Set Your Alarm Early Tomorrow Folks

I'm getting up early tomorrow...

Have you lost your marbles Mick, I hear you ask. Well, not quite. My reason is that I've just spotted a breakout that caused me to go digging about. Well, it's better than watching TV (or answering the door to the blasted Trick or Treaters).

Now, to the point...

Mirada

Mirada (AIM: MIRA) showed a clear breakout above the 200 day m.a. today (with volume), moving up 1p to 10.5p. See the graph below:

Looking at the Key Metrics (below) didn't give too many clues...

A young company with a PSR below 1.0 (in this case 0.78) is always good. There are no forecasts on Sharescope, so I went digging around on the Company's website, checked the last two sets of accounts and the various RNS announcements.

What really caught my eye was the Mirada RNS yesterday (30th October 2012), which states (inter alia) that

"Our Interims to 30th September 2012 will be reported on 1 November and I am pleased to say that we anticipate that they will show a significant improvement in performance.”show a significant improvement."

Coupled with the recent news about the tie ups with Cablecom Mexico and Sky Italia, I expect the shareprice to respond accordingly.

Usual Caveats... make up your own mind and DYOR.

I'm off to set my alarm clock!

Mick.

Don't peep - two bottoms on view!

Premier Foods (LSE: PFD)

Premier Foods was up 10.5% today, closing at 101.5p. The share price graph is starting to show clear signs of forming a "Double Bottom", see below:

With momentum building, following the RNS announcement today, re. the completion of the disposal of the Sweet Spreads and Jellies Business for £200m (£170m cash + £30m shares in the buyer [Hain Celestial]), the completion of a double bottom formation looks more likely than not. If this does happen, it could bode well for us DIY-Investors that spotted the signs.

What do you think - will this be a trick or treat?

Mick.

Can Premier Foods get back to the First Division?

Premier Foods (LSE: PFD) - SP= 85.75p, MCAP=£205.6m (at close 24/10/2012)

Premier Foods looks as though it is shaping up to be a classic recovery stock. At the beginning of October, I added it to one of the DIY-Investors Active Portfolios (replacing Shaftsinkers) and so far that looks to have been a good move. So in amongst my current plans to "Escape to the Country", what attracted me to it?

Well, you won't be surprised to hear that it was a combination of technical and fundamental indicators. I've summarised these below...

Technical Indicators

Back at the beginning of October, the PFD share price had nudged through the 50 day moving average, following a lateral breakout from the downtrend (marked by the orange line) that had been in place since the middle of June. On Friday 5th October, I bought PFD for the active DIY-Investors portfolio at 66.5p (having sold ShaftSinkers the day before). At the time, the SP graph looked like this...

You can see that, as is common, there was no increased volume to support the lateral breakout (17th September onwards) although the OBV broke up through the downtrend and the RSI was starting to show increasing strength. The clear breakthrough of the 50 day m.a. was the factor that tipped the balance for me, coupled with the general shape of the Share price graph over the medium term (see below):

Note that the low at the beginning of September 2012 was a higher low, compared to the lows of October/November 2011 (marked by the high volume).

Fundamental Analysis

Let's have a look at the Key Metrics (from Sharescope):

Background

 PFD has been burdened by the large debts (£1.2 Bn) taken on when it acquired Hovis and Mr Kipling group (RHM) in March 2007, just before the credit crunch and subsequent economic downturn. PFD has been facing an uphill battle since then, having to cover large interest payments, hefty bank fees and with the need to correct the large pension deficit.

Summary

Notwithstanding the above, the fundamentals do meet some of my criteria for a potential recovery stock, as follows:

• Low PSR (currently 0.12 [pr])
• Positive operating margin (+4.68% on last results - see Blue Arrow [above])
• Low P/E (currently 2.86)
• Improving Newsflow re. disposals etc.

Some of the more bearish counterpoints included:

• Level of debt
• Pension issues
• negative cashflow in y/e 31.12.2011 (see orange line on key metrics)
• negative tangible book value
• slight fall in turnover

As usual, as a DIY-Investor, I am quite happy to weigh up the evidence and dip my toe in the water (buying my initial holding) based on my own judgement. So far, so good and I can see the potential for more upside on the share price.

Why not take a look and see what you think about the recovery prospects for PFD?

Be sure to let me know your verdict!

Mick.

TCG starting to cook?

Thomas Cook Group, TCG (SP=18.25p, MCAP=£159.7m)

Thomas Cook Group (TCG) closed at 18.25p this evening, having broken up through the flattish 200 day moving average. This follows an interesting Pre-Close Statement last Friday (28th September), which suggested that business had improved - with late foreign holiday bookings being a strong factor.

You may remember our previous Blog Post on 19th July 2012, when we asked if Thomas Cook was turning? Well, here at DIY-Investors, we now feel that the balance of evidence is showing that this  might well be the case. So, if this is the start of a long road back to recovery for TCG, let's take another look at the evidence...

Technical Analysis

The Long Term graph doesn't make a pretty picture, as you can see:

Having fallen, from 297.5p (6th May 2009) to 10.2p on 22nd November 2011 (a drop of 287.3p, 96.57%) in two and a half years, TCG has been bumping along the bottom for some weeks.

Fundamental Analysis

Trading the breakout of such a battered stock carries risk and potential reward. The Key Metrics (below), illustrate some of the problems facing TCG...

Having turned in a thumping loss last year (£398.2m), the loss is forecast to narrow considerably in the year that has just ended (on 30/09/2012).

Positive Points include:

• High Turnover but low PSR (0.16)
• Well established brand name (at least in most peoples eyes!)
• Cash-flow per share still positive last year, compared to eps (22.87p - v - 0.84p)
• Long-Term Funding in place - see Interim Results (May 2012)
• Positive action being taken to reduce borrowing (such as selling TCG India).

Negative Points include:

• High (and increasing borrowings)
• Net gearing has been rising for past 5 years
•  The squeeze on household expenditures may adversely affect discretionary spending (such as holidays)

 Recent Price Action (and Analysis)

The recent share price action, since the panic dump of November 2011, is worth looking at in greater detail...

You can see above that the price has clearly responded favourably to the pre-close statement last Friday. Note in particular:

• Increased volume in past two trading days
• Higher average volume last 10 or so trading days
• Buy signal on the ADX indicators (although I would like to see the 14 day ADX value higher)
• RS (against the FTSE 350 Travel & Leisure) has turned up, from a low position
• OBV has turned up
• Improving news recently (disposals etc)
• Horizontal Trading range of past 10 weeks has been broken to the upside

As usual, we all have to make up our own minds as DIY-Investors but the signs look promising!

Let us know what you think!