My Stock Trading Journey

[JackSherwin]

Jack Sherwin – Aspiring Stock & Forex Market Analyst

I am working to build a published portfolio of stock and forex analysis with Samuel and Co Trading. I will be posting my analysis weekly, so keep your eyes peeled for my market outlook. I would like to open my analysis for discussion and feedback from the community.

Stock in question: LSE:RB (Reckitt Benckiser)

One of my personal favourite stocks to trade is being featured today, British consumer goods conglomerate Reckitt Benckiser. Formed in 1999 as a result of the merger between UK-based Reckitt & Colman and the Netherlands-based Benckiser NV. Most likely one of the farthest-reaching companies that you have never heard of, I expect you have almost certainly bought some of their products in the past. RB has some huge brands in its portfolio including; Dettol, Durex, Strepsils, Nurofen and Vanish, just to name a few. Having a market cap of £41.53bn Reckitt Benckiser is in the top 20 of FTSE100 stocks and is said to tick all of Warren Buffett’s stock pick boxes. Buffett is notorious for his success in his stock picks, averaging around 20% on his investments since 1965, and Reckitt Benckiser fits his criteria of having a low price to earnings ratio of 12.4%, as of February 2019, and a dividend yield of 2.94%. He looks for businesses to have an edge that ‘keeps competitors at an arm’s length’ such as a powerful product or brand with a loyal customer base, Reckitt Benckiser most certainly covers this with customers returning to purchase their branded household products.

Source: CityA.M.

In recent weeks, we have seen some significant downside to the stock on the back of the federal indictment against UK drug maker Indivior PLC. Accusations of illegally increasing prescriptions for its opioid addiction treatment Suboxone lead Indivior to a federal court in Abingdon, Virginia, where a grand jury said: “Indivior made billions of dollars by deceiving doctors and healthcare benefit programmes into believing its suboxone film version as safer and less susceptible to abuse than similar drugs”. They have been charged with health care fraud, mail fraud and wire fraud, if convicted, the U.S. government would seek forfeiture of at least $3B.

So you may be thinking, “but this isn’t Reckitt Benckiser it’s a different company”, well the company Indivior was actually spun off from RB in 2014 and the indictment has said that the illegal activity began before this spin-off and some activities even being “made or approved “ by Reckitt Benckiser Pre 2014. It is definitely worth seeing how the charges pan out against Indivior and how this affects Reckitt Benckiser’s share price in early May when a court hearing is scheduled.

Source: TradingView

Let’s have a look at the technicals. The green trendline you can see here on the daily chart was drawn on the weekly timeframe chart, starting in 2008, and has been confirmed with 5 touches, two of which being in the first months of this year in January and February. Some may argue that this trendline is not valid since it has been broken by wicks, however, there has not been a confirmed move below the line on the weekly chart that it was drawn. I have also drawn a support zone in at the yearly low of 5560p, this has previously acted as a support and arguably is now a confirmed support level in price. The previous lows of 5700p may also act as a psychological level from its whole number value.

More Fundamentals:

Source: SimplyWallSt

As we can see here, based on estimated future cash flow, RB is significantly undervalued at 22% at the time of writing. Future cash flow estimates a potential to reach the 7450p level which has not been seen since late 2017 however this level is well below all-time highs of 8110p back in May 2017 which outlines how achievable this price target may be in the future. A contribution to this gain may be earnings growth which is expected to hit 7.7% next year, outperforming the estimated growth in the household products sector which is 6.9%.

Source: SimplyWallSt

It is seen that individuals who are involved in Reckitt Benckiser including members of the board of directors have been buying stock in the last 3 months. Elane Stock bought a fair 1,910 shares for a total of £119,047 on the 20th of Feb this year. Whilst this is not a significant monetary value in this context, the sentiment behind the purchase may be something to consider.

Source: SimplyWallSt

Getting into some number crunching here we have the historical debt of Reckitt Benckiser. In the current position, it is looking okay. Most importantly net worth is outstripping debt, although not by a huge amount with its debt levels totalling 80.5% of its net worth. The debt spike in the chart from 2017 was right about the time of selling its North American food division and as you can see this was quickly followed by a great net worth increase of £5B. Q1 IMS is due to be released on May 2nd so we can expect an update to these levels in that statement.

In conclusion, I think this would be a great stock for the watchlist and in my opinion, shows good growth potential. I will be keeping a close eye on the stock in the next weeks with developments in performance on the 2nd and court hearing for Indivior on the 6th. These could completely change my outlook so definitely something important to keep an eye on.

References:

Reuters.com Indivior Shares Plummet, Reckitt hurt on U.S. charges over opioid prescriptions.
Indivior shares plummet, Reckitt hurt on U.S. charges over opioid prescriptions - Reuters

Reckitt Benckiser Results that outperform – RB

City A.M. Nine UK shares that tick all of Warren Buffett’s boxes http://www.cityam.com/275125/nine-uk-shares-tick-all-warren-buffetts-boxes

This article is not and should not be construed as an offer to sell, or the solicitation of an offer to purchase, or to subscribe for any investment. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author of this article is not a registered financial advisor. Readers should not view this material as offering investment related advice. Authors have taken information from what is perceived as reliable sources, but since the information source(s) are beyond our control, no representation or guarantee is made that it is complete or accurate. The reader precautions to ensure the accuracy of the information provided. Information collected and presented accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in this article is not a specific buy or sell recommendation and is presented solely for informational purposes only. Not to be taken as financial advice. Investors are advised to obtain the advice of a qualified financial and investment advisor before entering any financial transaction.

