Styles & Wood Group - Breakout?

Styles & Wood group (FTSE Fledgling: STY) closed at 13.25p yesterday but looks set to break out from its downtrend which started at the beginning of January.

STY provides property services to major retailers, banks and commercial organisations and has had a tough time in recent years as the long term price graph shows (see below).

As you can see, a drop from £43.05 (11th April 2007) to 11.00p (9th December 2010), a fall of £42.94 (-99.7%) is fairly desperate!

However, lets go in a bit closer and take another look at the recent price action...

The graph above, covering the last 18 months or so, shows how STY is beginning to show signs of life. The first signs of a break came in December 2010, when the share price shot up from 11.25p to 17.75p (a rise of 61.4% in 26 days). This rise wasn't sustained however and STY has been steadily declining so far this year.

In terms of fundamentals, STY is reasonably well placed. Some of the key facts from the preliminary results for the year ended 31st December 2010 (announced on 13th April) are:

• Revenue £99.1m (2009: £139.3m)
• Underlying operating profit £1.4m (2009: 1.8m)
• Net Loss £0.9m (2009: Net Loss £1.7m) - reduction of 47%
• Gross Margin 7.8% (2009: 6.4%)
• Net cash £7.5m (31/12/2009: £8.4m)
• MCAP - £7.88m

So, we have a company valued by the market at £7.88m with net cash of £7.5m, effectively meaning that the price being put on the ongoing debt free business is £380,000! For a business that, from recent news seems to be very clearly in recovery, this seems a bargain.

Looking at the price action since 13th April is worthwhile (see the daily chart below).

The price action yesterday seems to me to be a clear buy signal. The 14 day ADX indicator gave a buy signal (foretold by the 8 day ADX a couple of days ago). OBV has picked up nicely since the results were announced and the 200 day moving average is nicely flat. Volume has also been picking up nicely, suggesting we are in a period of accumulation.

Interestingly, as I'm completing this blog post, I've just checked the shareprice of STY to see that it's jumped this morning (currently: 14.5p at 12:55, Wednesday 27th April). One to give serious consideration to?

I'd be interested to hear your views on the prospects for STY.

Usual warnings - Do your own research etc...

Titan Europe (88p) puts the wheels back on!

Titan Europe Announced preliminary results, for the year ended 31st December 2010, today. TSW manufactures wheels and undercarriages for the global construction, agriculture and mining sectors and has operations in several countries.

The highlights of the results are:

• Turnover up £96.6m (+37.35%) from £258.6m to £355.2m
• Operating profit improved by £45.8m to +£12.3m (FY 2009, loss: £33.5m)
• Pretax profit £3.4m up by £44.8m from 2009 loss of £41.4m
• Net debt reduced by £15.2m, to £132.8m (31.12.2009: £148m)
• Diluted eps of 3.14p (2009: loss per share of 41.44p)

The rise of 9p to 88p today, reflects these excellent figures and there could be more upside to come, based on the look of the shareprice graph (see below):

The graph shows the nice move up today (+11.39%) on strengthening volume. The OBV has kicked up nicely in the past two days and the RSI and MACD are nowhere near overbought teritory. A quick look back at the longer term chart reveals an interesting angle...

The  "eagle eyed" DIY-Investors amongst you will have noted the huge gap (arrowed on the graph) to the downside that occured in September 2008, when TSW dropped from 122p to 64p in a day. This fall of 58p (47.5%) from the previous close, on volume of just over a million shares traded, was followed by more heavy selling over the next few days. This sets up TSW for the possibility of a significant move up over the next few days, as people digest the figures and start to buy back in. In my opinion, I believe that the 122p target may well be reached within the next few weeks. A positive change in sentiment is supported by the news, released with the results, that Q1 2011 turnover is 66% up on the first quarter last year. This sets us up nicely for another jump in turnover within the next twelve months.

Do you agree with my interpretation of the prospects for TSW? Do let us know what you think by leaving you comments below.