Daily Stock Market Report (Wed 16 April 2025) - JIM, MERC, OXIG, BNZL, JNEO, SOS, SMWH, XPS, RIO, PMI, G4M

Journeo (LON:JNEO)

Roland says he expects todays contract win is already baked into the forecasts but I think he is wrong.

I side with Roland here (just) - they will have a pot of potential contracts some of which they need to sign to make ends meet. Its likely that they simply need to  get say 5 of these in the bank over the rest of the year  so whilst i agree the contract may not have been expected it might be necessary to get over the line ref current expectations anyway if they need a project this size every 3 months say to turn up.

If this moved the goalposts so they would be ahead of expectations i would have liked to think they would have updated the market  - the lack of update leaves me saying its not in itself enough  to move the needle.

There is a middle ground here in that they are starting the year cautious and may upgrade at next formal update point perhaps. I have been bitten a fews times with companies with chunky contracts - so i will never presume stuff if we havent been slapped in the face. I have held Journeo for less than 12 months as i has slight concerns before buying in - up to now though they do seem to be professional at not over promising which i am liking- thats my main bugbear with companies like this that do overplay the future - or a purple patch exists that might explain slight dip. I must say as they have been on a decent run its much easier to hit targets when you know sales and profits are up - the real test in when there is a pause for breathe and some of the "good profit prior work" is struggling to find a replacement - hopefully they are being cautious and the outcome will be better than "not quite as good as 2024".

In the meantime with tepid current expectations (compared to 2024) we just need to wait it out to see how the mop flops -happy to play that game.
 

Journeo (LON:JNEO)

When a company flags up a new order without mentioning expectations, I tend to assume that it's actually business as usual and is already priced into forecasts. But this isn't always correct and may not be here.

very sensible stance that mirrors mine as a holder and my normal default stance - i always await the formal fish slapping before i celebrate good news - especially important if one is needing Rory to deliver a win !!! 

Aislabie, like you I have an ISA with Jarvis Securities (LON:JIM) but thankfully don't hold any of their shares.  Regarding the CEO's 'termination';  this was  announced a year ago  https://www.investegate.co.uk/...

News from three portfolio companies  this morning:

Journeo: $2.5m contract to supply high definition screens to the New York transportation system.  Possibly opens up more opportunities via its relationship with the Outfront Media Group. Also the company has £14m cash on its balance sheet, which is about 33% of its market cap.  I also view this as a 'new' order that is not included in current forecasts, otherwise I believe the company would have said so, as it has done previously.  Plenty to for!

Premier Miton (LON:PMI) AUM of £10.2 billion at 31 March, albeit now around £10 billion strikes me as a very creditable performance for an active fund management group in the current climate.  I also hold Polar Capital Holdings (LON:POLR)

WH Smith (LON:SMWH) I think Megan's summary is somewhat harsh as is the market's reaction. 

Yes the high street division went for comparative buttons.  I travelled to Shrewsbury last week and bought a newspaper at Smiths in the town centre; it was empty. By comparison the outlet at Birmingham International, where I changed trains was buzzing.  Despite the paltry price, the sale of the high street shops was the right thing to do. Smith's has got a declining business off its back together with the impact of the recent budgetary tax rises allowing management to focus on growing the profitable travel business.  For a business with decent growth prospects, a sub 10 PE falling to 9 and a dividend yield of 3.9% rising to 4.3% or thereabouts strikes me as good value.  

On the subject of share buy backs, the time to buy back shares is when the price is depressed not when it is expensive.

All the best

Regarding Jarvis Securities (LON:JIM), not necssarily anything any more sinister than already announced.  My reading of the situation is that they were too small to be an effective player. The skilled person review is something that is extremely onerous and expensive for a company of this size and they probably didn't have the staff, expertise and control systems to escape.  What has undoubtedly been their downfall is the Model B business segment. Some of their clients may have been on the dodgy end of the spectrum, and they have been caught up with all of this.  I sold a while back after concerns around who their end customers actually were. Maybe that's the learning point as I don't believe that they ever communicated their client list. I think Andrew Grant has always been very shareholder friendly,  with quarterly dividends and to the point communications, but he's been badly burnt and had to throw in the towel. He's at retirement age anyway.

I don't agree that WHS is cutting itself off from its roots because it grew mostly by being in railway stations when they were the biggest source of travel business. Focussing now on their travel shops is returning to their roots - the High Street turns out to be a very long-lived diversion!

My sentiments also Tein, but as a holder I am biased.

There was an RNS on 17.iv.2024 saying that Andrew Grant was retiring as CEO of the operating company (JIML) but would remain CEO of Jarvis Securities (LON:JIM).  He is c. 65.

I too was surprised when the market, after brief enthusiasm, decided to mark down WH Smith today. I’m with you, however, on the eventual benefit of concentrating on the travel shops alone. What you could also have mentioned is that the increase in profit margins should drive a higher multiple. None of that matters right now because travel stocks are off the menu for most investors while recession risks are elevated. Fair enough. Dividend is healthy enough to sit on my hands.