[Liam.Sharvell]

Interesting insight! Do you have any idea what caused that spike in debt in 2017?

[JackSherwin]

The debt levels in 2017 were in the run up to the acquisition of nutrition company Mead Johnson. The total value of the transaction was $17.9B including Mead Johnsons net debt. After accounting for the cash values and exchange rates this equates to the debt levels in 2017. As you can see from that chart, once the acquisition was finalised the net worth again outstripped the debt.

[Stephen.W]

Awesome breakdown Jack, very thorough for anyone interested in following good stock tips.

[JackSherwin]

Thank you Stephen, my previous shout of SThree is up 8.3% in two weeks with a lot of potential to move more.

[Stephen.W]

That’s quality, keep it up! I’ll be sure to keep my eye on this thread

[JackSherwin]

Jack Sherwin – Aspiring Stock & Forex Market Analyst

I am working to build a published portfolio of stock and forex analysis with Samuel and Co Trading. I will be posting my analysis weekly, so keep your eyes peeled for my market outlook. I would like to open my analysis for discussion and feedback from the community.

Stock in question: AIM:K3C (K3 Capital Group PLC)

Today I am going to be exploring another British AIM market stock K3 Capital Group. A very exciting, new, company to the London Stock exchange only having been listed in 2017 and subsequently won the IPO of the year by NEX exchange Small Cap Awards in 2018. K3 Capital Group is made up of 3 sectors; KBS Corporate, providing business sale services dedicated to businesses with enterprise value between £500k and £10M, KBS Corporate Finance specialising in lead advisory and transaction support for company sales valued between £10m and £200m and finally Knightsbridge who is one of the UK’s leading business sales brokers focussing on companies with enterprise value up to £1M.

Fundamentals

Looking at the fundamentals, K3 look to be in a great position and are performing well outperforming the market average with expected revenue growth of 6.1% vs 5.3% for the professional services sector. Talking of outperformance, the earnings growth for K3 in the last year hit 71.1% which tops both the market average of 14.5% and its 5 year average of 35.2%.

Source: IG.com

This growth looks very promising and quite possibly could continue to be reflected in the full year earnings coming in September. The half-year earnings released in January did not produce great numbers for the group however CEO John Rigby mentions in his statement “Due to the expected timing of several transactions in KBS Corporate Finance moving from H1 into H2, and given our accounting policy of only recognising Transaction Fee income when a transaction takes place, reported turnover in the brand for the reporting period has declined to £1.7m (£2.8m H1 2018). As a result of these delays, coupled with the ongoing delivery of the organic growth and ‘bigger and better’ strategies – the KBS Corporate Finance brand ends H1 2019 with its highest ever level of WIP pipeline (transactions in legal exclusivity) consisting of 11 transactions (6 transactions H1 2018) and a significant increase in potential Transaction Fee Income.”

Source: SimplyWallSt.com

As we can see here from the historical debt that there is, in fact, no debt to worry about. This means that there are no interest payments to be made since K3C have had no debt since mid 2017. With this in mind, being a professional services company it is not expected for them to have significant debt so this is not considered as a huge positive.

Source:SimplyWallSt.com

Looking here at the future cash flow, price is expected to grow to around 402.00p from its current level of 148.00p putting it at a discount of over 50%. This would take the stock back to its all-time highs around the 403.00p level which I see as achievable in the longer term.

Another point to consider is dividends, K3C has a payout of 7.6%, putting it amongst the top 25% of dividend-paying stocks with small growth expected in the coming years. This being said, they have not been paying dividends for a long time and have only paid out for the last two years.

So with all these positives why is the price so low?

Source: IG.com

I have drawn two arrows on the daily time frame chart for K3C, these being the start and finish of a share ‘Lock-up’ agreement. This began on 6th April 2017 for 270 days with an agreed lock-up extension of another 12 months, making the end of the lock up the 11th April 2019. Throughout this time you can see that the stock has taken quite a hit dropping 62% with the 125.00p zone showing to be the low of the downtrend. I hope to see the stock hold above this level in the coming weeks and show some confirmation that it has found a bottom to look at a position as the director’s shares come into the market. The 237.00p zone held as support for a long time until being broken with confirmation in late February. This zone may turn to resistance if we see a rally in price so would definitely be an are of interest for me.

In conclusion, this is most certainly a stock that I will be watching carefully for the price to confirm the floor of 125.00p and show a solid consolidation over the next couple of weeks before looking at placing any positions.

References:

K3 Capital Group PLC: www.k3capitalgroupplc.com

IG.com Market Analysis: https://www.ig.com/uk/marketanalysis/ig-shares/k3-capital-group-plc/prompts/CASH

Disclaimer:

This article is not and should not be construed as an offer to sell, or the solicitation of an offer to purchase, or to subscribe for any investment. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author of this article is not a registered financial advisor. Readers should not view this material as offering investment related advice. Authors have taken information from what is perceived as reliable sources, but since the information source(s) are beyond our control, no representation or guarantee is made that it is complete or accurate. The reader precautions to ensure the accuracy of the information provided. Information collected and presented accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in this article is not a specific buy or sell recommendation and is presented solely for informational purposes only. Not to be taken as financial advice. Investors are advised to obtain the advice of a qualified financial and investment advisor before entering any financial transaction.

