Shifting Shares (25 Feb 2019) – All about the data #D4T4 #RRE #BKS #ALT
It was a relatively quiet week for me with few setups showing themselves. Much like a surfer with no waves, if there’s a lack of volatility or setups then there is little to be done. But I continued to keep a close eye on the watchlist and did open one new long position.
I pulled the trigger on D4T4 Solutions as it broke the 220p level I mentioned last week. For those who aren’t aware of the fundamental situation or what it actually does, I’d recommend listening to my colleague Simon’s excellent podcast on the business.
Having looked at the fundamentals, I’m willing to give this company a wider stop in the hope of catching a larger trend. There aren’t many companies where revenues, margins, and profits are all growing, and the company is converting all of its profits into cash. Payment terms appear to be favourable for the company given the large increase in cash after working capital movements, but this may be just collecting previous receivables so I’d need to check.
At £85 million market cap, this stock will not be on the radar of many institutions. It reported 8.82p basic EPS for the six months to September 2018 – Stockopedia has FY19 forecasts of 12p, which seems easily doable and setting up for a beat, though this could be wrong since there is very little research coverage of the company.
I don’t fully understand what it does (collects and analyses data) but it clearly solves pain points for the customer and so I am guessing that it will keep winning tenders and new business. Ultimately none of this is relevant for my strategy however, as if the price goes down I’ll sell and wait for it to set up again.
I’m very bullish on RockRose, and spent a few weeks on the bid picking up stock below 610p at the start of the year. Macquarie are selling down, and so presented an opportunity to buy a quality business on the cheap. I felt on Friday with the increased volumes and price strength that this could be the start of the re-rating, and today’s RNS surely confirms that.
(All charts taken from this article are by SharePad.)
The cynic in me would say that news leaked, as it sure seems coincidental that there was so much volume strength on Friday before today’s RNS, but with RockRose’s anticipated production rising from 11,000 to 24,000 boepd I’m not going to complain. It would be great if the company could clean the book up before relisting, as nobody wants sellers to dampen the party when it does.
Beeks Financial Cloud
I like the BKS business – it has significant barriers to entry once it establishes itself, and I’d like to see it break 130p on good volume.
The better setup would be buying the all time high at 145p, so it remains on the watchlist for now.
I also bought Altitude at 100p as highlighted in a previous column, and so far the trade is still running. Notice how the price has been walked down on tiny volume – I want to see big volume on blue days and minimal volumes on small days. I’m looking forward to seeing how this trade plays out – from 100p there is little resistance until the all time high at 140p.
I still remain in plenty of cash, and unless I am shown a reason to buy, that will likely remain the same.
At the time of publication, the author has financial interests in shares discussed in this article.