Shifting shares (10 Feb 2019) – The future is bright #FUTR #CAML #CREO

Shifting shares (10 Feb 2019) – The future is bright #FUTR #CAML #CREO

News Roundup

Cluff Natural Resources (CLNR) released a stunning piece of news on Friday announcing a farm-out with Shell. It doesn’t really get much bigger than this, so I was glad I was up at 3am (my local time) to check the RNSs. It didn’t seem expected (expected news usually gets sold into), so I bought in the premarket and banked half close to 5p.

I’m still running half as I expect the weekend press to be all over it, meaning ordinary punters who perhaps have never bought shares before will be piling in on Monday pushing the stock higher. It’s not nice to think of it this way, but stocks go up and they go down, and as traders its our job to profit from these fluctuations. In fairness, it does look like a big deal and turning point for the company, so hopefully long term holders will be well rewarded.

Last week I mentioned the potential for Bidstack (BIDS) to break out from 7p; it did exactly that and screamed away tagging 9p. I’ve now sold all my position, but I’ve no doubt I’ll be back in the future (perhaps soon). It’s one of the few small stocks pushing into all time high territory with a blue sky story that sells.

Motif Bio made a nice move upwards, before retracing, and I unfortunately missed the move at Amphion (AMP) which holds a large amount of Motif stock. This always moves whenever Motif makes a significant move, so I was asleep at the wheel here and missed a lovely 100% move. AMP is complete trash of course, but it doesn’t matter if it makes you money.

I still think Motif offers a very good risk/reward ratio. Very soon, the FDA will make a decision on Iclaprim. As mentioned last week, the asset has already been through several phase III trials but the FDA also helped to design REVIVE-1 and REVIVE-2. This is because the drug is desperately needed. I can’t think of a logical reason why it would be refused, and so I estimate there is an 80-90% of making 50% and a 10-20% of losing 50%. Those are good odds over the long term, so like I did through both parts of the REVIVE phase III I’ll be holding a small position into the FDA result.

Altitude (ALT) broke through the 90p barrier mentioned and went closing in on 100p which is the key area I’m looking to buy. I want to see consolidation (it’s moved from the recent placing sub 70p) before making a meaningful move higher.

The Week Ahead

There aren’t many stocks I like the look of this week, but there are a few that may be coming into play.

Future Group (FUTR)

I first owned FUTR at around 150p in 2017. A shame I didn’t hold on to any of them in the bottom drawer as they hit 600p last week. This is a fantastic business, led by a cautious CEO and an experienced CFO. It would be sexist of me to say that as they are both women they are therefore more trustworthy, and less likely to commit fraud (despite the statistics confirming), so I wouldn’t dream of saying it.

Future has several revenue streams now and focusses on building online communities and evergreen assets through its publishing. I think the shares have a lot further to go in the long term, so buying this breakout, as I have done many times in the past, will be a trade that I am looking out for.

Central Asia Metals (CAML)

This stock sounds like a dodgy AIM share but unlike dodgy AIM shares it generates large amounts of free cash flow. It has broken the key 200 moving averages, and put in a new six month high. I’m long here, and may look to add if the stock retraces a little further to test the breakout.

Creo Medical Group (CREO)

I don’t know anything about this company, other than it’s in a nice uptrend and hasn’t given back too much from the recent high. I like stocks that don’t have large troughs after putting in a peak – stocks that show signs of strength by getting bought aggressively on dips are the stocks I like to trade. That way, the stock doesn’t need to dip much to tell you when you’re wrong and it’s not getting bought as hard as it was previously.

If you look at the volume chart on the bottom, we can see that since the start of 2019 volumes have been higher and the stock has risen gently. This is what I like to see – increasing demand for stock but also a rise in price. Increasing demand and a price still going down means that selling pressure is stronger!

The coming week

I still feel that the markets are very risk-off. I’m not seeing many breakouts, which isn’t good. When the markets are bullish I’m usually spoiled for choice. I’m not willing to risk capital on sub-optimal trades, so I’m happy to not trade as much and wait for the opportunity. A lot of traders struggle with this, and chase boredom trades; in the end it only costs them money. I’m in Aruba anyway, so this is quite nice to enjoy some time off.

Since my last column, I have started my own website which will focus on the process of trading and investing rather than the wealth of individual stock coverage that Cube offers. The link is in my bio below!

 

At the time of publication, the author has financial interests in shares discussed in this column.

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