Ben Richardson, CEO at SulNOx, confident they can cost-effectively decarbonise commercial shipping. Watch the video here.
I think it'll be good PR to re-hire some of the former Debenhams staff in Manchester. They've probably moved on though.
New all time high today - 515 earlier. Let's see where it closes but probably all resistance broken.
Not that I know much about TA but I thought the 500 mark might be a bit of a psychological barrier, considering the round number and the previous all time high. If we close above it that's very good news! We might be at £6 before we know it
Most people trying to catch the bottom on a stock have as much success as a dog chasing its bottom/tail.
My personal approach is to calculate an intrinsic value and if the stock price is below it (ideally with a margin of safety), then I buy. I try to buy in tranches so that I can average down, in case it goes lower. In that case you don't catch the bottom but you have a pretty good average price.
Obviously, that's the theory. In practice at some point you reach a full position and if the stock keeps going down like ASOS has done, it becomes harder to average down.
If someone know of a better approach, I'd be very happy to hear it!
Price target increased to UK£5.17
Up from UK£4.80, the current price target is an average from 3 analysts.
New target price is 8.8% above last closing price of UK£4.75.
Stock is up 37% over the past year.
I forgot to mention the obvious one which is oil. Last year we had negative! oil prices. The headlines were that we'll never need oil again and how oil is history and everyone will be driving EVs.
Fast forward 15-16 months and now people are killing each other in front of the petrol stations. I strongly suspect that one year from now we'll be looking back at this and say 'what the hell were we thinking?!'.
IMO the higher material, fuel costs and supply chain issues are all temporary. I've done some commodities investing back between 2016 and 2020 when commodities were cheap. One thing I've learned is that they're (very) cyclical, boom and bust. When they are cheap production like mines and plants shuts down, there's less available material and prices start to rise. And the opposite, which we're experiencing now - when prices rise everyone and their granny starts producing to take advantage of the high prices. There's more stuff around and then prices crash.
Remember the high lumber and copper prices that were in the news at the beginning of the year?! People were pulling their hair out at the time but those have since come crashing down. The same will happen with current high cotton prices, gas, etc. They don't call the natural gas futures the Widow-Maker for nothing!
IMO the higher material costs and supply chain issues are all temporary. Also I've been reading the Redrow results and they stated that house price inflation has covered basically all their extra costs. So no impact on profit. I assume the same is true for TW!
Obviously there might be some negative sentiment towards house builders considering the Evergrande la grand débâcle. That said TW has basically 0 debt (100m on 1b cash), so if it gets sold it's a case of throwing the baby out with the bathwater. I'm out of ammo now but envious of the folks adding at these levels. Hopefully I get a crack at it myself when my next paycheck comes in...
I'm very happy with the results, and don't intend to part with a single share. I only wish I had bought more but over the last few months I've managed to build this position to 10% of my Portfolio. Well it was 9% but with today's jump I'm at 10 now haha.
Considering that Free cash flow (FCF) takes into account Capital Expenditure (Capex) that's obviously down. Capex has gone from £6m for the six months to Aug of 2019 to £172m in 2021.
Analysts and investors take the FCF numbers and put them into their DCF models and say, oh Boohoo is now worth 2 quid instead of 3 or 4. That's also what I get if I take 20% growth and FCF of £70m. That's the FCF for 2020. Projections were higher for 2021.
However, that's the wrong way to look at it IMO. Unless you think BOO will be spending every year like this you need to adjust FCF for the Capex in 2021 and/or use a model that uses earnings instead of FCF. If you do that the target price for Boohoo is much higher than the current 220. More like 460!
I think drawing an equal sign between the Topshop acquisition and the lower share price is not quite right. The share price only really went down over the last 3 months. Pretty much after the CEO said they expect weaker results due to "bad weather" even though the weather had been pretty decent. Also Shein has been making headlines and the general market hasn't been great and most UK stocks haven't done great over the last 3 months.