For my own piece of scuttlebutt I would point to the £3.99 I paid for a small bag of Revels at Southwaite services last week. The margin on that has to be huge!

Strategically, WH Smith (LON:SMWH) might have done the right thing, but I think Megan is correct to say that the price achieved on sale was underwhelming at £76m for a business that made £32m of profit last year and generated cash. Hence, why the sale has not helped the share price in the short term.

Long-term, I agree Jonno that it will remove a management distraction and improve both growth and earnings quality but the dilution is unhelpful for now. I also don't see a share buyback as sensible given the leverage here (but let's not get started on that one again!)  

https://www.whsmithplc.co.uk/a...

Perhaps we're quibling but I was talking about the origins of the business. WH Smith (LON:SMWH) started life a few years before the first ever passenger rail service and more than half a century before it first opened for business at a railway station.

I’d agree access to this content is helpful. In fact, Graham and co often refer to the coverage and from other brokers in their own analysis in this report, so clearly adding value and opportunity to research further

More insider buying for Volex (LON:VLX)

COO picking up £150k worth, bullish! Yes I hold :)

https://www.stockopedia.com/sh...

Hi Roland - generally sensible but with Journeo (LON:JNEO) it is usually the opposite. Ie they tend to state “we’ve won xyz and it’s part of our expectations”. This time they didn’t and from memory going back to the results presentation they had said this contract was parked until traffic numbers came back so I very much doubt it was included anywhere.

It’s sort of irrelevant for me though as Journeo (LON:JNEO) are a long term investment. I rate the management highly and they believe they are on track to more than double the size of the business over the next few years. If they do that, and with some operational gearing, I suspect it will look very cheap at these prices. Certainly gets over my mid teens expected annual compound return hurdle rate.

I’m pretty certain it’s not included rmillaree for the reasons above. If you’re minded to check I think this particular contract was referred to as on hold for the foreseeable future in the recent results presentation, though memory may not serve me perfectly!!!

Volex (LON:VLX)

every time i check volex the future earnings expectations seem to be lower than previously.

looking at stocky ref 2026 thats 8 consecutive ticks down when stocky updates numbers - perhaps the people that should know are going to be lucky and buy in just before the trend reverses !! - if that does happen is that luck or insider trading ?

Note i suspect here that they are actively downgrading behind then scenes to then hit on promises - the year just finished looked like stuff was downgraded so that they coudl at the end of the year say they have delivered at the top end of estimates

Make of this what you will - i would agree now the p/e is at 9 this does look like its trending more towards being nice value pick than has ben the case for some time - that will only really be the case though if we dont get another 8 consecutive downgrades over the next 6-9 months or so.

Not sure what  chartist would say here - chart looks poor - but i dont think price has gone under 200p in the last 10 years - so does very low point there offer support?

Thank you for putting me straight on the JIM situation. I saw the notice for April 1st 2025 without being aware of the previous announcement. My bad

For reasons outlined in my earlier post I have added to WH Smith (LON:SMWH) and Premier Miton (LON:PMI) .  I remain adrift of my blended purchase price in both cases but am of the view that the share price of both will be substantially higher at some point, as to when that is, it is a finger in the air job.

With regard to WH Smith (LON:SMWH) I would suggest that once the sale of the high street division completes and the positive impact on margins comes through.  

Premier Miton (LON:PMI) has about 40% of its market cap in cash and on current forecasts the dividend of 6p is covered by earnings, so unlike most other fund managers it appears that it will not need to deplete its cash balance.  On this basis the shares yield north of 12%, which in normal markets would be unthinkable.  Interest rate reductions are good for assets (shares) so fund managers are too a large extent a play on the potential for such.  

It is difficult to believe that we are not close to the bottom for good quality small caps and AIM has started to tick up recently.  There are some very well managed companies listed on AIM, Jet2 (LON:JET2) James Halstead (LON:JHD) Avingtrans (LON:AVG) for example, but there is also a lot of dross.  Successful investing is in my view about avoiding the latter and buying fundamentally good companies when nobody wants them.

Things can always get worse, but small cap investing has been challenging for the last 2/3 years and the share prices of most UK small caps have been battered, despite in many cases performing well from an operational perspective.  

To quote two of the great investors, Warren Buffet and Howard Marks  'price is what you pay value is what you get' and "investing is a popularity contest and the most dangerous thing is to buy something at the peak of its popularity".

Hopefully I have got these buy decisions right, time will tell.

I already have a full position in Journeo (LON:JNEO) 

There endeth the monologue.

All the best.

Well it certainly has been below 200 in last 10 years, though i take your wider point

Jarvis Securities (LON:JIM)

Have they?

Or are they just a small player outside the City which the FCA hate and know if they tie them up in knots for a couple of years they'll become unprofitable and throw in the towel.

Who knows?

But I know what I think. 

(Don't hold)