Stock Picks | Video - Richard Staveley Of Rockwood Strategic & Harwood Capital Discusses 12 Stock Ideas In Detail

21st Nov '23 by Paul Hill

9 comments 1855 reads

Timestamps

00:00 Outlook for equities.
09:30 Pressure Technologies plc
18:15 Argentex Group PLC
26:50 James Fisher and Sons plc
40:50 RM plc
47:50 Galliford Try
54:25 Van Elle
59:35 STV Group plc
67:30 M&C Saatchi Group
76:10 Centaur Media Plc
87:00 Hostmore plc
96:35 Filtronic
108:35 Restore plc
119:40 What investors should avoid doing

Unlock with Email

Unlock with Google

Already have an account?
Login here

About the Author

Paul Hill

Premium Member

Stocks owned : EQLS, AGFX, Pfizer, Bristol Myers, Roche, WATR, VCT, MBH, ASTO, IOM, TR25, ESYS, ELCO, IHC, Paypal & AOM Elsewhere, I'm also paid by Vox Markets (as a contractor) to interview interview fund managers, capital market experts & companies (re EQLS, VRCI, BELL, FIN, AVG, AVCT, LLAI, VLG, FADL, SUP, ELCO, LORD , MPAC & ONC). I believe all these stocks are clients of Vox.Lastly my 24 year HIT RATE is only 62%. Meaning 38% of the time I lose money (ie often wrong) - albeit my winners are (on average) 1.5x larger than my losers. Please Do Your Own Research. more »

9 comments

Paul Hill

21st Nov '23

Valuation benchmarks of discussed stocks

Paul Hill

22nd Nov '23

Paul Hill

22nd Nov '23

BnB

22nd Nov '23

Granted that the shares look very cheap, and especially next to Equals and Alpha Group International. But the commentary on Argentex was at best apologetic, while I’m tempted to say evasive - there were a lot of non-verbal tells. The investment case seems to be “let’s hope the new management are better than the old lot and maybe then this poor performer can catch up a bit in a highly competitive field”. Hmmmm.

Much more enthusiastic and convincing on the likes of James Fisher.

carmensfella

22nd Nov '23

Richard Staveley and indeed Christopher Mills of Harwood will both be presenting and interviewed at Mello London next week https://melloevents.com/mltick...

There is a thread and discount offer here... https://www.stockopedia.com/co...

Andy Howe

22nd Nov '23

Thanks for adding this interview Paul, really interesting. Richard certainly knows his investments inside out and gives them life rather than just talking about the numbers. I've added Rockwood Strategic to my IMC and will be attending interim results presentation next week.

Funnymoney

24th Apr

My notes from this video if like me you forget some of what you watch:

Based on the discussion, here are the investment theses for the key stocks mentioned:

Pressure Technologies:

Specialist manufacturing business with a submarine division (Chesterfield Special Cylinders) poised to benefit from strong growth in the global submarine market
Chesterfield has high margins and makes up the bulk of the company's value
Management is divesting the oil & gas division to focus on Chesterfield and pay down debt
Potential for the stock to be a multi-bagger from current depressed levels

Argentex:

Leading foreign exchange provider for corporates, with a strong technology platform
High margins, strong cash generation, and huge growth potential as it expands in the UK and internationally
Recent management changes and new experienced Chairman should drive the next phase of growth
Shares look very undervalued at 4.5x EBITDA and 8x PE given the quality of the business

James Fisher:

Diverse marine services business with exposure to energy, defense and specialized engineering
New CEO is a proven operator implementing a turnaround - targeting 10% EBIT margins vs 5% currently
Defense business has exciting growth potential and energy shifting to offshore wind
Disposals of non-core assets will pay down debt and re-rate the equity

Mpac:

High-quality, niche engineering business providing automated packaging solutions
De-risked after recent disposals, now focused on growth in its core markets with strong pipeline
Significant US opportunity and potential for bolt-on M&A
Attractive cash generation and undemanding valuation for a high-quality, well-run business

