Daily Stock Market Report (Thur 6 Feb 2025) - WOSG, TPX, W7L, TBLD, SRC, BBGI, ANX, BAB, CPG

Ah I see. I wouldn't describe Warpaint London (LON:W7L) as ex-growth - they had a quieter H2 where growth slowed.

I'm usually trying to identify the negatives in stocks I hold, but I don't really need to do that with W7L today ...

The reaction seems over the top for what wasn't a full blown profit warning (in fact not a profit warning at all). However, this type of reaction is quite common for small cap stocks that have multibagged. Private investors tend to get nervous about their gains and can be hair-trigger on selling at the slightest sign of trouble.  This can get accentuated when the stock is also a bulletin board favourite and sellers communicate their fears to other nervous holders.

I can only see the volume on Stockpedia but it looks like about 2 million shares have been traded today out of 77 million. That's a lot more than normal but isn't huge. Probably around 70% of Warpaint is held by insiders or institutions, so that's maybe 10% of the available shares - enough to make a difference, but not an indication of any big moves.

That said, I'd never criticise investors taking a profit, but it's very hard to find the portfolio defining multibaggers if you sell at the wrong time. But it'll be interesting to see the FY results in April - if the outlook there is poor I'd imagine we'd see another hit to the share price.

Tricky stuff, investing.

timarr

No, she wrote about its Compounding potential, UK tech etc

BBGI Global Infrastructure SA (LON:BBGI) has returned c8.5% total NAV return per annum since launch over a decade ago. Not too shabby for a low risk placeholder income stock. 

Vertu Motors (LON:VTU) I hold

Profit warning just out

Vertu Motors (LON:VTU) I hold

Profit warning just out

“Profits will be substantially below expectations” and shares barely budge from 55 when they should be down in the low 40s. Warpaint misses by less than 1% and shares fall 20%. Gotta love the market. No need for anyone to explain why so perverse. I already know. Although that doesn’t mean I agree.

Cheeky middle of the day announcement from Vertu Motors (LON:VTU) - did they think no one would notice? 

Bad form to put it out in the middle of the day. I must admit I gave up on Vertu Motors (LON:VTU) as gave up waiting for the elusive bid, and also found it too difficult to read the new/used car market, which seems to be very unpredictable. Wondering if any read across to ZIGUP (LON:ZIG) (I hold) which has recently been impacted by falling second hand van prices. The dislocation highlighted today seems to be more in the new car market so hopefully not. 

CRH (NYQ:CRH) was itself acquisitive a few years back, it bought a lot of the old Tarmac quarries back in the day, which had before that been acquired from Wimpey all part of Sir Joe Dwyer strategy of becoming a pure housebuilder that is now Taylor Wimpey (LON:TW.) and Sir Neville Simms creating Carrillion...

I don't know enough about the cement production and ready mixed concrete world and ownership thereof, so there feels a sense of vertical integration too within the process somewhere.  Do you own one piece and specialize within it or do you own parts of the whole value chain?

I do not follow this area enough as I work it in rather than invest in it...

Tommy

She, you know who of Ra International (LON:RAI) , is about to walk off mission accomplished.  I dropped out last August at 7.2 pence, lost me thousands and was left disgusted at the way investors were coaxed along.  Jam tomorrow, huh!

Warpaint London (LON:W7L): I have wondered recently if the popularity of a stock on this thread is becoming a contrary indicator.

huh you have lost me - warpaint shareprice is up 300% in 3 years - is that not the opposite of contrary indicator?

oh and card factory shareprice has also shown good gains in last 3 years.

 shareprice may go up and shareprices may go down - comparing to "peak bubble price" for any share is not perhaps too meaningful i suggest - if you look at any share its likely that most are down from their all time highs or not at even near their all time high for last 18 months - thats probably 80% of all shares (my random guess)

Hi Cancun - The problem with Warpaint London (LON:W7L) today is the PER rather than it being ex-growth. It is unusual for a retailer of this type to trade on a PER of 20+ so the only reason for that rating to be maintained is anticipated excess growth - a FY25 eps growth rate of 30% would bring it back to a more in-line 14* PER so for the shares to rise from here now you need confidence there is an anticipated 20-30% eps rise in FY26..

As others mention H2 doesn’t look great against those lofty expectations so there is clearly a view amongst investors that this sort of EPS growth may not prove attainable hence the sell off.

At this level Brand Architekts (LON:BAR) holders will take the cash rather than share offer so that probably removes any potential overhang of investors trying to arb the differential though so that’s probably a positive.

