Mello of 2019 from Peter Higgins (known as @conkers3 on Twitter). I’m also aware of Peter’s knack for picking out future winners, and so I set an alert for the stock to break out.

I’ve been long since last July when my alert triggered, and whilst the stock has had a sharp pullback, for now the trend continues. 

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It’s often worth following successful stockpickers and see what they’re buying – if they’re going to do all the hard work and research to qualify a stock for quality then I’m happy to piggyback those ideas for a trade. 

Background 

Reach is the old Trinity Mirror (TNI), which is both a national and regional news publisher. Like Future plc, it is making the transition to digital based content rather than relying on print. 

I would also like it if the price action would mirror that of Future, as the trend here has been exceptional for shareholders.

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Finding stage two trends like this, and riding them up, is one of my core strategies. It’s great to capture quick gains and book the profits, but if we want to really capture multiples of our R then the best way is to get on board trends and try to stay in the trade. 

We can do this by averaging up and doubling our position. Of course, if we do this we then need to halve our stop if we wish to keep our risk constant. By doing this, we add on double the upside for the same amount of risk. Getting into positions like these tips the odds over time in our favour. 

Transition to digital

Reach plc’s overall revenue is declining, however, print sales are falling slower in percentage terms, with digital sales growing and accelerating. This can be seen in the recent update where print fell 7.3% compared to its previous comparator of a fall of 8.2%, and digital grew 14.0% against the prior year of 9.3%. In my opinion, the data is not useful enough to show any real trend in print – but print is the boring and declining part, and digital is the growing and exciting revenue stream. The upside in digital – should management execute – is substantial. …

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