[Stephen.W]

Really detailed breakdown Jack. Great work!

[JackSherwin]

Jack Sherwin – Aspiring Stock & Forex Market Analyst

I am working to build a published portfolio of stock and forex analysis with Samuel and Co Trading. I will be posting my analysis weekly, so keep your eyes peeled for my market outlook. I would like to open my analysis for discussion and feedback from the community.

Stock in question: LSE:LGEN (Legal & General PLC)

Featuring in this weeks stock report is London based multinational financial services company Legal & General PLC. They are a constituent of the FTSE100, offering products including, but not limited to, investment management, life assurance and general insurance in the UK, US and Europe. Legal & General group’s investment management arm is the 10th largest investment management firm in the world by assets under management (AUM) totalling at £1,015 Billion, also making them the second largest in Europe after Blackrock. The top earner under the L&G umbrella is their retirement sector, offering a range of retirement products for retail customers and producing over 50% of operating profit in 2018.

Source: TradingView

Technicals

On a technical level, I see this stock to be in a good position in the market to look at a potential entry. This is because, as we can see the significant rally from the start of the year has confirmed L&G’s uptrend with the EMAs having crossed into a bullish formation, 50 is above the 200. This rally broke through two previous support turned resistance levels at 250p and 266p illustrating significant momentum. Price has tested the all-time highs of 290p 3 times, making new highs on it’s last bounce signifying possible positive sentiment to break through on the next rally. Alternatively, the price Is currently on a retrace towards the 266 level, upon a break it is possible for us to see a continuation to 250p or if we see a rebound from 266p, a rally to 290p for 7.5% wouldn’t be out of reach. The blue trendline you can see at the base of the chart was drawn on the monthly timeframe chart identifying longer-term (3-5 Years) growth potential. So what is going to make the price move to these levels in the coming months?

Fundamentals

If you follow some developments of Legal & General, you will know they are not opposed to buying and selling arms of business under its broad umbrella, most recently it has put its home insurance brand up for sale after disappointing earnings in 2018. It has since become public that Allianz is in talks with the life insurer to acquire its home insurance sector for a value estimated to be between £250m and £350m. Furthermore, L&G’s general insurance division is also up for sale with significant interest from UK based insurer Direct Line, the value of this deal said to be around £400m. The reaction of the rumour of these deals has been mixed with the Direct Line rumour coming public in Mid December right before the January rally however the Allianz deal rumour announced Monday has seen the stock drop 3.2% in the week since. Further developments of these deals are likely to move the markets, possibly skewed to the upside but it is impossible to tell. Keep an eye out for more news on these developments and the market reaction to follow.

Source: SimplyWallSt

An interesting piece of data I have identified on the London life insurer is their current price against intrinsic value based on future cash flow. This highlights that the group are significantly undervalued at 47% below the intrinsic value, however, you can see here that the estimated value is more than 1.5x all-time highs of this stock. This makes me think that immediately, this value would not be obtainable but it does spark an interest in the potential growth of this group in the years to come.

Source: SimplyWallSt

It seems that individuals within the Legal & General group share my interest in this stocks potential having bought significant values of stock for the past year with the Chairman of the Board, John Oliver Kingman, having purchased stock every month for the past year totalling around £60k. This is not a significant value in this case however it does present a great sentiment from a very influential individual in the group. Further board members have also been accumulating stock in this past year alongside Kingman.

Source: IG.com

Being a FTSE100 stock, LGEN will be on the radar of many brokers, shown here by 17 different brokers having positions on this market. The average rating is a buy with 5 strong buys and 5 buys, on the other hand, we can see one broker having a strong sell on the stock which in my opinion cannot be ignored. It will be interesting to see if this stance changes as news is released in the coming weeks, or if other brokers follow this downside sentiment.

One essential check in my stock scan is the dividend payout of which L&G is one of the best payers in the UK with a great history of paying a good dividend to shareholders. The current annual dividend yield is at a strong 6.04% putting it as the 14th best in the FTSE100 and is estimated to increase closer to 7% over the coming years.

In conclusion, there are some exciting developments ongoing with this company which will require close surveillance before making any decision to trade this stock. For now in my opinion, it is definitely one to watch with some potential growth available or a simple passive dividend paying company for the portfolio.

References:

Insurance Times: Allianz to buy L&G home insurance – report: Allianz to buy L&G home insurance - report | Latest News | Insurance Times

Legal and General Group PLC 2018 Results: https://www.legalandgeneralgroup.com/media/2928/ye-18-rns_ap-internet-upload_fy2018-press-release_final_2109incbackhalf.pdf

MorningStar Top 20 FTSE100 Dividend Paying Stocks: http://www.morningstar.co.uk/uk/news/132966/top-20-ftse-100-dividend-paying-stocks.aspx

Legal and General Group PLC Wikipedia: Legal & General - Wikipedia

Disclaimer:

This article is not and should not be construed as an offer to sell, or the solicitation of an offer to purchase, or to subscribe for any investment. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author of this article is not a registered financial advisor. Readers should not view this material as offering investment related advice. Authors have taken information from what is perceived as reliable sources, but since the information source(s) are beyond our control, no representation or guarantee is made that it is complete or accurate. The reader precautions to ensure the accuracy of the information provided. Information collected and presented accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in this article is not a specific buy or sell recommendation and is presented solely for informational purposes only. Not to be taken as financial advice. Investors are advised to obtain the advice of a qualified financial and investment advisor before entering any financial transaction.

