Member Info for LorenzoLynch

Excellent acquisition imo

Further diversifies the company and immediately earnings accretive

When the housing market recovers, I expect BRCK to do 14p-15p EPS

Alessandro,

For a takeover bid, I think we'd be looking at 60% premium before discussions even commence.

What clown would accept a £1 offer for a globally diversified company with no debt and an ability to pivot in/out of brands as fashion evolves over time, which is doing 13p EPS per annum during a time of severe headwinds (and therefore artificially low earnings, imo)?

Even if net profit stays flat, that EPS will continue growing due to the buybacks.

FWIW, I think the company has set the bar very low this year, so they can buyback shares on the cheap before surprising to the upside.

Oh... and I doubt that the world cup will do JD any harm.

PJ,

I agree completely and I topped up today. I'm baffled at how this didn't rally after weathering the mother of all storms, trading in line for the full year, diversifying geographically to reduce risk and ME exposure, and back to near full utilisation.

I didn't expect the company to withstand this stress test. Even Paul Hill (who isn't a fan of GMS generally) said that it's evidently a more resilient company than he gave it credit for.

One of the most obvious long-term holds on the market at this valuation imo.

I should add that I believe Regis is only being kept in place so that company continues to underperform whilst buybacks are ongoing

Hopefully they’ve set the bar low with the expectations, so that sentiment can change later in the year

Little Aston,

I 100% agree that Regis needs to go. I can’t think of one good thing that he’s done under his tenure.

To date, it appears as though most of the acquisitions have been a waste of time, but there’s still time and Funky Pigeon isn’t fully integrated yet (by far the most attractive acquisition imo)

As for the debt - I’d rather it not be there, but the balance is healthy and when/if the share price re-rates, the company can increase net profit by deleveraging to create further upside

Mistakes have been made, for sure, but we’re not investing in CARD in 2023 or 2024, we’re investing in CARD today

I think they’ve (rightly) set the bar low with the expectations after that shambles of a profit warning around christmas

While we’re all frustrated, it’s important to focus on the context: this company has been absolutely battered by macro, rising wage costs, a quieter high street and NI increases

Hopefully, the macro environment is much kinder to the company this year, which should lead to nice y-o-y comparables. Moreover, we should start seeing a benefit from Funky Pigeon before long

With regards to the other acquisitions - I really don’t like how their performance seems to be swept under the carpet, but I’m glad the company is now looking to allocate capital in a more fruitful way for shareholders

For me, I think the focus should be on better marketing, cost cutting, more competitive pricing on in-store gifts and the majority of the growth capex should be spent on Funky Pigeon (which should benefit nicely by being vertically integrated)

Even with just the (large) dividend and share buybacks, I see an attractive return here, and effectively somewhere to keep my cash until I find a very attractive opportunity elsewhere

FWIW, I think the worst is behind us (assuming that the Iran conflict is dealt with sooner rather than later)

J.Oxford,

If you’re a trader, well done, and that certaintly makes some sense

For long term investors, I think it would be insane to sell this (or any other undervalued stock) atm. The end of the conflict in Iran is one hell of a catalyst if you ask me, and there are potentially several catalysts on the horizon as well

Just because the SP is in the doldrums now, I really don’t see this being taken over for peanuts.

There’s no need for the company to be sold imo, and I think the major shareholders will be happy with a 6.25%-6.5% dividend yield for the time being with a sale in a couple of years (assuming that the construction industry recovers) at well over £1 (probably more like £1.20).

I think it will take an offer in excess of 90p, at the very least, for serious discussions to take place.

Even then, it would be a single digit p/e on next year’s forecast earnings of c.9.5p, but a fair deal, all things considered imv, due to opportunity cost.

All just my opinions, so do your own research

Hoss,

Iran have the US by the short and curlies. The US simply cannot escalate the war from here without there being grave consequences for the entire world.

If Iran were to take out even the 3 biggest desalination plants (or power plants which feed them), it would render 10-15 MILLION people without any water. Those plants take years to build, so basically it would be the end of Dubai, Riyadh and I forget the 3rd place. That's the impact of wiping out 3 plants... let alone the many others which they will target.

The US and Trump benefit financially and militarily from the gulf states, so they won't want to see the collapse of that region.

Now imagine, say 13 million people having to leave those places at once, whilst millions of others also tries to leave... all whilst it's dangerous to fly, and impossible to leave by boat. His hands are tied imo and the threat of attacking the power plants was just to test the waters (establishing Iran's limits).

Iran have correctly stated the obvious - Trump has had to back down.

The US now either have to:

1) Make a deal with Iran

2) End/exit the conflict with no deal

3) Keep the conflict ticking over - I don't see this as a realistic option as arms supplies are running low, it could cause a global recession before long and as you pointed out, it will certainly take the shine off and spirit out of the world cup. This option also achieves very little.

4) Find a way of protecting all of the desalination plants and a way of keeping the gulf safe and mine-free

5) Send in the hit squad

6) Threaten another Nagaski

On the flip side of this, if Iran ever do target those desalination plants, then the country will be obliterated as there's no other card up their sleeve.

