George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
Think some things have been lost in translation here.
If you bought at £3 the story has changed and the fundamentals are significantly weaker, I would agree with cutting losses there (with your stop loss method)
But under £2 this stock represents value, and imo should be held for a medium / long term time horizon
The arguement in the link is too simple and doesn't account for what is going on with this specific equity.
How do you quantify short seller activity, weak sentiment etc....
Setting a quantitative metric for a qualitative problem doesn't work imo. What use is setting a 10% stop loss if the story of the stock hasn't changed?
There is a big difference between what he is talking about and this. This stock is a value play at this price level. Alright, if you bought at £3 and bought at high P/E ratios on the way down that isn't advisable. But right now this is the time to buy. Good margin of safety and metrics.
First of all, you've done well to minimise your risk by averaging down.
I know it sounds easy when I'm saying it, but try to forget about the holding and come back to it in a year or two. There are positives with the stock, and tbh £1.60 isn't that bad of a price. If you can, average down more. The fundamentals are good thankfully and look positive for the future.
Hi all,
In yesterdays meeting a few things were said that worried me slightly going forward for the short term:
- cash flow likely to be neutral for coming year
- price increases to be passed onto the consumer
What do you guys think about this?
Lots of panic at the moment so I thought I'd repost this to attempt to calm some people
Hi all,
Relatively new to this forum, so I thought I'd give my opinion on the equity.
Firstly, many people here seem to be concerned with the daily share price movement. The three month average for volume is around 12m shares. However at the moment, volume is around 7m. Therefore I think a fair assumption to make is that the share price is being dominated by 'smart money'. Consequently the price could go to 80p or 150p in the coming months. At the end of the day, who cares? The market acts as a weighing machine in the long term, and barring extreme consumer changes, in my bear case BOO will be worth around 300p a share.
Onto the valuation. I think BOOs fundamentals have been covered well here.
- Historical Financials are strong esp. revenue growth
- Low debt
- Historical Gross Margin better than competition
However, as pointed out there are problems. My take on the London head office is that it shows the ego of management. Personally, I think this is MK rather than JL. The fact they didn't allocate capital towards a US distribution centre shows their complacency and arrogance. Hopefully this has taught them a valuable lesson for the future. While this is a negative, I don't think it is as extreme as some have made out. Supply Chain issues should ease in FY24 and net margin should return back to normal.
Onto the labour scandal in Leicester. For me, this poses the most significant threat to BOO, and was why I initially was reluctant to build a position. The conscious consumer has grown in BOOs demographic and with social media, activism is far more accessible now. Long term, I think BOO could struggle. Their test and repeat model isn't sustainable and consumers are more open to cutting back on consumption, choosing to shop vintage. However I think this is an excellent medium term investment, with 200 / 300% upside.
Debenhams and other acquired brands will be able to offset slowing growth in PLT and Boohoo. This is assuming consumer behaviour changes, of course in a bull scenario, US growth matches the UK and this sits at £10/£15 a share in FY27.
At the moment the share price provides me with a good margin of safety, and with significant upside, I think this is a buy at the moment.
I agree, but what happens to the demographic if student loan repayments increase (interest) and if rents go up for universities (private landlords).
Asos has the best quality clothes on the market. No doubt. However it's not the only option anymore. People are far more open to vintage fashion and less consumption.
As a consumer in their age demographic, their clothes are very expensive for what they are. I can pick up clothes for the same quality second hand for half the price. With Boohoo's demographic I'm not sure they will switch to more sustainable sources but ASOS have more environmentally conscious consumers. Hopefully inflation will be ok, but I'm working on worst case scenarios here.
Wish I could have picked up shares when they went to £10, that would have been a great price. Really like ASOS as a company, think they will do really well on capitalising on the sustainable trends that will dominate fashion in the next 5-10yrs
Thanks for the information Dan.
When I watched the investor meetings, I was impressed with the new CCO, Jose. Thought he was very knowledgeable. Not so sure about the other management.
My main concern about ASOS is its price. Is it just me who feels that their products are extremely expensive. I'm worried that in a recessionary environment their customer base will either shop vintage or cut down on spending.
The business model is amazing. I love what they're doing with analytics, haven't seen anyone else in this space do what they are doing. I'm just not sure if they can crack the US market. I feel their products are better suited to a European audience. Urban Outfitters is their main competition in the US and I'm not sure if ASOS offer more at this moment in time.
I have no idea what he means by the downside. The company has little / no debt. Growing revenue, cash on the balance sheet and inventory / capital in warehouses. I could make a good case for Primark having a larger downside than this, given that its a dying brick and mortar retailer. The downside for this is very small given how its all online.