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. 

DIY-Investors Sharepicks for 2011

Subscribers to the diy-investors.com website will be aware that we picked two virtual portfolios for 2011. The first took a notional £10,000 and invested this equally into ten shares. The second was more focussed, spreading the fund equally between five shares. Although this is OK as a comparison with the annual ritual that the mainstream newspapers engage in, it doesn't reflect the reality of my approach as an active DIY-Investor.

I have therefore taken up the challenge of  actively managing two (mirror) virtual portfolios, using the same sharepicks as my starting point. However, I am applying the portfolio management techniques (as set out in chapter 14 of my book "Picking Winning Shares", coupled with the selling techniques as set out in chapter 15).

So far, the only change that I have made was to have sold MBL group (incurring a loss to the portfolio of £418), following the deterioration of the price action after the profit warning on 31st January 2011. The proceeds were invested in Pendragon (2431 shares purchased at 23.25p). This has, so far, proved to be the correct move as MBL Group has now dropped to 12p (having had the contract for the supply to Morrisons terminated, as announced on 15th March 2011).

I'm currently monitoring the virtual shareholdings in the two actively managed portfolios and at diy-investors.com, we'll be comparing the passive and actively managed virtual funds quarterly as we go through the year. We'll circulate the first quarter results to our subscribers over the weekend of 2nd/3rd April.

I believe that I can outperform the passive virtual funds - but by how much over the full 12 months? Anyone like to offer an opinion as to how many percentage basis points this might be?

Is HaiKe Chemical Group (SP=32p) about to take off?

Is Haike Chemical Group (AIM: HAIK), about to start another short term uptrend?

Over the past 4 years, HAIK has been in a downtrend, characterised by very volatile short term moves (see graph below).

Is there any reason to expect the shareprice to turnaround? Well I believe the answer may well be yes. The recent positive news about both turnover and profitability, coupled with the commencement of production at the jointly owned Ruilin Refinery, could well be the reason. The increase in gasoline and diesel prices,by the PRC Government in December, may also have a positive effect going foreward.

Analysing the recent news, it appears that the full year Turnover, for the year ended 31/12/2010, will be around £780m. On the current shareprice of 32p and with 38.4m shares issued, the MCAP is currently around £12.3million. This gives a PSR of only 0.016. This appears to be extremely low for a Company with such a large turnover and located in such a growing market. Note also that, for the years ending 2005 to 2007, HAIK managed an operating profit of between 5 and 7%. Any slight improvement in profitability, coupled with the rapidly increasing turnover, will be likely to lead to a massive increase in profit and hence eps (based on the current 38.4m shares issued). A re-rating is therefore quite likely!

What about the recent chart action? Well, here too there are grounds for some optimism (see below):

As you can see, since the last RNS (20th January 2011), the shareprice has dropped from 73p to 32p (a fall of 56%). However, note that the 200 day moving average is sloping up and providing support to the price. Also, there appears to be buy signals on both MACD and stochastic secondary indicators. RSI is also oversold but the OBV is very strong. The recent decline has also taken the price back to about the level where it broke (laterally) out of the 4 year downtrend, at the end of November 2010. In my opinion, this could be the last buying opportunity at this level, as the full year results (expected at the end of June 2011) are likely to show huge growth in turnover, and a "modest profit" (as per the RNS of 20th January).

What do you think?

Usual warnings DYOR etc.

"Picking Winning Shares"

Well, at last my book is published - you can now buy it on Amazon HERE!

The back cover image is here ...

I hope you enjoy reading it and that it helps with your investing.

Kind Regards, Mick.

A real good price move!

Real Good Food Group closed at 37.5p today (up 8.3%), breaking through the overhead resistance (see chart below).

The preliminary results are due on 29th March and based on the last RNS, we can expect a pleasant surprise. If the forecast turnover of £220m is met and given todays MCAP of £24.4m, RGD is still on a paltry PSR of 0.11. Expect a re-rating if the results are good.

Looking at the longer term chart, the next serious price resistance is expected at the 80 to 81p price level.

Will this one double again in the next year? What do you think?

You may also have noticed that RGD is available as a free case study HERE.

As ever, do the DIY-Investors thing and "make up your own mind!"

Is Uniq unique?

Uniq (SP=13.25p) underwent an explosive breakout today, closing up 5.75p (+74.92%). Of the 115million total shares available, 9.96m changed hands (8.7%), making this a significant move.

Was any of this foreseeable? Well we thought so, hence UNIQ was one of our picks for 2011. Another one of our picks for the year went up 21.18% today on a very impressive set of annual results. Want to get details? Join our community of DIY-Investors Here.