Top ten companies that are selling at a discount – FTSE 350

On the previous blog, also dated 25th February 2017, Nick has provided the list of companies from the FTSE 350 that made the grade for our long-term investment.

The spreadsheet was the cumulation of focused effort by Nick and me over a 9-month period a few years back. Nick, spent. Subsequently, a considerable amount of time improving the calculation.

Here’s an example of the back sheet of information for up to 10 years of figures for each company in the FTSE 350 – and this does not show the mind-numbing calculations within each of these boxes.

screenshot-2017-02-24-11-15-36

We must emphasise that this is for longer-term investment. The principles of which use many ideas from the famous investors, but primarily that of Benjamin Graham and Warren Buffett – and, if you know these investors, we are talking long term.

Nick has only provided FTSE 350 for UK ISA or SIPP investors.

Here is a synopsis of the filters of the principal figures used: “and, we have to say, principal figures that are nowhere else.” 

The Margin of Safety: price is less than 60% of the value

Age: more than 4-years trading with less than 2-years of negative earnings

Growth: a growth rate higher than 10% to ensure a reasonable rate of return

Consistency: 10% growth rate in all variables – consistency score higher than 60%

(Blackberry conundrum: consistency of growth improves over time)

You will notice, in the more detailed sheets below, that annual report dates can be over 12 months old. That is because of the release time of annual report information. Although we are long-term investors with this information, Nick will run the calculations every few months to capture yearly result information reasonably early.

Here is the more detailed, and most up to date annual report information, on each of our companies that qualified:

snip20170225_2

snip20170225_4

snip20170225_5

Finally, anyone using this information to invest we must, of course, point you to our disclaimer page. Also, it is important that individuals do their due diligence. It is essential that, as investors, we understand the company. The information above is detailed but we must determine for ourselves if we think a company has legs for the longer term.

Which companies make the grade for long-term investment, FTSE 350

Name

Ticker

Sub Sector

Crest Nicholson Holdings Ltd

CRST

Home Construction

B&M European Value Retail SA

BME

Broadline Retailers

ZPG PLC

ZPG

Media Agencies

NewRiver REIT PLC

NRR

Retail REITs

Shire PLC

SHP

Pharmaceuticals

Wizz Air Holding PLC

WIZZ

Airlines

Playtech PLC

PTEC

Gambling

Hikma Pharmaceuticals PLC

HIK

Pharmaceuticals

Micro Focus International PLC

MCRO

Software

Hargreaves Lansdown PLC

HL_

Asset Managers

 

How goes it? Week 25

For simplification, I’ve combined Slow Trader and Ferrari into one fund which we will refer to as Slow Trader Fund.

Our strategy in Slow Trader is to short-term trade (using, primarily, daily close bars rather than intraday bars) shares in the FTSE 350, stocks in the S&P 500 and major foreign exchange (FX) currency pairings.

Arm Holdings. We came out at a little over break even. I moved our stop as I was not happy with the possible trend change of this share price. The share price did run below our buy point but has subsequently moved up again. We are out for the time being.

Halliburton Co. We set this share stop also to a little over break even; this took us out without losing, and the share price has continued to drop. A good move on our part.

BT Group. Moving the stop too early is usually not a good thing. I feel that the stop should move if something happens to make you change your mind about the share or the share price has climbed sufficiently to put you into a different price bracket. I got this wrong with BT. I moved the stop and got stopped out for £17 profit, but the share turned and continued up!

Ashtead Group. – £311 lose. On reflection, not a good share to take. A ranging share price, rather than my strategy of making trending prices, this share dropped well below my entry price – but has subsequently turned up again.

CLS Holdings.  – £325 lose. I made fundamental mistakes with this one. Incorrect retracement level without price action. If I had waited (patience is the virtue of a good trader) and measured the retrace correctly, this could have been a winner.

Snip20150620_7I bought at the red arrow; the green arrow was, of course, the correct buy point.

Card Factory. – £311 lose. A relatively new share. Only five years of fundamental information, I prefer ten years.

Snip20150620_8

We were in credit – having bought at the lower green arrow – but a sharp drop took us out. You will notice that I sell a share for a loss.

FX AUD/USD. + £394. An intraday 4-hour chart so you can see the move.

Snip20150620_9

We bought at the red arrow, we sold at the green arrow, and we bought again (and we are still in) at the blue arrow. Easy! Okay, sometimes it goes ideally like this.

We also had interest charges (mostly for carrying shares over the weekend) of – £32.

We are currently in:

CLS Holdings. We bought again at the green arrow on the CLS chart above. Although the price has moved up, we are still -3.7 points as this is the spread. The spread is how the broker (in our case IG) make their money. It is the same as when you go on holiday and change your sterling for euros; you have a buy and a sell rate.

ITV PLC. + 2.6 points.

Money Supermarket. + 12.1 points.

Monster Beverage. + 568 points.

Underarmour. + 464 points.

WPP PLC. – 9 points.

FX AUS/USD. – 20.9 points.

Finally, anyone wishing to short-term trade for themselves I am trialling a notification system to help you. You will get my information directly to your smartphone.

Shares traded this week

None of our shares reached their price targets this week.

We usually only trade shares long (unlike the FX market which we trade long and short).

The FTSE 350 and S&P 500 markets were generally down this week. Specific sectors like Home Construction had a good week.

However, the general down periods in the market present us with buy signals.

The one I got wrong was Southwestern Energy Co. A higher risk share for us as it was early in an up cycle following a sizeable down period. It retraced more than I wanted.

On the plus side, we entered:

Arm Holdings which we got for a reasonable price and is up a few points.

BT Group, this is a weak growth share but a positive growth none the less. We are at even on this.

Halliburton Co, we had a buy limit set on this company for most of the week. We recently got it, and it immediately moved nicely up. An oil equipment company but very much dependent on the oil commodity price.

Monster Beverage had a good buy signal but has moved lower. We are still in this share although my stop position will not allow it to run much lower. Hopefully, we’ll get an excellent recovery in the market and Monster next week.

Under Armour, Inc. was bought early in the week and stayed low throughout. Yesterday, however, it moved very sharply up in our favour – still some way to go to our sell target.

A reminder not to use this as recommendations as the buy time on most has probably passed. You would end up buying as I’m selling!

You can get early information via WhatsApp – more on this later.