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PP yes, that's pretty much the method I used for the valuation even though I wrongly said DCF. I think this method is called payback method, not DCF. I might do a DCF valuation at some point as well.
The main difference from what you described by BuffettsloveChild and what I did is that I calculated the valuation for 6 years into the future, since it's difficult for me to guess how things are going to be 10 years into the future. Also my expected return is 12% instead of 15%, which is why I used 6 years. You get a double in 6 years time with 12% return. And also I used lower growth rate - 25.5%.
What's interesting is that I get pretty much the same buy price as BuffettsloveChild which is obviously good news!
Someone mentioned that the current share price isn't that attractive. I think that depends on what growth rate you assume. For example, SimplyWallStreet have this as fair value at £3.62. However, they assume a growth of "only" 21% when over the last 4 years BOO had 45% of shareholder equity growth!
I've done my own DCF valuation and I assumed 25.5% growth. I didn't want to use 45% as that's a bit too high. At the same time 21% was a bit low for me. Yahoo finance had it as 30% (under Analysis). So I decided to take the average of 21 and 30 which gave me 25.5%.
Once I use that number I get a buy price with 40% margin of safety of... £3.9., i.e. GOO is a buy right now! My fair price for BOO is £6.5. So IMO this could easily double from here over the next 4-5 years. And I think that's a conservative estimate, as I'm using almost the lowest growth forecast number out there and I want a 40% margin of safety.
I'd be interested to hear other people's thoughts on the valuation. Cheers!
Folks, can we please stay on topic? I've been reading this BB for couple of days and I've mostly read personal attacks and discussions about politics and religion. What does this have to do with BOO? Could we please keep it a bit more civil and make posts that actually add value?
On that note thanks to those who shared links to the articles, that was helpful.
Hello, I'm new to this board. I'm planning to buy some BOO shares instead as soon as the tax year is over and I can free up some cash.
Personally I don't invest in IPOs because (as per Ben Graham) they are hard to value. I don't have 10 years worth of data to know how this business is going to perform. BOO has 8 years of data, not quite 10 but excellent track record. However, I do have lots of friends who are buying Deliveroo.
I'd ignore the bad press around the rules change. Otherwise they would've listed in New York where these dual shares are standard practice. So no difference to Will Shu, only our beloved Londres would've lost the big IPO. Of course if someone doesn't feel comfortable with the way they treat their workers, they shouldn't invest. One needs conviction to play the investment game and if that's hard, if one doesn't like the business.
Btw that's my main concern about BOO as well. I've checked their Glassdoor reviews and they are terrible. 3.2 stars and only
46% CEO approval. But all the other numbers are so good, this is not enough to put me off. Any ideas why the bad reviews? Long hours?
Thanks sgee. Sounds like I'll have to buy in smaller chunks!
I tried to buy about 100 shares, less than 500 quid, so we're not talking huge sums of money here but you're right that the volume is quite low. I've just checked the last 10-15 trades. Lots of trades of less than 10 shares. In a way that's good because the tight shares structure could lead to great price jumps in case we get some good news.
I'll try again next week, hopefully there will be some more movement around the end of the tax year and I can get my hands on a decent amount of shares. Otherwise I'll have to pay in fees to my broker a big chunk of my potential profits here. Did I mention that my broker is s**t?!
Folks, have you had any issues buying and selling HOTC shares? I wonder if it's because my broker is crap or it's just the low volume.
Peter Lynch brought me here! He says repeatedly in his book to keep your eyes open for great products that you enjoy and to research the companies behind them. He says consumers quite often discover great businesses before Wall Street does.
I've always loved Hotel Chocolat's chocolate and this year I gave some to my family for Christmas - they loved it. Only now it occurred to me to check out the business and it looks great and with a big margin of safety at the current prices.
The only problem is that I need to wait for the tax year to be over before I can sell some stuff and put my money in here. Hopefully I won't miss the boat.
I was disappointed not to see an announcement for another buyback programme. Perhaps it might come in the next few days. At least I'd like to hear an explanation why they wouldn't be doing one, considering that the discount to NAV still persists.
Yes, I was wondering the same thing. In the last NR they said that the scheme ends on 30 October. So perhaps we can expect an announcement next week. Considering that the discount to NAV was 29% when the scheme started and now it's 25% as you say, I do expect them to continue it in some shape or form.
My personal opinion is that it has worked and that the share price would have been lower had it not been for the buybacks. Yes, it's taking longer and more money than expected but it has done it's job. I also think that announcing another buyback scheme will show the market that management is serious about eliminating the discount and the share price will go up on its own.
But maybe this is just wishful thinking on my part, as I'm down 12% on this investment right now...
Here's a link to an episode of a podcast that I follow which was dedicated to uranium. Yellow Cake gets couple of mentions as an excellent opportunity and including the discount to NAV:
https://www.youtube.com/watch?v=aGL0j3BHDb4
"BHP says it believes that the fundamentals for oil and gas will remain attractive for at least the next decade, with potential for price upside in the coming years given the recent slowdown in development activity."
https://seekingalpha.com/news/3619984-bhp-buys-hess-shenzi-oil-field-stake-in-505m-deal
Re the article, I was about to say, Ensco/Valaris went bust recently:
https://www.energyvoice.com/oilandgas/259774/valaris-chapter-11-bankruptcy/
Remember a guy on YouTube was recommending it 2 years ago. Great buy he said, you're going to make a ton of money long term because we need to drill for more oil. Never mind the ton of debt. My mates from MotleyFool also made one of their great calls as usual on this one:
https://www.fool.com/investing/2019/03/10/is-ensco-a-buy.aspx
Their long term debt was no reason to worry they said, gave the stock 'a substantial measure of safety'...