[Stephen.W]

Look forward to see how this one plays out

[JackSherwin]

Jack Sherwin – Aspiring Stock & Forex Market Analyst

I am working to build a published portfolio of stock and forex analysis with Samuel and Co Trading. I will be posting my analysis weekly, so keep your eyes peeled for my market outlook. I would like to open my analysis for discussion and feedback from the community.

Stock in question: LSE:TW. (Taylor Wimpey PLC)

Taylor Wimpey PLC is one of the largest UK based homebuilders. Listed on the London Stock Exchange with a market cap totalling £5.8B, Taylor Wimpey (TW) is a constituent of the FTSE100 index. TW is the result of a merger between Taylor Woodrow and George Wimpey in 2007, both of which have rich histories in the homebuilding and construction sectors dating back more than 100 years not only in the UK but America, Canada and Ghana. In 2011, Taylor Wimpey’s American and Canadian sectors were sold off to a property investment group backed by Oaktree Capital, Texas Pacific Group and John Hancock investments for £595M in the interest to cut debt and focus investment in the UK market. Taylor Wimpey’s construction sector was also sold to Vinci PLC in 2008 which left the company’s focus on the homebuilding sector consisting of three business lines; Taylor Wimpey Homes, Taylor Wimpey Central London and Taylor Wimpey España. Let’s have a deeper look.

Technicals

Source: TradingView

In the last year, investors have been fickle towards the UK housing industry with Brexit negotiations looming over many sectors in the UK stock market. This has led to a steady decline in TW’s stock value, finding a floor at 128p towards the end of 2018. After a month of consolidation around this level and shortly after TW released their annual results there was a strong recovery in the price. The daily chart above, displays an interesting situation with a couple of points for us to look at from a technical trader’s point of view. Firstly, since the start of the year, we have seen a strong uptrend with price retracing at 165p and 173p before moving higher towards 190p. In recent weeks, we have seen another pullback back to 173p, towards the 200 EMA. If we see a rebound confirmed, my outlook would be that price makes it’s way back to the previous highs, just above the 200p level.

Source: SimplyWallst

The intrinsic value illustrated above based on future cash flow shows a current discount of 27% with the expected value of 244p. This discount is not considered extremely high with it being less than a 50% discount. At this current value of 175.00p, the P/E ratio is 8.32, in the homebuilding sector, this value is not considered out of the norm with values ranging from 7.27 for Persimmon PLC and 10.26 for Bovis Homes Group PLC.

More Fundamentals

From a fundamental standpoint, Taylor Wimpey in my opinion is healthy, displaying low debt levels for the past 5 years in relation to the amount of cash it holds and net worth. In their most recent earnings release, the company’s net debt came in at 3.6% of its net worth, therefore the payments can be considered as sustainable moving forward with low-interest costs relative to cash. Taylor Wimpey worked hard to reduce debt since their merger in 2007 and this has proved to put them in a strong financial position to grow in the years since. As you can see below, the group’s net worth has grown steadily over the last 5 years.

Source: SimplyWallSt

Source: Hargreaves Lansdown.

Let’s have a look at how the brokers are currently rating Taylor Wimpey. Looking at the broker ratings supplied by Hargreaves Lansdown, 4 brokers have a strong buy on the stock with price targets ranging between 189p and 230p with the sentiment slightly shifting towards the buy end in the last three months shown by the arrows on the slider on the right. This strong performer has no sell ratings and 3 neutral (hold) ratings.

A regular point for discussion within my reports is the dividend and the dividend yield, of which Taylor Wimpey has one of the strongest in the FTSE100. The full dividend is coming in at 10.33%, paid out in three parts as a special dividend, final dividend and interim dividend. Minus the special dividend, TW is paying 3.49% which is below the top 25% of dividend payers in the FTSE100, with this being said they do have a good track record of paying shareholders well through the special dividend in line with positive earnings.

In conclusion, Taylor Wimpey shows some good promise in the future holding a reasonable share of the UK homebuilding market, completing 14,822 homes out of a total 165,090 in 2018. For me, this is a great stock for the watchlist in the coming weeks to see some potential upside towards the 200.00p mark, as well as providing income along the way. Thank you for reading.

References:

Telegraph. Taylor Wimpey sells American Business for £595M Taylor Wimpey sells American business for £595m - Telegraph

Taylor Wimpey About Us Our History | Taylor Wimpey

Taylor Wimpey Wikipedia Taylor Wimpey - Wikipedia

Hargreaves Lansdown Taylor Wimpey https://www.hl.co.uk/shares/shares-search-results/t/taylor-wimpey-plc-ordinary-1p-shares

Disclaimer:

This article is not and should not be construed as an offer to sell, or the solicitation of an offer to purchase, or to subscribe for any investment. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author of this article is not a registered financial advisor. Readers should not view this material as offering investment related advice. Authors have taken information from what is perceived as reliable sources, but since the information source(s) are beyond our control, no representation or guarantee is made that it is complete or accurate. The reader precautions to ensure the accuracy of the information provided. Information collected and presented accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in this article is not a specific buy or sell recommendation and is presented solely for informational purposes only. Not to be taken as financial advice. Investors are advised to obtain the advice of a qualified financial and investment advisor before entering any financial transaction.

