Good prospects, and undervalued..

[james1989]

Not a share tip, but maybe worth a look.

ECM, Electrocomponents.

 

[aparoid89]

Not a share tip, but maybe worth a look.

ECM, Electrocomponents.

Looks good, when are you timing your entry? Seems very volatile on the 1 year chart.

 

[james1989]

Looks good, when are you timing your entry? Seems very volatile on the 1 year chart.

I bought in at the low, however, the business is still in value territory, i'd still pick it up at this point without hesitation, but it may fall back to support in the 190 region.

Please note, my holding period is dependent upon numerous factors and i'm typically a longer term investor (three months to forever), so discretion on exit is advised, a typical gain of 15% in the near term would suffice on a personal level.

Kind Regards

 

[james1989]

Tesco (TSCO) is another business that deserves a look right now, very close to a no brainer picking it up at close to 320.

 

[wackypete2]

I'd stay away from TESCO. Too many funny things going on there. If I were forced to choose I'd rather have the Research in Motion (RIMM) you guys were discussing in another thread. At least we KNOW what's been going on there and you can make a better informed decision.

Peter

 

[james1989]

Time will surely tell Peter, rather than debating the invisible peripherals we should focus on what Tesco is doing internationally and survey their numbers, if we rendezvous back at this thread in ten years i'd be confident enough to say that TSCO will be well on the way to catching WMT, I have my money where my mouth is.

If you would be confident enough to put your money in RIMM and be willing to come back in ten years, I could very well understand your conduct, but giving that advice is somewhat dangerous for the long term investor, the smartphone market is beyond fierce.

But, the deciding factor in this will be time, we shall see.

 

[wackypete2]

You misunderstood me. I don't want RIMM either but of the 3 we are talking about TSCO, RIMM, and ECM, my opinion is RIMM is the least worst.

I was just expressing my opinion though, I don't have money in any of them. Since you do then kudos to you and good luck

Peter

 

[james1989]

I understood that as you expressed 'if I were forced to choose', but many people on the forums may take that advice, and studying the companies compararively, I BELIEVE (not absolute truth) RIMM is the most in danger, it is not traditionally in value territory, never mind reference to the qualitative woes.

You're opinion is as important as everyone elses Peter and I am most certainly not saying you are wrong, opinion is what makes a market, but doesn't always produce winners.

Thank you for the good luck, although luck shouldn't come into it.

Happy trading Peter.

James

 

[james1989]

While a growth business in the technology sector is riskier than the average, in a market like this throwing up little opportunity for undervalued securities apart from the two retailers Tesco and Sainsbury's, a calculated venture may prove rewarding with less downside risk.

Volex, which came to my attention after Giles Hargreave manager of Marlborough UK Micro Cap Growth Fund picked it up has extremely good numbers and is, by conservative calculation, severely undervalued, but putting an absolute estimate on value is tricky with a stock exhibiting such growth as Volex, therefore after an analysis of probability, if the price came back to to 250p per share region, I plan to allocate 5% of my funds to a long position.

No investment advice is intended, to buy or otherwise.

Regards

 

[james1989]

Electrocomponents has now reverted to around its true value, hence, I have exited the position as I feel there are undervalued issues elsewhere in the market promising a better margin of safety.

Edit - ECM is still undervalued by around 4% at the time of writing, after the share price of the business advances a further 4%, a trade in ECM would be regarded as speculative.

Regards

 

[wackypete2]

So you made a nice profit then?
Looks like it's been moving up.



Peter

 

[james1989]

I would like to talk a little about compounding and value investing and why time is your friend.

I believe equities offer the greatest potential and safety over time and one may expect returns of 5-7% average annual returns investing regularly in an index tracker such as the FTSE100. I would first like to exhibit the gains possible by subscribing to this method of investment when taking compounding into consideration, please note, inflation is not accounted for.

Years 20
Percent Yield 7%
Initial Balance £10,000
Monthly Contribution £400
Final Balance £248,758.05

However, my personal value investing strategy aims to outperform the FTSE100 by around 10 percentage points annually, and some funds have done this over time such as Marlborough Special Situations making around 18% annually since 1995, however it may be said that this fund has grown and returns may be difficult to replicate over the next 20 years with such a diversified portfolio. However, investing for the long term in a good manager can help you gain a massive advantage over the market and I would like to illustrate this below, obviously, this isn't the only way to make money, but it may be worth considering if you are struggling with trading the markets.

Years 20
Percent Yield 17%
Initial Balance £10,000
Monthly Contribution £400
Final Balance £1,090,440.28

Regards

 

[james1989]

So you made a nice profit then?
Looks like it's been moving up.



Peter

Hello Peter,

I did make a 20% or so profit, I have just been contemplating how easy my job would be if I was living on your side of the Atlantic Peter, what a great country you're in to take advantage of capitalism.

Regards

 

[james1989]

Just an update on the post regarding Volex (VLX).

The price came back to my 250p entry price briefly and I did take a position.

Based upon the appraisal of the business at the time of writing, I would put the value at around 313p per share.

Regards

 

[james1989]

As with the US thread, I have reviewed my stance on one aforementioned security, the buy rating remains in place for Tesco.

The recent bull market has left little opportunity for disciplined methodical probable stock selection, hence, as human nature intends, I have tried to chase the market in recommending VLX, I plan to liquidate my position in VLX come Monday morning.

As always, no advice is intended.

 

[aparoid89]

Just wondering. Do you know the reason why Volex surged by 700% in two years? It seemed to have reached an all time low by the end of 2008.

One stock i'm interested in is Game Group. Which is showing similar behavior to Volex and the directors seem to think there is still value by buying large amounts of stock. Do you think the same thing will happen?

 

[james1989]

Obviously in a time of mass chaos, everything comes down in a stampeed of irrationality (this is the time business becomes available cheaply and disproves the efficient market theory), only for the public to realise that businesses become mispriced, especially when earnings and management are taken into account, and that's what happened in Volex's case.

As for Game, I would consider it largely speculative in relation to my own requirements and you must consider the fact that gaming is becoming largely download orientated, this is my problem with tech, you cannot foresee tomorrow.

Regards

 

[james1989]

Another good little cheap company which is trading at a deep discount is Colefax Group (CFX).

No advice is intended, to buy or otherwise.

 

[james1989]

.

 

[aparoid89]

Well glad you made a profit. I'm now sitting on a 70% loss. Why would the directors suddenly buy large amounts of stock when they know that the company is about to enter administration.