Webinar: Britain's Stock Market on Sale

First, a quick apology. Five minutes into last night's webinar, our webinar platform went down - we couldn’t stream and the team couldn’t even access the backend. That's never happened to us before - and while the failure was at our service provider’s end, I know how maddening it was for everyone who had set aside some time to join us live. Sorry!

Anyway, Roland and I stayed on and immediately recorded the webinar in full as a video. It's was up on YouTube by 8:30pm last night - and you'll find it alongside the slides on the webinar event page:

• Watch the recording and download the slides

We put a lot of preparation into this, so I hope you'll find an hour to watch over the weekend. Below is a quick tour of what we covered - and I hope this post can be a place for discussing the themes.

The backdrop: Britain on sale and breaking out

The spine of the webinar is what I wrote about last week on the site (here): the FTSE 250 has just broken out to its first all-time high in five years. UK shares still trade at roughly a 20% discount to comparable international markets, there were 23 takeover bids in the last three months, and companies are buying back their own shares at a rapid pace.

If trade buyers and private equity have noticed how cheap Britain is - then it should give us all confidence that there’s still a lot of value in UK equities. Of course, there’s one corner lagging - the AIM index, which is still 39% below its pandemic peak - which Roland and I do discuss.

Our analyst team has been focusing on mid-cap names recently. They've published nine FTSE 250 stock pitches this year, and all nine are up - on average by +38% - with 2 more written up in the last fortnight. We talked through a few of them. Roland pitched Raspberry PI Holdings (LON:RPI)  in April, very soon after it had jumped 42% in a single session - which definitely took nerve - and it rallied another 43% since. Mark pitched CMC Markets (LON:CMCX)  in March - earnings forecasts have roughly doubled this year, from about 24p to 52p, and it's still on around 12 times earnings. Meanwhile Keller (LON:KLR) , quietly digging the foundations for the world's data centres, has prominently featured in webinars and editorial all year, and is still telling the market it’s doing well.

Ramsdens Holdings: a textbook case study

We dug into Ramsdens Holdings (LON:RFX) as this year’s perfect example of all the signals we zero in on at Stockopedia. Nine times in eighteen months, the company told the market it was ahead of expectations or raising guidance, while the StockRank was in the 90s throughout.

I think most people thought "pawnbroker, gold play", shrugged and moved on. But in June a trade buyer bid for the stock (just as they did for H&T) and the shares jumped +31% - raising its final offer by another 13% in July. From the first “significantly ahead of expectations” signal to the final offer, the shares gained +185%.

The principle does generalise - we’ve seen the same ideas play out in Keller, CMC and others all year. More than that we ran the numbers on 111 guidance upgrades this last quarter - shares popped by around 5% on that day’s trading regardless of StockRank, but 80+ ranked names continued to drift a further +6.5% afterwards. Winners do keep winning - and the signal is always in the news - the readers of the Daily Reports can get a real edge.

The growth stock corner

To show these points in action - we discussed four smaller growth stocks - across the StockRank range - some more speculative than others.

Two low ranked stocks:

• Rentguarantor Holdings (LON:RGG) - revenue up 250% year on year in the first half, with the Renters' Rights Act providing a real tailwind. Still loss-making, and on a valuation Graham has called "bonkers" on current numbers - but justified if the forecast growth comes through.
• Seeing Machines (LON:SEE) - who provide driver-monitoring systems, now required in new cars sold in the EU. Volumes are inflecting, but a convertible refinance is due in early October. A binary situation - not one for me, but I know many do follow this story closely. 

Two higher ranked stocks beating expectations this week providing digital contracts:

• Made Tech (LON:MTEC) - announced the largest contract in its history on Tuesday and upgraded guidance for the second time this year, its fifth "ahead of expectations" statement. I've held this one a long while - it finally looks to be breaking out.
• Kainos (LON:KNOS) - told the market it would be "comfortably ahead" and jumped 22% on the day. Not a share I’m hugely familiar with, but still on the digital contractor theme. Another in this vein is Tpximpact Holdings (LON:TPX) - the highest ranked of all of them.

The housebuilders - is there an early turning point?

I have written a couple of newsletters about the housebuilders in recent weeks. And have spotted an anomaly. Yes eight of eleven listed housebuilders trade well below tangible book value, and the six majors average about 0.7 times book against a 13-year average of 1.6 times. Deep Value alone isn't necessarily enough, though as you often end up owning Value Traps or worse for years. Returns on capital in the sector have more than halved and the valuation discounts are arguably deserved.

What caught our eye is how the market has started reacting to bad news.

There have been ten guidance cuts since mid-2025. The first six fell 17% on average on the day and kept falling over the following month. But all four cuts since June have traded differently. The share prices were higher four weeks later. Taylor Wimpey (TW.) even rebased its dividend policy on 31st July - normally that would create a share price hammering - but the shares have risen since. When guidance downgrades are ignored by the market, I think it’s a signal that sentiment has changed and the sellers may be done.

Personally I still want to see the language change - "ahead of expectations", upgraded guidance - before I'd move, even if that means being late. The risk is this is a temporary rally.

Roland's Irish comparison shows what can happen if the cycle turns: Cairn Homes (LON:CRN) was at 0.9x book on 7% ROCE in 2020, roughly where the UK majors sit today. It trades at 1.9 times on 16% returns now. If that played out, there are multibaggers to be had. But it’s a big if!

Three rules to take home

You know how I like some simple rules... well just to reiterate the key points in the webinar:

1. Follow the words. "Ahead of expectations" and raised earnings guidance keep driving share price drift after the first day jump, especially in shares ranked above 80.
2. Winners aren't too expensive. Ramsdens, CMC, Keller - rallying share prices often look like you'd missed the boat. So often you haven’t. If valuations are still low, share price rises don’t mean the shares areexpensive.
3. In loathed sectors, watch the reaction, not the news. If bad news stops hurting shares, it’s a signal that sentiment is changing and sellers may be done.

What are your thoughts?

The webinar video has plenty more, including all the data about the takeover bid-wave and a closing list of a dozen companies beating expectations right now with StockRanks of 80 or higher.  Watch the recording and download the slides.

I’d love to hear your thoughts on any of the themes discussed.

• Did you own Ramsdens -  or what held you back?  
• Are you buying the housebuilders, or waiting for further improved sentiment?
• Any views on the growth corner? RGG, SEE, MTEC and KNOS.  Or any other growth stock names? 
• And which of the 12 "ahead of expectations" names shared at the end are you most interested in? 

Thanks for your understanding over the webinar streaming issues. I’m putting it down to being a glitch in the matrix.  We’ve been putting on a great pace of webinars this year - more than ever actually - and targeting one per month.  Let me know what topics you’d love to see covered more.