[Liam.Sharvell]

Hi Jack, Whats your thoughts on the latest sell off?

[JackSherwin]

Hi Liam,
As mentioned in the technical analysis section of my report I did foresee a pullback towards the 173.00p handle and was awaiting confirmation of a rebound to look at potential entries on this stock. From a fundamental standpoint, the FTSE 100 index (of which TW is a constituent) saw a sell off during trading hours on Monday in the London market, which identifies it is not a direct sell off to TW and more the UK market sentiment as a whole. FTSE 100 ended the trading day on Monday at -0.2% and has since seen a recovery past the 7335 level to now be trading at 7355 (as of 9:55 22/5/19). This has confirmed the bounce on TW of 173.00p and I am now looking at entries.

[JackSherwin]

Jack Sherwin – Aspiring Stock & Forex Market Analyst

I am working to build a published portfolio of stock and forex analysis with Samuel and Co Trading. I will be posting my analysis weekly, so keep your eyes peeled for my market outlook. I would like to open my analysis for discussion and feedback from the community.

Stock in question: AIM:EPWN (Epwin Group PLC)

Sticking with the building sector from last week’s Taylor Wimpey Report, which you can find on my Linkedin and the Samuel and Co Trading Blog, we today have AIM Market constituent, Epwin Group PLC in the spotlight. Founded in 1976 as one of the first PVC-U Window fabrication businesses, Epwin has evolved to become a market leader in the low maintenance building products sector and supply the trade, retail, new build and social housing markets. Their products include, but not limited to; windows, doors, curtain walling and composite decking. June 2014 marked the date for the group to be listed on the London Stock Exchange AIM market starting a new era for the company.

Technicals

Source:TradingView

Looking here at the daily timeframe chart we can see that the stock has been ranging between the 70.00p and 90.00p levels for the last 16 months with it briefly breaking this level making new yearly lows of 66.00p in March 2019. Since then, a dividend increased was announced in line with previous expectations from the board of directors sparking confidence and moving the stock to its current level around 80.00p. This recent rally has also seen a crossover of the EMAs on this daily chart displaying potential for a further rise in value back towards the 90.00p level and possibly beyond according to the fundamentals.

Fundamentals

Delving into the annual report for EPWN in 2018, immediately Brexit appears to have disrupted the market in which Epwin operates as a result of several contributing factors. Brexit uncertainty has lead to significant volatility in the pound which significantly impacted input costs for the group. Alongside this, consumer confidence has been low this year leading to reductions in big purchases for the companies products in the last year. Consumers are not wanting to spend the big money on developing or repairing their homes in the fear of Brexit leading to a reduction in house prices in the coming years. These challenges are expected to continue during 2019 as no deal is set as of yet. With this being said I look to how Epwin group are performing within this troubled market at this stage.

During 2018, the group completed both the consolidation of its Macclesfield extrusion operations into Telford as well as the move into a new warehouse facility in Scunthorpe. They have cut lower margin, non-core operations to increase operational efficiency and footprint. This is allowing the group to focus on, and invest into its core operations where it has a significant market presence for example, its PVC-UE extruded ‘Cellular’ roofline and cladding profile systems, of which Epwin group claim to be the market leader.

Source: Simply Wall St

It seems very consistent in the housing market that contributing companies have seen a decline into the undervalued territory in the past year so it is not surprising to see Epwin group join this market with an estimated 46% discount based on future cash flows. The 146.00p value is to be taken with a pinch of salt as an immediate goal since this is not far from all-time highs of 155.00p, however, the undervalued status still holds. As we see some certainty come into the UK market with Brexit negotiations developing in the coming months I believe we will see some movement in the stocks contributing to the housing market.

Source: Simply Wall St

Historical debt levels for Epwin Group are nothing to shake a stick at, with their overall debt cut by 10% in the last 6 months alongside an increase in cash flow for the group. Looking at the group’s net worth from 2014 until 2017, they grew by a good rate until the market slowdown on the back of the UK’s vote to leave the EU in 2016. Digging into the numbers it’s all looking good for EPWN with their debt being less than 40% of their net worth as well as cash flow covering interest payments. Their debt has also decreased over the past 5 years.

Finally, a piece of data that I always check is the dividend, of which Epwin Group have a mixed story. For the years up until 2018, the dividend increased year-by-year to a peak of 8.69% in 2018, however, this has since decreased with the market taking a hit in 2018 dropping the payout to 6.2%. This payout still puts the group amongst the top 25% payers in the UK stock market and upon improved performance in the years to come, I would expect Epwin to return to its top end dividend reputation.

In conclusion, Epwin group are facing troubling times amongst others in the UK building sector, however, with their expansion and development ongoing, I expect Epwin group to be one to watch in the months to come. Thank you for reading my article, I would like to open up the comments for discussion.

