Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Well you can never be certain of anything in the markets at the best of times, but after the last 2 years I wouldn’t be surprised if we get if we get a swarm of giant locusts decimating world crops and grounding all air travel or COVID mutates into the rage virus and we all need to start practicing our head shots ! :)
Increased price targets seem to be coming in thick and fast now!
Last week BofA up to 3,700 and Barclays up to 3,400 and today Jeffries up to 3,900.
I wonder how long this uptrend will continue as it's pretty dramatic at the moment but no signs of it letting up!
SP approaching 120 which is where it very briefly spiked last November and is a key resistance level.
There's always a chance that the SP won't be able to break through this level and could retrace, but at the moment thing seem to be quite positive for value/UK stocks. COVID cases dropping off and restrictions being lifted, UK GDP back to pre pandemic levels already. Growth to value rotation still happening and FTSE approaching pre pandemic levels.
Q3 update in 2 weeks which should be positive, and H1 results in Nov triggered a big rise. I've no doubt the pending update together with the technicals/charts looking very bullish with price being above 100MA and the 20MA/100MA cross that this is going to be on a few traders radars, especially with the gaps to fill at 130 and 140.
Lets hope the world doesn't throw us another curve ball in the next few weeks as it's all looking good IMO.
The SP is on the cusp of a breakout at the moment. The last 5 days trading range has been above the 100MA and that's the first time that's happened since May last year. The 20MA is also about to cross above the 100MA and the 50MA isn't far behind, all of which are very positive signs. Closing price was also close to intraday high and November highs, so the platform has been set for a bigger rise.
If the growth to value rotation trade continues then this could surprise to the upside very quickly, especially with the Q3 update due in just over 2 weeks. I'd be surprised if we didn't close the gap at 130 by then, and we might even get to 142. Energy and banking stocks have had those kinds of moves in the last 2 weeks, so it's not out of the question.
Lots of people on here keep banging on about the debt, but money has been pouring into debt laden and loss making tech/growth companies for the last couple of years. It sent their share prices sky high and many of them are now getting slaughtered and that money needs to find a new home. It won't be in cash as even if interest rates do go up by 1% this year, that still won't be anywhere near enough to stop inflation eroding the real value.
The worm seems to be turning on value/UK/telecom stocks quite quickly at the moment and tbh VOD has some catching up to do. Pressure has been building up now for over 2 months and it should go pop soon.
Let's just hope the world doesn't throw us another curve ball in the next few weeks to derail the current trend!
You aren't going to see the fund managers change their ESG screening to include BATS, even if it doubles in price next week and triples the dividend. There's been an exponential rise in investor demand for ESG (Environmental, Social, Governance) or ethical funds. A fund is either an ethical fund or it isn't. Despite BATS ESG rating, all the funds I look at, look for a positive impact from a company but also negatively screen for sectors which include tobacco.
What might change, however, is the retail investor appetite for ESG funds. They've done incredibly well over the last couple of years and have outperformed the markets as the ESG screening means they aren't invested in the sectors that haven't done so well such fossil fuels and tobacco, but have much heavier weightings in sectors that have done so well such as tech.
The outperformance has been so good that a lot of people who would normally sit on the fence about how ethically they want their money invested have been piling into ESG funds for the performance, and I've even heard of some advisers touting the ESG funds as offering better performance. If the rotation from growth/tech into value continues and the ESG funds start underperforming, I imagine there will be some investors who may re-evaluate their principles, although tbh it won't be a substantial amount.
There's enough appetite for BATS amongst non ESG funds and private investors though, although a significant proportion of those will be buying for the dividend and not the increase in SP. BATS have always recognised this, and have always made the dividends a top priority and has one of, if not the best track records for not just paying a steady and increasing dividend.
I just hope they don't forget this and when they look at their capital allocation that they factor in a decent hike in the dividend as well as paying down debt and doing buy backs. With inflation running hot a 2.5% hike won't cut it, and they should be looking at a 5%-7% increase.
I think the SP is always going to be anchored to the dividend and a stock like this needs a 6%+ yield to make it attractive to the type of investors who invest in it. Buy backs can help in increasing the dividend if they keep the total spend fixed as it will spread across less shares. I just hope they don't get carried away with this talk of buy backs though as this isn't a jam tomorrow tech stock which is valued purely on EPS.
Don't know in the short term Jim. I posted a while back that even on current profits the price should be around 3175 although I wasn't expecting it to rise so for so quickly!
The recent price rise has been driven by the US markets as the volume there has been heavier. I was expecting a pull back when BTI got to $40, but the rotation trade in the US has driven it higher.