I don’t own though I’ve watched Warpaint London (LON:W7L) for some time and been reluctant to buy until I saw good H2 results. Trading update didn’t inspire. I suspect the purchase of skinny tan could act as quite a boon for them longer term but I suspect a period of consolidation is now in order whilst the market watches growth rates. 

You're much better at this than me David, but I suppose that it will come down to margins ... if the 2025 EPS forecast of 26.6 proves to be correct, then after today's fall that's a PER of 16 ... if they can continue on some kind of growth strategy, I'm hoping that will prove decent value ... 

A 1/3 fall in share price just feels overdone for a relatively unchanged story... many thanks as ever though:)

Hi Chris, not sure if I agree with your 'logic'.  I hold Card Factory (LON:CARD) having sold on the way down from the high around 116p and bought back in around 94p once the exit stampede had abated and I had got a better handle on the interims and watched the management presentation.

Unfortunately I missed investing in Warpaint London (LON:W7L) having seen them at Mello in Chiswick, two years or so ago and before the shares took off.  I also saw Filtronic (LON:FTC) at Mello when the shares were 17p and again failed to invest on the basis that I didn't fully understand the technology. So well done to those more perceptive than me and there will be many.

Excuse my rambling. My observation is that if a company consistently trades well, the share price will ultimately follow.  You can bet your shirt that if a company makes a habit of issuing positive trading updates, there will be buyers, private investors and institutions.  

Nothing goes up ad infinitum and at some point something is likely to upset the applecart either the price becomes too rich and/or something comes out of left field, for example competition, real or perceived, Nvidia being a recent example or closer to home Funding Circle Holdings (LON:FCH) where questions have been raised about the legal 'water-tightness' of their loan agreements.  I don't follow Warpaint so am unable to comment as to why today's update was poorly received by the market

Just my view and some will see it differently.

All the best

Absolutely ridiculous!

Sorry... I meant 1/3 from the high / 20 % today obviously...

Potentially / hopefully both right Jonno ... 

Chris in the short term / voting machine

You in the medium + long term / weighing machine...

I think that’s a very good summary David. The Warpaint London (LON:W7L) shares were on a PER of I think 24 when trading opened, which could only have been justified by revenue well ahead of forecasts, not slightly below.

Hi rmillaree. Yes Card Factory (LON:CARD) had a big jump from October 2022 to January 2023. But it has been broadly flat for the past two years (ex-divs).

My feeling is that it has become one of the most popular stocks in the Stockopedia community over the past 6-12 months. It wasn't so popular a few years ago, which was actually the best time to buy. 

Using the "discuss" tab on the CARD page, it has been mentioned in 20 articles over the last year or so. The 5 Dec and 14 Jan daily blogs covered lots of company updates, but Card Factory attracted the most comments, about 10-12 each time. It has a busier 2024 discussion tab than 98% of stocks on the UK database, I'd venture.

In 2022 it was only mentioned in 8 articles (all SCVRs) and half of those articles attract no comments on it at all.

Warpaint London (LON:W7L) is similar - I'd say one of the most popular stocks right now, alongside Card. Look at the "Discuss" page for W7L and the 2024 entries are endless! 2020-2022 was much quieter. But when was the best time to buy? W7L is now broadly flat over the past year.

It's just the old short-term sentiment check. When everyone is talking about something (in an overwhelmingly positive way / as holders) then all the good news is likely in the price already.  The buyers have already bought and the rate of change in public opinion (and buy/sell decisions) can only tilt negative. Like it has over recent weeks with Warpaint.

Journeo (LON:JNEO) springs to mind too. No community interest before. Big rise in 2023. Huge community interest in 2024. And now flat over the last year. Good luck to holders though - I have no view on its fundamentals.

Of course, long-term, share prices are inextricably linked to EPS. Like others have mentioned.

Bit of a ramble, sorry - knackered after a long day!

Interesting that they must have had the finance team working at full tilt (  presumably including all over the last weekend) since the jan period end ( fri 31 st ? ) . Only three ish working days to get an accurate fix on gross margins for the month  . 
Wonder how accurate those numbers will be - thats not a normal turnaround time and wont be subject to any audit scrutiny at all ? 

Hi Jonno. I've posted another comment further down (or up?!) to try and explain a bit more. I'm talking about the short-term crowding effect rather then the long-term. On  a long-term basis I completely agree it's fundamentals that matter.