Why Fevertree FEVR is right for the picking over 200% up and climbing!

5th Feb '16 by lightningtiger

11 comments 8037 reads

With 50 countries to sell drinks in and a sales growth of 62% are excellent figures. They also have £14M in cash. Sales in the second half of 2015 were up 77% on 2014 with full year revenues up 71%.
Black Rock have bought around 11M shares on 27th Jan 2016 as well.
The average volume of shares trading is around 350K although they have been up to over !M at times.
Although FEVR only pays a small dividend, I see good prospects for this share to be top sliced in the future if you want to.
Actual growth on a superb equity graph is +228% in a year.
This share has a stock rating of just 70 but the momentum is 99.

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About the Author

Lightningtiger

Premium Member

700 club gold member. Anniversary yesterday 1/10/2013. Recently returned from New York with a wish to see Wall Street for myself as a bit of a satisfying accomplishment. I first got interested in investments when I was a financial advisor for 14 years. I learned a lot & went to quite a few investment seminars. The one I remember particularly was with Fidelity. They visited the companies that they invested in and held them for a long duration in their portfolios. The other thing was with different currencies that they could buy a particular stock with and of course sell it if it was favourable with another currency. This was potentially more risky of course. It was not long before I realised that all the money from the insurance premiums had to be invested and who was doing it. We used to sell investment bonds where 5% was allowed to be taken tax free once a year on the anniversary of the policy which could run for 20 years.There was a choice of Managed, Property, or Equity to invest into. It was at this point of time that the Property fund went up 40% in less than a year. A simple comparison with the Managed and Equity funds showed the difference. I was soon taking a keen interest in unit trusts and shares, looking for things that were going up and the highest that they had been and bought them. I bought a software package with Up-data which enabled me to be much more efficient, putting stop losses in. Drummed into my head was cut your losses and sell when a stock breached the stop loss and let the profits run. Another stepping stone was to buy myself a Rolls Royce silver shadow that was chestnut brown in colour. The reasons were threefold. 1. That I could afford it. 2. The two managers for the insurance company that I was working for were called Douglas & Rolls. 3. I was still single. As well as doing the insurance business I joined an investment club in Basingstoke and became their chairman. We closed it this year sadly because of ill health with some of the members. Now I have a portfolio that I am able to take out (if & when I want to some cash) just like the insurance bonds but much more flexible. I enjoy the technology stocks and have taken profits several times from Arm Holdings which is the only share that I have held for many years now. Having just got this Stockopedia yesterday (first saw it at an investment seminar in London earlier this year) when I noticed Dart Group (DTG) so that is now in my portfolio too. I suppose you could say I am an analyst & a chartist. It was good to see my portfolio already has Globo, , Blinks, Clingen ,Dart, Wanddisco, opay,Easyjet ,LLoyds Arm Telicom Plus(which has doubled and a bit more but then started to drop so I have just sold almost half and re invested the proceeds into ASOS.) In conclusion I hold about 20 shares, and have just INCREASED my holdings in Globo about two weeks ago, and noticed someone has reduced their holding with Globo to 3%.I hope they are not still holding the poor pawnbroker shares (guess who) -40% in one day followed by further catastrophic drop. A good case for a stoploss . Join the 700 club and put some money to work I say. more »

11 comments

vik2001

5th Feb '16

this has had one hell of a bull run but I reckon its going to run out of steam at some point..

AnonymousUser40634

9th Aug '16

Well called LightningTiger!

monzo

9th Aug '16

Looks like a decent place to open a short position to me

MichaelFBS

10th Aug '16

I would be interested for your bear case for Fevertree Drinks (LON:FEVR).

Hi Billytk

I have a relatively (for me) significant investment in Fevertree Drinks (LON:FEVR) (12.1% of folio 9.7% of folio including cash) and am looking to move this to 20% of folio ex cash. I buy shares as though I was an owner and look to a 5 to 10 year view, with a sound business, with good management and growth potential. A bit like my business was 10 or so years ago. Fevertree Drinks (LON:FEVR) have:

- delivered consistently
- great ROE/ROCE etc
- Quality and Momentum Stockranks are 90 and 97 respectively with a healthy 74 Stockrank
- Sales and operating profit growth have been extraordinary and crucially for me the estimates given by Stockopedia look to me to be too conservative
- the addressable market is enormous and while it was a little while ago I remember management commenting that while Bombay Sapphire was in some 55,000 establishments in the UK, Fevertree was in 7,000
- Management have significant (21.75%) stake in the business
- They pay a dividend (poxy I know but they do pay a dividend)
- I like the management
- I suspect my 5 to 10 year view will be foreshortened by a bid though I hope not.

I am sitting on a 55% gain overall and a 120% gain on my initial investment in October 2015 at 437p. I have added at 578p, 626p, 652p and 836p.

Kind regards

Michael

monzo

10th Aug '16

Hi Purpleski,
Well done on your investment here. Just to be clear I don't have a position either way. I too looked at it at about 500p and decided it wasn't for me and it's doubled from then. Looking at it from an investment point of view now however, I couldn't buy at such a rich multiple even though it has excellent growth prospects and margins. It will probably be bought out and swallowed up by a bigger player but there is already a high premium in the SP which would account for many years of growth that have yet to be delivered.

Edward Croft

10th Aug '16

Personally, I wouldn't short this stock. It's one of a rare class of high momentum/ high quality stocks I classify as "High Flyers" - I wrote up the style here - http://www.stockopedia.com/content/high-flyers-how...

On any valuation metric this stock is 'overvalued', and it's bound to mean revert at some point.... but the lesson of market history is that the highest QM stocks are more likely to rise than fall. A mistimed short could prove highly expensive.

The hikes in broker estimates are incredibly strong for FEVR at the moment... that trend shows no sign of abating right now. I've unlocked the stock report here - http://www.stockopedia.com/share-prices/fevertree-...

DYOR etc

LongbeardRanger

10th Aug '16

Ed,

Agreed. A basic rule of "don't short good companies" seems appropriate here.
Regards,
Phil

Ramridge

10th Aug '16

Hi Ed -
On the subject of High Flyers, have you come across any write-up that tries to look into the overall characteristics of such stocks - what I term, those which seem to defy gravity?
I don't mean valuation metrics, because as you say, we know of no valuation method that could be applied to these stocks.
So I have been mulling over a combination of hard and soft metrics that could come near to identifying such stocks.

On a different matter but related to this, have we got access to historical StockRanks (QM, QV, VM, etc) in order to do some back testing?

Regards, Ram

monzo

10th Aug '16

Hi Ed,
I missed the boat on this. I have no position in the share and am unlikely to do so but if I had to pick a position it would be short. Like looking at ASOS (LON:ASC); if there was a bid what premium would a buyer be prepared to pay above what's already built into the price. If there's already multiple years of growth in the SP that has yet to be delivered then the company has to do everything right and can't have any slip ups.

I'm all for purpleski's buying higher as he's already in from a low base but to buy now is a very risky approach as you could easily wake up 30-40% down overnight on any disappointment. But who knows, it could just keep on steaming from here. Not for me now though.

Rusty2

10th Aug '16

In case you missed it, this article maybe of interest: http://www.stockopedia.com/content/high-flyers-how-to-beat-the-market-in-expensive-and-highly-priced-shares-109584/

Ramridge

10th Aug '16

Herbie - yes, I had missed this - thanks for the prompt; it seems to answer the queries I posted to Ed.
Cheers.

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Why Fevertree FEVR is right for the picking over 200% up and climbing!

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Lightningtiger

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