SP13 Aug 2020 14:18
Still not concerned here at all. SP is annoying but there's no reason to panic.
For me, the drop is down to a few things:
1. So many shares are on insane recovery runs at the moment and people are trying to make the most of them. Begbies isn't one of these recovery plays because it recovered early in lockdown so is of less interest to those sorts of PIs.
2. Optimism. As I've said before, most PIs are by their nature optimists - Begbies is a pessimistic share because you're essentially betting against small and medium business. People don't want to do that while it appears the sun is shining.
3. Impatience. We know the next trading update is September - it's unlikely much will happen here until then unless we get a high profile share tip from Midas/IC.
4. A lot of people are assuming the stock market is indicative of the real economy - the average person and small and medium businesses (i.e. they think that, because the stock market is flying, everything is fine). It isn't.
But there are many many reasons to be optimistic here:
1. People seem to forget about the Property Services arm. Everyone I know involved in the property market is absolutely rammed at the moment - the busiest they've ever been. This is true for both residential and commercial. It's an oft-forgotten slice of the Begbies pie that is likely very very fruitful at the moment.
2. Businesses ARE failing, fast. Most of these aren't in the news, but these are the sorts of companies Begbies deals with.
3. Brexit. Remember Brexit? That's still to come.
4. Performance in previous recessions.
5. The true p/e ratio (backward looking) is about 15 rather than the 100+ that Google/LSE shows. We've been as high as 25 before so there's miles of room for SP growth even against the last financial year's results.
6. Institutions don't appear to be selling at the moment and brokers remain very positive.
I could go on. I firmly believe that in 12-18 months, the share price will be 140+. It's just going to take people a little while to realise how the stock market isn't actually indicative of the economy at the moment.
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