References:

Epwin Group – Products - https://www.epwin.co.uk/#

Epwin Group – Investors – About Us - About Us | Epwin Group

Epwin Group – Investors – Annual Accounts Annual Accounts | Epwin Group

Interactive Investor – Epwin pleased with 2018 performance despite drop in revenue, profit - https://www.ii.co.uk/news/epwin-pleased-with-2018-performance-despite-drop-in-revenue-profit-al1554887057428773400

Disclaimer:

This article is not and should not be construed as an offer to sell, or the solicitation of an offer to purchase, or to subscribe for any investment. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author of this article is not a registered financial advisor. Readers should not view this material as offering investment related advice. Authors have taken information from what is perceived as reliable sources, but since the information source(s) are beyond our control, no representation or guarantee is made that it is complete or accurate. The reader precautions to ensure the accuracy of the information provided. Information collected and presented accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in this article is not a specific buy or sell recommendation and is presented solely for informational purposes only. Not to be taken as financial advice. Investors are advised to obtain the advice of a qualified financial and investment advisor before entering any financial transaction.

[JackSherwin]

Jack Sherwin – Aspiring Stock & Forex Market Analyst

I am working to build a published portfolio of stock and forex analysis with Samuel and Co Trading. I will be posting my analysis weekly, so keep your eyes peeled for my market outlook. I would like to open my analysis for discussion and feedback from the community.

Stock in question: LSE:PAGE ( Page Group PLC )

In this week’s stock spotlight is FTSE100 constituent Page Group PLC. Page Group PLC together with its subsidiaries, provides recruitment consultancy and support services through their 4 key brands; Page Executive, Page Personnel, Page Outsourcing and Michael Page. They operate in 36 countries across the world from Canada to New Zealand. At a glance, this stock is showing some potential with CFO Kelvin Stagg saying “The group grew gross profit 11.7% in constant currencies with all four regions delivering growth and 12 countries growing in excess of 20%”. With a market cap of £2Bn, Page Group PLC is coming in as one of the biggest recruitment consultancy groups in the UK and appear to be performing well during this challenging UK market.

Source: TradingView

First of all, let’s have a look at the technicals behind this stock’s chart as there are a couple of points of interest to consider. So, as you can see during the months from September 2018 to January 2019 there was a significant sell-off seeing the stock value drop 30% in 4 months. Fundamentally during this time, significant executive changes were being made as the Company Secretary Elaine Marriner announced she was stepping down, proving to shake investors during the winter. In the early months of 2019, we saw some consolidation around the 450.00p zone, followed by a rally as a result of earnings being released above expectations. Since, we have again seen consolidation just above the 500.00p level. From here, I would like to see a larger retracement before considering a long entry, however, it seems to be holding strong at 510.00p. What reasons are there for a rally back to 600p?

Source: SimplyWallSt

Looking at the intrinsic value based on future cash flow data from Simply Wall St, PAGE is showing to be at a 27% discount at its current value and I consider this to be a reasonable discount. The intrinsic value does seem very high and maybe not achievable in the current environment as all-time highs for this stock are 628.00p reached in August 2018. Although the 712.00p value may not be achievable immediately it does still present a great opportunity with this stock.

Source: Hargreaves Lansdown

7 brokers have existing ratings on this UK stock with 2 strong buys, 2 buys and 3 neutral, the average rating is coming in at a buy, however, looking at the slider on the right some brokers have downgraded their outlook in the last 3 months and it may take a further sell off for more brokers to push to their rating to a buy. The buy ratings at this stage have price targets between 590.00p and 685.00p.

Source: Simply Wall St

Further fundamentals to analyse for this stock is their historical debt charts which are showing to be in a healthy position. Firstly, you can see that their debt level is currently at zero and has been for the last two years meaning they also have no interest payments to keep up with. Prior to this, they have had periods holding debt but quickly show to pay it off and return to zero or low debt. Secondly, the consistency of their net worth increase is definitely something to consider, it is not the steepest increase but it does show strong steady growth. To me, this identifies consistency and stability in their growth, something that is important in my stock choices.

Finally, this stock is showing some great long-term potential when looking at their dividend payment. PAGE has a dividend payout yield of 4.96% putting it just under the top 25% of dividend payers in the UK, however this is still a very strong payout.

In conclusion, I am going to be watching this stock very carefully over the next couple of weeks to see if it retraces further to look at some opportunities moving forward. I think this company is performing well and is undervalued at its current price with some potential for growth, whilst earning a strong dividend in the process.

References:

Page Group PLC Investors - Investor Relations | Page Group

Disclaimer:

This article is not and should not be construed as an offer to sell, or the solicitation of an offer to purchase, or to subscribe for any investment. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author of this article is not a registered financial advisor. Readers should not view this material as offering investment related advice. Authors have taken information from what is perceived as reliable sources, but since the information source(s) are beyond our control, no representation or guarantee is made that it is complete or accurate. The reader precautions to ensure the accuracy of the information provided. Information collected and presented accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in this article is not a specific buy or sell recommendation and is presented solely for informational purposes only. Not to be taken as financial advice. Investors are advised to obtain the advice of a qualified financial and investment advisor before entering any financial transaction.

[JackSherwin]

Jack Sherwin – Aspiring Stock & Forex Market Analyst

I am working to build a published portfolio of stock and forex analysis with Samuel and Co Trading. I will be posting my analysis weekly, so keep your eyes peeled for my market outlook. I would like to open my analysis for discussion and feedback from the community.