BTW, the issues in the middle east are causing many expats to come home.. and surely they're bringing some cash with them? They'll need some warmer clothes, that's for certain!

All just my honest opinions. I'm looking through the situation, not at it.

As far as investing is concerned, the private credit issue is a much greater concern to me, BUT I think JD survives all of the above with relative ease.

The priority for me is avoiding value traps and any companies which could go under in the event of a recession.

Tyler,

Very valid points made there. I share the same views and topped up an hour or so ago.

I wouldn’t be massively surprised if an offshore rig was targeted. It’s a time for hedging bets and remaining diversified imo.

There doesn’t seem to be any certainty with anything atm aside from defence stocks, but I’d say that’s priced in two-fold

Something the market seems to be over-looking imv is that oil prices can come down just as quickly as they’ve risen.

I suspect that this Iran conflict will be a memory in the coming weeks/months, as USA and Isreal don’t seem to be messing about… unless the sole objective is to ramp up oil prices. If it is, then this could obviously drag on (intentionally)

JG,

They’re both very interesting stocks, but obviously both facing some serious uncertainty with regards to disruption.

I don’t hold either myself, but I’ll be surprised if FUTR doesn’t make a mockery of the current valuation. A p/e of 3 is nuts, as is a P/FCF of 3.8 imo. I haven’t heard a truly compelling argument either for or against tbh.

I can’t see GoCompare being fully displaced anytime soon, but that call is outside my circle of competence.

I’d be more concerned with TRN and the govt app en route, but knowing our govt, the app will useless and is simply a way of using public money to enrich a select few

Do you have any expertise in these fields? I’d like to hear your views

If my existing holdings weren’t so cheap and appealing, I’d probably hold some FUTR myself

JG,

You’re a brave man for holding RCH, full stop.

To date, it’s one of the best performing stocks I’ve ever had (bought around 60p when I first start investing and then sold close to £4), but I think the structural decline is difficult to content with there. Earnings always look great, but FCF not so much.

The next pension valuation could change that though (I’m not up to date with current events for RCH beyond the cagey outlook). That would be the focus of my research and could be your exit point

Good luck! At present I’m topping up or trimming positions on a near daily basis (usually, I don’t like to tinker). Can’t say I’m phased by the macro in the long-term, personally, although rising oil prices are a concern across the board for me

JG,

I locked in a lot of my profit on Monday as I had a feeling this would happen due to Iran’s threats etc. Still holding around half my position though as results are due soon (28p+ would have seen me exit fully for the time-being)

Anyway, I’ll be loading up again if it really tanks today. Gotta hedge your bets during black swans imo.. especially when you’ve made a big profit in a short period of time

Where the hell are they?

LittleAston,

This is my biggest position, even after the drop (albeit only slightly now), so I’m sitting on my hands for now

The fall looks irrational to me, but in JD terms, I do think it could fall significantly lower (unjustifiably so, if you ask me)

I’ll almost certainly be topping up sooner or later. I’ve already started topping up some other positions

I had to trim my position on the rise as my weighting was out of control

Topped up today to bring this up to a 12.5% weighting

Most investors react to noise… and most investors underperform. No coincidence, if you ask me

The U.S. needs a higher oil price realistically, due to the cost of production there being higher than the Middle East.

Imv, this is the primary reason for the escalation. Well, that and Israel’s lobbying of (I have another word for it), and leverage over many U.S. politicians

Flash in a pan imo

Have Mobico’s future prospects suddenly changed? I don’t think so

@kay101

I've never had reason to ask somebody this on LSE previously, but do you have a brain?

Why the 10% drop today on no RNS?

Zanab,

Understanding and respecting your limitations is so important. I don't actually view the debt situation as overly complicated here. The complexity imo, lies in the many contracts. If a big contract was about to turn into a loss-maker, I wouldn't have a clue. It's why I'm so happy with the new management team. Without those guys at the helm, I wouldn't be invested here.

With CARD, I have the opposite issue: easy company to run with a sound balance sheet (imo), but being ran poorly, by an out-of-touch management team who aren't even doing the basics right.

I was the same with regards to debt previously, but deleveraging is the easiest way to obtain a multi-bagger imo. Debts ok imv if earnings are stable and predictable IF there is macro stability or growth. I wouldn't want to hold any highly leveraged stocks through a recession though.

With regards to a golden goose, I think there quite a few atm. My favourite stock has to stay close to my chest, because it's small and I'm expecting (or at least hoping for) a little windfall. I obviously want to load up while it's peanuts.

However, for a larger market cap stock with a solid balance sheet, I'd take a look at JD Sports. The US is the biggest part of their business now, and they own many different fashion retailers. It's globally diversified, albeit mostly US, UK and Europe.

Oh... and the world cup starts in less than 4 months I think. Not a bad catalyst if you ask me. Then there's the big buybacks etc as well. I'll be astounded if it's not at least £1.30 by Xmas, but I'm also content holding longer term, if necessary.... and I HATE retail stocks with a passion.