RE: Explains the low SP at the moment...17 Oct 2021 11:02
Lorenzo
Yes, brokers have no shame. I guess they did not put a date on the price prediction, £4.05 and £3.45 may yet come and then the brokers will say they told you so.
On Motley today (not the biggest Motley fan) but still an interesting take.
Reopening bargain
The first company is Card Factory (LSE: CARD). Shares in this retailer have lost around 50% of their value since the beginning of May. That’s even though the economy has seen substantial growth during this period.
That’s why I believe there’s an opportunity here. According to Card Factory’s interim results for the six months to the end of July, sales increased 16% year-on-year, albeit from a low base.
Still, the group is incredibly cash generative. It created an operating cash flow of £36m in the first half, which allowed it to reduce borrowings by 33%.
The company’s strong balance sheet and cash generation should help it reach its ambitious target to generate annual revenues of around £600m by its 2026 financial year. By comparison, sales totalled £117m in the first half.
To hit this goal, management’s looking to invest more in the firm’s online business and retail partnerships. While there’s no guarantee Card Factory will hit this growth target, I’m encouraged by its cash generation and management’s plans for expansion.
That’s why I’d buy this beaten-down penny stock for my portfolio today. As we advance, the challenges it could face include further coronavirus restrictions and higher costs, which may dent profit margins.