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I do like the gegraphical spread of GLO and its range of assets. With hindsight I should have been a bit more patient and waited to pick this up around £1.80 instead of my current average (including tax etc.) £1.867.
I like the look of this stock so now have to decide if its worth trying to exit above £1.869 and buy back at a lower point, average down, or just wait for the trading range to rise naturally as I think it will in time.
Recent highs on the 21st, and 22nd of this month appear to make it feasable, and recent lows (excluding this week) over the past few months make an entry around £1.80 look possible.
I have covered the borrowings and pe in previous posts.
Question is define undervalued. It’s not just GLO. It applies to lots of UK stocks especially on a US peer basis.
We are what the market says we are and that unfortunately seems to be based on buys and sells rather than fundamentals.
If you plot GLO to the FTS250 index you will see bar a couple of disconnects we track it. That is a general indication of fair value.
I believe the SP is manipulated by the MM to keep it range bound, it’s their job else there would be huge extremes. I referenced MM schemes before which are MiFID2 compliant. IMO that accounts for the regular small number of share trades put through. You expect to see lots of single trades for a divi scrip but it’s bau hear and on other stocks.
I can regularly sell 30 or even 50k shares but often can’t buy 10k or even 2k without it going NT. Even during the last drop I was quoted 181 to buy when the SP was supposed to be 175.
This is now one of my biggest positions in my pf , that’s how I rate it for income but I have said before that I don’t expect this one to shoot up. Many in this sector trade at a discount to NAV.
I think 250p is a fair price and below 200p gives over 6% yield. The pe is skewed by them paying down debt. It’s a pretty low risk investment. We even now have an ESG B rating badge!
I expect the SP will track the divi. So when they next increase the divi by 10% the SP will lift to keep it in the 5.5-7% range.
Any upside surprises could come from energy price hikes. That is similar to APF in the commodities space. But what goes up usually comes back down.
It’s a really boring hold this one and I think now is bargain basement for income. I am not a fan of trusts, oeic’s, ETF’s etc as I would rather build my own income.
So undervalued or fair value you really have to decide based on what you are looking for and looking at peers.
Good luck with your investments
Trek
Good question. Interested in any replies. Trek this is your area of expertise ..... amongst very many !
I wold. appreciate your. opinion as to. why. GLO is so undervalued. Is it. just the. amount of . . . . debt? The debt. does not. worry me unduly as the. 115 operations. around the. world are obviously producing. the income. to. cover . this. Is. there something else'
Hi trek, I too have purchased more as a sensible precaution given international events, let alone the superb four dividends a year. Interested to see you have taken the plunge re anglo. I know the company quite well and attended the annual results regularly before lock down. Again, a great dividend and investment base. The one concern I have is how the in house new Chef Executive will do.
Article on Greencoat wind. It’s a good read across to GLO. As always though with those articles they never mention the associated costs with holding trust/funds. GLO yields more, has more diversity and you only pay dealing costs…..
Of note….
‘ Russian aggression against the Ukraine and the economic sanctions that are likely to follow have the potential to unnerve the markets, especially as higher power prices would add further inflationary pressure. It is possible that Greencoat and other similar beneficiaries would be one of the few ways to help protect the value of your portfolio.’
Mmmm prescient.
Is it just me that sees this as the market seems agnostic. Oh well. Buying more sub 180!
https://masterinvestor.co.uk/funds-and-investment-trusts/an-ill-wind-could-the-ukraine-crisis-be-good-for-greencoat-uk-wind/?mc_cid=f15ea841b9&mc_eid=418bda054f
Usual caveats
Trek
Some flaky journalism from yahoo finance. I mean they are promoting divi stocks and get the divi wrong! Also they omit the pe is impacted by debt repayments and that each project has individual finance. But hey, they still like the theme!
‘ ContourGlobal (7.7% dividend yield)
Power generator ContourGlobal (LSE: GLO) has the wind in its sails at the moment. In December it upgraded its profits guidance for 2021 thanks to better-than-expected performance from one of its Spanish natural gas plants. I don’t think this dividend stock’s just a great buy for today, though. I reckon it’s a good way to make money from soaring energy consumption around the globe.
ContourGlobal builds and operates power stations across Europe, Africa and Latin America. Demand for its services should hopefully grow as population levels increase and economic output in emerging markets takes off. I also like this particular energy producer because of its growing focus on renewable energy. This could help its share price rise over the long term as the theme of responsible investing takes off.
But I’m aware that today ContourGlobal trades on a high forward P/E ratio of around 29 times. A premium share price always leaves a company in danger of sinking if earnings forecasts start to look a bit flaky. A project delay is one danger that could send ContourGlobal’s share price reversing sharply.’
https://uk.finance.yahoo.com/news/6-dividend-yields-5-best-084607041.html
Trek
This pays out 6.5% within a period of 7 months from the Mar 31st ex divi date to 25th Nov 22 with a chance of a special divi and a very likely 10% divi increase during the period. I expect the results to be a beat over and above guidance given energy prices.
There isnt much stock around hence why the MM’s are forcing through small trades to range bound the SP. However, this is a solid income pay not really for capital growth. If it gets to fair value at +250p range I will be surprised. That’s just how it is in this sector where similar closed funds such as uk wind, greencoat etc trade at nav discounts with slow capital growth.
The benefit is it’s a defensive income play.
Usual caveats
Trek
Good day today, I sold 30k shares and bought them all back cheaper! Got 2x5k at 180 and a bit.
Surprising though the double tax on the two buys has a big impact On the profit. Not complaining about tax. Just saying it was a lot of hard work today but I knocked 3p off my average.
Have just set some buys for sub 180. Just to keep the MM’s on their toes!
At times today 5k was the max you could buy but could sell 35k in one hit. Joke really for a FTSE 250!
I intend to hold these for a long time so view sub 200 as a bargain. But I guess if Armageddon arrives it won’t matter a jot anyway! Yikes!
Trek