Sorry for the off topic and the rant but just annoyed that a bunch of people must have listened to these so called experts and lost their shirts!
I agree that the price action has been quite disappointing. Not at all what I was hoping for.
That said, the discount to NAV is still 24%. If they run out of money and there's still such a big discount IMO they should sell more uranium and continue the buybacks.
Also we need to keep in mind that the uranium sector in general has done very poorly over the last 2 months. Cameco's share price is down 20%. The juniors I hold are also down similar amounts, if not more. Compared to that we have done relatively well, down about 15% I think.
The uranium ETFs and most uranium funds hold Yellow Cake in their portfolios, so to some extend we do track the market. I think the 5% 'outperformance', if I can call it that, is probably due to the buybacks. I have to say that I don't quite understand the sell off in the uranium space, as general equities have held up and so has the price of uranium which has declined only about 5%. You'd expect Cameco's share price do decline 10% due to the leverage and ours do be down 5%, same as uranium. But what do I know?!
Soleman, regarding the annual returns from an investment here I've run the numbers for Shell in my discounted cash flow model. I've taken the average EPS for the last 11 years due to the cyclical nature of the business. That gives me £1.66.
The big assumption I make is that we continue with the same average growth we had over the last 4 years: 6.6%. As a future PE I take double that at 13.2. That's quite conservative as our average PE has been around 40 over the last 5 years.
That gives me fair value of 2136 in 5 years time and a buy price of 1068 with 50% margin of safety! We're well below that atm. This means more than 12% annual return over the next 5 years, including the divi!
Obviously if the share price recovers in less than 5 years the annual return will be much higher than 12%. So I agree with the 10-20% range though for me that's divi and share price increase together.
I've topped up as well. Apparently people are panic buying food and loo paper again. There was nothing left in my local Sainsbury's yesterday. Good time to buy stocks IMO, especially close to the March lows like it's the case for RDSB.
Hi Surfa,
I agree that it's a mid-term game and probably a 2-3 year hold. But we should be handsomely rewarded for our patience.
Demand is indeed challenged due to the pandemic, especially short term. The oil price has recovered quite a bit while the economy and especially travel are still in bad shape.
However, in Q4 US shale production will fall of a cliff once the already drilled wells deplete. The rig counts are really down. I'm quoting Art Berman here, not my own drivel. Here's a link to an interview with him:
https://www.youtube.com/watch?v=4Wvb0d3tUyM
Let's face it, at current prices US shale is toast. Without shale the oversupply is gone. So oil prices must go up, energy transition or not. Even if we see a further drop now this will be very bullish medium and long term. It might not happen and we might stay where we are and then go higher. Time will tell. But I feel oil stocks are super cheap atm. I added yesterday to my positions in Shell, Total, and OMV. If they drop lower I'll buy more! I mean we're almost at March lows here. If prices recover to their 2016 level that's a 50% return without the dividend. If we go back to where we were pre-covid that's a double.
Hi again chaps! As a former long term holder I'm really sorry to see the pain on this board. I never posted on here when I sold in order not to sound negative. Based on my valuation fair price was 74p for 1500 gold and 90p for 1600 gold. So I sold all my shares between 74 and 79. Didn't make much money here but also didn't lose much.
I was tempted to get back in after the coup in Mali but now with the strike it seems that there's a bit of a pattern in all these unfortunate events. As others have said it hints at incompetence at the helm. They say fortune favours the brave. It seems that the opposite is true as well. Sure, the coup is outside of their control but both the strike and the technical issues at Syama would've been avoided by a different team. Personally, I don't invest when I have question marks over management so I'm staying away.
However, for those brave enough, I do feel there's money to be made here! Both the coup and the strike are fully priced in now and again, IMO the gold in the ground is worth 74p, so that's a 36% upside at 1500 gold. There aren't many value plays in the gold space atm and this is one of them. So good luck, I'll keep my fingers crossed for you!
Tiger, I completely agree on Paul Atherley. He's going to talk shows now and claims he's been "hugely successful" with BKY. It couldn't be further from the truth.
Paul Atherley is on record saying they will start building the mine in 2019, as if they were fully permitted, which was not the case. YouTube is great in that respect. You can go and watch the old videos from few years ago.
Joe, that's why the price ran up to the mid 50s. Once it became clear that Atherley has been misleading investors and that there's no chance the mine gets the green light, the share price tanked.
Yes, the government in Spain did change but there was a massive campaign against the mine all along. How long would it take to get a permit for a uranium mine in Spain? Would it ever happen considering the public opinion towards nuclear?
I lost a bit of money with Atherley and I made the mistake of listening too much to the CEO. I'm definitely not repeating the same mistake twice and will stay away from companies with his involvement! Obviously not investment advice, do your own dd, etc.