Which brings me to the next topic and yes, the market is a forecasting animal but it usually is focused on forecasting the next quarter, perhaps two if it's a "long term" forecaster haha. For me to judge the Topshop deal, I want to see their ROIC over the next 2 years. If that goes down, then probably it was a bad deal, if it goes up or stays the same then it was money well spent/invested. Mind you ASC have fantastic ROIC of 18 on average over the past 10 years, 15 TTM. For comparison, Facebook has ROIC of 13 over the last 10 years.
I've added some today. I feel the stock is priced for 5% growth (based on my model) and a surprise to the upside is quite likely. TW has grown shareholder equity by 8.5% over the last 4 years so 5% in the current market seems low. SimplyWallSt has them growing earnings at 12%. If they are right or historical growth is repeated that means TW is worth 3-4 quid in 5 years time. That's an annual return of 15-20% (standard divi included)! Oh btw Yahoo Finance expects them to grow at 47.97%. What are those guys smoking?!
Finally, even if I'm wrong I still get the 5% dividend plus potentially a special dividend next year.
An investment in TW is as safe as houses, please excuse the pun!
I remember we were discussing on here about value investors becoming interested in ASC at some point. Well, it's happening!
Popular value investors on YouTube are releasing videos about ASOS as of late:
https://www.youtube.com/watch?v=krDClJlSgJc
And another one:
https://www.youtube.com/watch?v=X6D90SyC424
I'm in Southern Europe enjoying the autumn sun and I've been thinking about the potential upside here.
The best case scenario IMO is for HOTC to become the size of Lindt. The quality of the product is there, they have excellent marketing, the question is can they execute and expand internationally.
Assuming they can they could really reach Lindt size, as the products are slightly different compared to Lindt and the market is growing, i.e. they won't necessarily have to take huge market share from Lindt to be successful.
Let's look at Lindt, it's £21b market cap I believe. Analysts forecast 7.5% growth for it, so it will double in 10 years. That's £42b. HOTC has market cap of £0.52b. To reach Lindt size that's 81 times potential upside!
Obviously that's a wildly optimistic scenario but the opportunity is there. I've been thinking about this after listening to a Mohnish Pabrai interview about identifying potential 100 baggers, and that to get one you need to find it at max $500m market cap. So my thinking is that with HOTC the ingredients for a 100 bagger (or 80 bagger) are there. If management can execute and so far they have been doing very well IMO, we could do really well here!
Folks, don't let the media fool you. Ground rents still exist. Officially ground rent is zero (peppercorn) for new developments like the one I live on, as required by law. However, my developer that shall remain nameless, charges me a "garden maintenance fee" that is a similar amount to what ground rent used to be. That's separate from service charge. I won't be surprised if that magically doubles in 10 years!
I bet other developers are using similar work arounds. As usual the regulators are one step behind. I expect the removal of ground rents to have zero impact on the bottom line for developers!
I agree that supply chain issues might affect ASC and many other sectors (construction, manufacturing, etc.). However, that's all short term IMO, perhaps except the chips shortage which might take a year or two to clear. Has anyone seen Intel's new CEO repeat "Intel is back" ten times on a conference call?! It's very entertaining!
Personally, I'm holding hard here and will be averaging down if things go well for me elsewhere and I can free up some cash. Not sure why the big drop today but all my UK stocks are getting hammered right now, so not too bothered...
Marquess, thanks for the nice write up.
Regarding margin, TW were able to achieve a margin increase for the same period. They reported results few weeks ago. So personally, I'm hoping we won't see a drop in margins though I have to say TW were really focused on it. I don't remember seeing much about that in RDW's annual report.
On another note, RDW did mention several times about incurring extra costs due to exiting London. Is that still a factor? I know they kept the massive development in Colindale. Drove past it few weeks ago and it's looking lovely.
Makes sense. If I were the CEO of a US house builder I'd be looking at my inflated stock price and I'd be thinking: "Can I use that to make an acquisition?". And then you see the likes of TW, RDW and other UK house builders which are undervalued and it's almost a no brainer. Do an all share deal, and you get a double bonus even if you pay a decent premium. No wonder there are rumours about Redrow.