Stock in question: NYSE:BA (The Boeing Company)

I am sure you have seen the recent news stories regarding Boeing’s mishaps over the past 6 months. However, are these situations now presenting a buying opportunity in Boeing? With a market cap of $192Billion, Boeing design and manufacture commercial jets, defence equipment such as the F-15 fighter Jet, rockets, rotorcraft, satellites and missiles worldwide. Boeing has faced strong criticism in recent times as we saw two unfortunate accidents resulting in the loss of 346 lives. In preliminary reports, it is stated that the crashes were a result of the MCAS (Manoeuvring Characteristics Augmentation System) being activated due to the erroneous angle of attack information. In simpler terms, the angle of attack data makes the MCAS think that the plane is going to stall so it drops the nose to prevent this from happening only shortly after take-off. This presents an opportunity for Boeing to adjust the software and roll this out to the 393 grounded 737 MAX planes as well as the 4,500+ units on the order backlog to get these planes back in the skies. CEO Dennis Muilenburg released a statement on April 4th stating “We’re taking a comprehensive, disciplined approach, and taking the time, to get the software update right. We’re nearing completion and anticipate its certification and implementation on the 737 MAX fleet worldwide in the weeks ahead”. Since this statement, on April 17th Muilenburg said “We’re making steady progress toward certification”. Let’s have a look at what this has done to the stock.

Technicals

Source: Tradingview

From this chart, we can see the decline as a result of the aforementioned accidents firstly in October resulting in a 25% drop in the stock value in the months to follow. As the markets regained their positive sentiment in late December into January, we saw a rally to new all-time highs of around $440. This was followed by news of the second crash this time seeing the stock drop 22% to its current level. I can see this continuing to the $320 or $300 level before seeing some more upside as the groundings of the 737 MAX’s are lifted by authorities. There are some particular levels of interest in this situation with the $370 level showing to have acted as resistance on previous occasions so we could possibly see price stall at this level before moving higher. Let’s have a look at the fundamentals leading to this move.

Fundamentals

Source:SimplyWallSt

Currently, Boeing is sitting at a strong 36% discount against its intrinsic value based on future cash flows with more room to move to the downside opening further discount. The intrinsic value is $537 which I don’t see as achievable in the shorter term however I can see this stock moving back to it’s all-time highs at $440. However, only on the condition that the FAA (Federal Aviation Authority) certify the fleet fit to fly again. I would also hope to see an increase in output back to the previous 52 units per month up from its reduced 42 units per month currently. Assuming $440 as a target, currently puts the stock at a 23% discount.
Source: IG.com
Broker ratings for this stock are showing to be a bit of a mixed bag. The 25 ratings are showing an average of buy with 8 strong buys, 9 buys, 6 holds and 2 strong sells.

A regular point of interest in my stock analysis is the dividend of which Boeing is a very average payer. Boeing has a rich history of paying a stable dividend which is definitely a point in their favour however the current rate is a mere 2.41%. This does put it above the bottom 25% of payers in the US however they are a way off the 3.86% minimum of the top 25% in the same sector.

Source: IG.com

Touching down on some further fundamentals here we have the last full year reports from Boeing for their net income, total equity and cash from operating activities. As you can see there was some good growth during 2018 for both the net income and cash levels with income growing by 23% from $8.5B to $10.5B as well as cash growth of 15% from $13.3B to $15.3B. However, as you can see, Boeing has struggled with its total equity in the past 5 years seeing drops in equity each year before 2017. With this being said, if we see an upside surprise in total equity in the preliminary report for 2019, this could be highly exaggerated in the stock price reflection to follow and we could see some strong upside moves in this situation.

In conclusion, Boeing is facing some troubling times and this is not to be taken lightly, I do see some further downside before opportunities arise. This company is a clear market leader and in high demand with 5,000+ units on order. I will be watching the news carefully for the certification from the FAA for the 737 MAX fleet to fly again. Thank you for reading my report today.

References:

Boeing – investors – annual reports - http://investors.boeing.com/investors/financial-reports/default.aspx

Boeing – 737 MAX updates - http://www.boeing.com/commercial/737max/737-max-update.page

Boeing – Wikipedia - Boeing - Wikipedia

Disclaimer:

This article is not and should not be construed as an offer to sell, or the solicitation of an offer to purchase, or to subscribe for any investment. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author of this article is not a registered financial advisor. Readers should not view this material as offering investment related advice. Authors have taken information from what is perceived as reliable sources, but since the information source(s) are beyond our control, no representation or guarantee is made that it is complete or accurate. The reader precautions to ensure the accuracy of the information provided. Information collected and presented accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in this article is not a specific buy or sell recommendation and is presented solely for informational purposes only. Not to be taken as financial advice. Investors are advised to obtain the advice of a qualified financial and investment advisor before entering any financial transaction.

[Stephen.W]

Nice breakdown Jack!

[JackSherwin]

Jack Sherwin – Aspiring Stock & Forex Market Analyst

I am working to build a published portfolio of stock and forex analysis with Samuel and Co Trading. I will be posting my analysis weekly, so keep your eyes peeled for my market outlook. I would like to open my analysis for discussion and feedback from the community.