STV Group:

Scotland's leading commercial broadcaster with #1 content across news, drama and entertainment
Digital streaming service STV Player is growing rapidly with 50% margins - underappreciated by the market
Studios business creating valuable IP and content - potential to be a key value driver
Depressed valuation with digital and studios masking the value, strategic appeal

Centaur Media:

B2B media business with leading brands in law (The Lawyer) and marketing (Econsultancy, Marketing Week)
Successfully completed turnaround with 23% EBITDA margins, strong cash generation
Mini-MBA and other digital learning content can drive the next leg of growth
Shares look too cheap at 4.7x EV/EBITDA with net cash given the quality of the brands

Filtronic:

Specialist designer and manufacturer of RF communications equipment for telecoms infrastructure, defense and aerospace
Strong IP and know-how in the growing field of E-band/D-band and mmWave for 5G backhaul and satellite communications
Exposure to huge growth in Low Earth Orbit (LEO) satellite mega-constellations
Lumpy revenues currently mask the long-term potential of the LEO opportunity

Funnymoney

31st May

Van Elle is the UK's number one ground piling and geotechnics business, helping with foundations in infrastructure projects. The company has a strong presence in the rail sector, including contracts related to HS2 and rail electrification. They have also started winning business in Canada due to their advanced rail technology. Van Elle's performance in the new build residential housing sector has softened recently. The company has a decent balance sheet with £8 million in net cash. Van Elle has recently announced a transaction with Galliford Try (GFRD), acquiring their piling equipment and division. This is expected to help Van Elle win more work from Galliford Try and cross-sell their services. The acquisition also expands Van Elle's regional presence in the South and Southeast of the UK, complementing their existing presence in the Midlands, North, and Scotland. Van Elle's management should be aiming to break out of being a small company. The company's margins have room for improvement, with a target of 8% compared to the current 5.5%. Profit recovery is expected even without significant turnover growth.

Funnymoney

5th Jun

Hostmore (LON:MORE)

Hostmore owns the TGI Fridays brand in the UK, which is the fourth most recognized casual dining brand in the UK and the most recognized non-pizza brand.
Despite TGI Fridays' brand recognition and historically profitable operations, the company was facing challenges in the tough casual dining market backdrop.
The stock was severely undervalued, trading at a very low market capitalization of around £25 million in the summer of 2023, down from an IPO price of around £1 per share.
A new chairman, Stephen Walker, who is described as extremely bright and experienced in turnarounds, took a significant stake in the company.
Walker brought in a new CEO and CFO, paused new restaurant openings (which require significant upfront investment), and renegotiated terms with banks to provide breathing room.
The new management team believes the business can generate at least £10 million in annual free cash flow, which at the current valuation would represent a very high cash flow yield.
Once debt is paid down to a normalized level, the entire £10 million in free cash flow could potentially be returned to shareholders.
Staveley believes hostmore could be a 4-5 bagger from the current levels if the management team is successful in executing the turnaround plan.
While he thinks it is the riskiest position in the portfolio, Staveley sees the risk-reward as attractive, having allocated a 2% position that could potentially grow to 8% of the portfolio with a 4-5x return.

In summary, the thesis is centered around the perceived deep undervaluation of a well-known brand, the new management team's turnaround efforts, and the potential for significant upside if the £10 million free cash flow target is achieved and returned to shareholders.

Unlock the metrics for all these stocks and more...

Take a free trial

Facebook Twitter Youtube Instagram RSS

This site cannot substitute for professional investment advice or independent factual verification. To use it, you must accept our Terms of Use, Privacy and Disclaimer policies.

Unlock the metrics for all these stocks and more...

Take a free trial

Video - Richard Staveley of Rockwood Strategic & Harwood Capital discusses 12 stock ideas in detail

Unlock the rest of this article with a 14 day trial

About the Author

Paul Hill

9 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...