BATS easily has the potential to get to 4,000 once they start share buy backs and the NCPs stop losing money, although both of those will take another 3-4 years to filter through.
The recent Barclays research note thinks buy backs could be up to 15% of market capitalisation over the next few years. If you factor that in, plus an additional £1bn profit when the NCPs start making money, then you could get to around £3.88 EPS, and dividends of 63p per quarter based on a 65% payout ratio.
On a PE of x10 that's 3,880 a share. Phillip Morris trades on a PE of around x15 which would give 5,800 a share, although BATS would need an 85% payout ratio and much lower debt to get anywhere near that, and even then I'm not sure if a 'sin stock' would be as attractive in the UK with a sub 6% yield.
Lots of regulatory risks etc along the way, but the potential is there.
It could easily dip down a few times along the way to the 2500/2600 level, and if it does I'll buy more again, but I'm keeping my core holding for the next few years to make sure I don't miss out on the dividends and medium term growth.
I know what you mean MIkey - I'm getting sick and fed up of this now.
Why doesn't it just keep going up every day by 2% or more? If it had done that the last 6 months then we'd be at around £19 a share and I'd be a retired multi millionaire!!
Stupid share!!! I'll have to go and do some work now :(
Absolutely not. Nothing tastes as good as Welsh lamb reared by chain smoking farmers :)
I sold a chunk slightly earlier than planned at 2860 on Monday as I wanted to buy the dip on tech which has worked out well.
I think there's more chance it will go down than up from here now in the short term as BTI already at $40k and looking very overbought.
I won't be selling anymore for a long time though as the dividends are too good. Will switch off to the paper gains which I know are going to fluctuate, but the income stream should be steady and increasing.
Robina - I have no idea who the buyer is, but the redemption of the MCBs in March last year could have created a lot of institutional sellers.
If you were a fund manager with an investment mandate to own a lot of fixed interest and not much in equities, if you bought the MCBs then you would have to sell the shares you got when they were redeemed. You wouldn't be able hold the shares indefinitely, even if you thought they were going to go up.
Ironically enough, it could actually be bad for some fund managers if the price shot up as that would mean increased volatility which would be bad if you were in charge of a managed volatility fund (crazy I know!)
Believe it or not the vast majority of decisions made by institutional investors/fund managers are not based on making as much money as possible - other factors such as asset allocation and volatility would be a much bigger driver.
Chill Mikey - it's all good. The big rise Monday was due to the very large volumes, and that won't happen every day as the buyer is too smart for that. A bit of a retracement is to be expected and perfectly normal. We're forming a good base ahead of the Q3 update which should be good.
I'm still confident of 140p + by May, and we should get there on the current trajectory. I wouldn't be at all surprised though if we dipped down to 114p to test the former resistance and 100MA as support before the next leg up.
This is just going to take a bit of patience - it's a boring value stock with predictable revenue streams/profits. The only surprise we might get is if the buyer runs out of willing institutional sellers selling off book and starts trying to buy volume on the open market, or M&A activity, but I'm not banking on either of those things.
I agree Mikey - It would be nice to hold onto to some of these gains, although I wouldn't be surprised to see it drop back to around 114p to close the gap up from this morning and test the 100MA as support - don't panic if it does!
There were some pretty chunky off book trades today and overall volume back up to mid December levels which is driving the price up. It looks like we're forming a good base ahead of Q3 update, and I'm still confident of 140p+ by May, and I'm ready to be surprised to the upside!
Quite a violent rotation going on today from growth to value. Makes a change to see the US indexes take an absolute pasting but it's one of the best days I've had in a while!
Let's hope the rotation doesn't turn into a general rout, although tbh I'm pretty bullish at the moment. Yanks are still having a hissy fit about the Fed being more hawkish than they previously thought, but they'll soon realise that's because the US economy is in great shape which is good for stocks, and then we'll get a snap back.
Narrative on COVID is changing here as well - moving from pandemic to endemic, and from talking about lockdowns to reducing isolation periods even more. If that happens and we get back to some kind of normal then VOD and other value stocks could have a very good year!
Gary - big buyers staying away? How on earth did you cine to that conclusion? Have you looked at the volumes in November and December up to the last proper trading week? There is a buyer in the background who has been buying a lot of shares.
There’s also a positive correlation between value stocks such as Vodafone and interest rates. Tech stocks tend to take a battering when interest rates rise as their valuations are based on the current value of future profits/cash flow and that calculation is far more susceptible to change when the discount rate increases in line with interest rates.