Stock in question: LSE:HL. (Hargreaves Lansdown PLC)

Hargreaves Lansdown is a UK based financial services company that sells funds, shares and related products to retail investors. Much like my friends over at Samuel and Co Trading, Peter Hargreaves and Stephen Lansdown started trading from a bedroom and provided information to clients on unit trusts and tax planning. The company was first listed on the London Stock Exchange in May 2007 and is a constituent of the FTSE 100 index with a market cap of £9.2B. Hargreaves Lansdown is the UK’s biggest direct to investor investment platform and in the winter of 2018 administered a great £91.6B worth of investments for over 1 million clients.

Hargreaves Lansdown has been a strong supporter of Woodford investment management and features several investment products of theirs on the Wealth 50 list. With this being said, it has come about that Neil Woodford has decided to suspend his Equity Income Fund after seeing large outflows and increased redemptions. This led to the decision for Hargreaves Lansdown to drop Woodford’s fund from its Wealth 50 which left clients and investors doubtful of the robustness of how HL chooses its top 50 funds for clients.

Source: TradingView

The chart for this stock has definitely been an interesting one over the last couple of years. There has been significant uncertainty in the markets as Brexit negotiations seemingly make no progress towards a deal and investors seek havens for their capital and assets. This has proved to be beneficial to HL with Q1 of 2018 showing a 16% increase in net revenue and assets under management rose by 3%. Looking at the chart of Hargreaves stock price we can see the extent of the negative market sentiment as a result of dropping Woodford from its Wealth 50, the total decline standing around 16%. I can see this potentially dropping down to 1800p or even down to 1750p which would give us some great opportunity to buy into this stock at a fair price. I will be looking for a long position with my stop below the 1640p handle and here is why I think this stock is a set to be potential buy in the weeks to come.

Fundamentals

Source: SimplyWallSt

Historical debt for HL is definitely a tick in their favour having not had any debt for over 5 years and as you can see the growth of their cash and net worth has steadily increased in the same time frame.

Source: IG.com

The growth for HL in the results for 2018 were very strong across the board especially in such a turbulent time in the UK investment markets. Net income rose from £211.7m to £236.3M for a growth of 11.6% which is way above the low-risk savings rate of 1.2%. Total equity saw a strong performance with growth of 32% from £307M to £404M and finally Cash flow improved by 8% from £225m to £245M so a great performance across the board for 2018. So What do other brokers think of HL?

Source: Hargreaves Lansdown

The broker ratings on this stock are coming in as an average neutral rating with a slight weight to the sell side. The ratings on the sell side are targeting prices in the range of 1,775p down to 1,541p, as we see some significant moves in this stock value I will be keeping a close eye on these ratings as price approaches this zone I would expect to see these sell ratings to adjust to holds. Numis Capital has upgraded their rating from ‘hold’ to ‘add’ on 11/6 which saw a slight market reaction to the upside, however the stock has continued its move down during the open of 12/6.

Hargreaves Lansdown is not the best dividend payer in the market with a small 1.68% current annual income putting it amongst the lower 25% of payers in the UK. It could be said that this promotes investors to look to invest in other products with the company itself where they can make commissions on these investors, turning this low dividend into a selling point for its top funds and investment products.

In conclusion, this stock has seen a shock drop and I am going to be watching carefully how this pans out over the next few days or weeks to consider a position. HL have a strong position in the UK market and have been performing well in recent years pushing me to look for long term holds in this stock focussing on growth as opposed to an income investment once I see an opportunity to achieve a fair price.

References:

Hargreaves Lansdown Wikipedia - Hargreaves Lansdown - Wikipedia

Hargreaves Lansdown boss apologises for Woodford Suspension - Hargreaves Lansdown boss apologises for Woodford suspension - BBC News

Woodford Funds – Fund Suspension update - Fund suspension update from Neil - Woodford Investment Management Ltd

Disclaimer:

This article is not and should not be construed as an offer to sell, or the solicitation of an offer to purchase, or to subscribe for any investment. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author of this article is not a registered financial advisor. Readers should not view this material as offering investment related advice. Authors have taken information from what is perceived as reliable sources, but since the information source(s) are beyond our control, no representation or guarantee is made that it is complete or accurate. The reader precautions to ensure the accuracy of the information provided. Information collected and presented accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in this article is not a specific buy or sell recommendation and is presented solely for informational purposes only. Not to be taken as financial advice. Investors are advised to obtain the advice of a qualified financial and investment advisor before entering any financial transaction.

[dpaterso]

Hey @JackSherwin.

Oh man it is so nice to see NO FOREX!!!

Well you’ll have one more reader for what it’s worth. I only trade Equities and Commodities and have been doing so for many years. It really is the only way to make money in this business. Ask me how I know!!!

As I am a purely a systems based trader (my methodology well documented around these parts) I will probably never trade based on any of your analysis (matter of fact I make a POINT of staying AWAY from people like you so as to ensure that I do not develop a directional bias that conflicts with my system and methodology). However: I can already see that if nothing else you may well put individual stocks on my radar i.e. stocks that I ordinarily would probably never look at.

All of the above being said: very very nice thread. Well presented.

[JackSherwin]

Hi @dpaterso

Thank you very much for your kind words about my thread so far and I definitely appreciate your method of approaching the markets. Even though we may not trade via similar systems I do hope we can share stocks that we are watching and see if our systems do have any confluence.

Again thank you for reading some of my content and I hope you are looking forward to the content moving forward.