You should familiarise yourself discounted cash flow models and play around with the discount rate (interest rates) so you can see what I mean.
Vodafone has a lot of long term fixed rate debt and they also use a lot of hedges and derivatives to offset the risk of interest rate increases so if and when that happens their financing costs don’t actually go up that much and it’s nothing to panic about. Quite the contrary as interest rates tend to rise when there is rising inflation (as there is now) and Vodafone has inflationary increases built in to a lot of their contracts. This increase in revenue more than offsets the increase in financing costs.
Vodafone should actually make more money in a high interest environment, and the only real pressure on the sp will be that the yield has to maintain its premium over the risk free rate (interest rates) so if dividends don’t increase (which they should with rising profits) to maintain this premium, then the sp will have to drop to increase the yield.
Yes there are risks with every share, but the reducing valuations of growth/tech stocks and increasing profits of value stocks is why we are likely to see a rotation from growth to value if interest rates rise which will be good for VOD, not bad.
I thought you'd made your last posts for the year a few days ago Mikey? :)
As I said last week, I was expecting a drop this week on lighter volumes, and I'm surprised it only went down by this much.
Buys are still outnumbering sells though, and the UT yet again was at a higher price than the Bid/Ask.
This will probably go on for at least another few weeks, maybe even a few months, but at some point we will get a holdings RNS, and maybe other news as well. It's all good.
The trading pattern is designed to stress people out and encourage them to sell - don't let it get to you.
BATs ex div is tomorrow, but BTI went ex div today hence the price drop.
It's holding up well at the moment. Div was $0.74 and although it did dip by as much as $1.05 from yesterday's close, it's currently down only $0.56.
I hope the same thing happens with BATS tomorrow, although I've got a feeling we will drop by more than that.
I didn't sell any today as I think this still has some legs to it. We've gone from very over sold to over bought, so a pull back is only natural before the next leg up which I think will get us to around the 3,000 mark.
I will trim at around 3,000 as I need some cash next year, but think 4,000 is quite possible in the next 3-4 years and I'm happy to keep my core holding and take the big fat dividends along the way...
Based on todays closing price of 1.1326 you’d need to buy an extra 117,000 shares which would be £132,514.20 plus stamp duty of £662.
If the SP goes up, you’d need to buy more.
As bullish as I am on VOD I’d think carefully about sinking that much extra cash into a single share, especially if you’re not sure on your numbers.
Chill Mikey - buyer is still in the background hoovering up shares. Still large volumes with half of it or more being reported after hours.
I must admit I did have a couple of quick trades to boost my xmas present pot - my mum and sister will be chuffed to bits on xmas day when they find out I've booked them a holiday in the sun with the money!
I'll be holding on to the rest of my positions as next year they'll help me buy a bigger house!
Just a little bit more patience is required - this won't go on for much longer.
Merry Christmas all ! :)
It's certainly been a good couple of weeks. Volumes much larger in the US, so unusually the ADS seems to be driving the price of the underlying BATS price, instead of it being the other way around. It looks like BTI is heading towards the $40 mark, which is around the 3,000 level for BATS.
I will trim when it gets to that level, although I doubt very much it will be this week. I'll bag another dividend, watch the SP tank by more than the div (and kick myself for not selling), then wait for the rise afterwards to my target price as I see no point selling any before that.
310m so far and could be more late reported trades....
To put that in context, it's around 30% of the average monthly volume during Aug-Oct in one day.
No wonder it was going in the opposite direction to nearly everything else....
Robleo you are spot on - we need a bit of xmas spirit here. I appreciate that losses and past decisions are hard to swallow sometimes (god knows I made some stinkers many years ago), but we need to be dispassionate about our investment choices if we want to make good ones moving forward and kind/understanding to each other.
This isn't a football team or politics, and we don't need to jump down each others throats for having opposing opinions.
If I sounded overly bullish in my last few posts, then I apologise. It makes no odds to me whether you agree with me or not, and I like being challenged and listening to opposing opinions as it's the best way to learn. I was actually doing it with the best of intentions as I could see this getting to a few people, which isn't good for either your mental health or for your ability to make evidence based, dispassionate investment decisions based on the current situation and future prospects.
Anyway, FTSE futures are up well over 1% so today should be a good day. I think the markets have been waiting for an excuse to get their Christmas rally on. Last night after Powell was very bullish on the economy and clear on what happens next, but with the proviso that they will change direction very quickly if they need to because of COVID or other threats.
That was enough for our American cousins to get the sleigh out, and unless the MPC comes out with a serious clanger later today then we should be hopping on board to enjoy the ride.
GLA