The makings of multibagger shares with Stockopedia

UK Investor Magazine
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The makings of multibagger shares with Stockopedia

The UK Investor Magazine was delighted to welcome Ed Croft, CEO of Stockopedia, for a deep dive into the makings of multibagger shares.

Download ‘The makings of a multibagger’ and explore 10 multibagging shares

Multi-Baggers – these are the stocks which can make a portfolio.

Owning just one can transform your returns and lead to a great acceleration of personal wealth. Everybody looks abroad enviously at the US stock market, but in a very difficult decade for the UK economy, a selection of outstanding shares have dramatically beaten the market.

Ed provides deep insight into the key characteristics driving the returns of multibagging shares and what investors should consider when buying high-growth companies.

Careful attention is paid to the financial ratios and metrics shared by companies that produce returns many times the original investment.

Download the full report here

Income: Engineering rising dividends

Andrew Hore
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Income: Engineering rising dividends

Many engineering businesses have found trading tough, but exposure to the commercial vehicles sector has provided upside for some. One company has kept up its capital investment so that it continues to improve its efficiency, as well as paying increasing dividends. A new £17m production line should be in action by 2026 – most of the cash outflow will be in 2024-25.
The forecast yield is 4.9% and in recent years there have also been special dividends when the cash pile has become higher than required by the business. The ordinary dividend is covered 1.9 times by forecast earnings. There could b...

Income: Underrated distribution potential

Andrew Hore
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Income: Underrated distribution potential

This fully listed distribution business has limited growth potential, but it is highly cash generative. The company could have net cash as early as 2025. The prospective yield is 7.8% and estimated dividend cover is around 2.4 times.

There is little likelihood of any significant increase in the dividend over the coming years, but that cash generation means that the dividend can be maintained without any financial concerns. Pre-tax profit is likely to be flat to slightly lower over the next three years. That is why the prospective multiple is not much more than five, although that seems too low.

Swindon-based newspaper and magazines distributor Smiths News (LON: SNWS) has been winning and renewing major contracts in recent weeks. This provides visibility of two-thirds of expected revenues, even before any additional renewals.

The main new win is a £27m/year contract with News UK covering the London area. This will contribute for nine months this year.

Magazine revenues are declining and that means that core revenues will fall. There are ways that additional income can be generated. One initiative is offering to collect recycling waste from customers, thereby more efficiently using vehicles. There are already 4,000 paying customers. This could add £1m to profit this year, offsetting any decline in the core business.

There is excess space that can be rented and potential for direct to consumer business. There is also potential to add new product areas.  

Smiths News can still move into a net cash position during 2025 as long-term borrowings are reduced. The lower interest charge helps to offset any decline in operating profit due to inflationary pressures. There are plans for more cost savings.

In the year to August 2024, pre-tax profit is likely to be flat at £33.4m on revenues declining from £1.09bn to £1.03bn. The total dividend has been 4.15p/share for the past two years and that is set to continue, although there could be a small increase when the £10m restriction placed on payouts by lenders ends.  

At 53.8p, the share price has risen by 15% this year. In the first nine months of the year the share price was lower, but there has been a rise of around one-third in the latest quarter. Even so, there is potential for income and growth in the share price. Buy.

Bowen Fintech’s potential Japanese crowdfunding purchase

Andrew Hore
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Bowen Fintech’s potential Japanese crowdfunding purchase

Bowen Fintech (LON: BWN) has secured an acquisition target just over one year after joining the standard list. The proposal is to acquire 93.49% of the share capital of MINNADEOOYASAN-HANBAI Co (MOH) and the enlarged business is expected to be valued at £42.7m.

The share price was suspended at 12p until a prospectus is issued. In October 2022, £2m was raised at 4p/share. There have been no shares traded since 29 November and prior to that it was 3 October. At the end of April 2023, there was £1.7m in the bank.

Japan-based MOH is a crowdfunding platform focused on property. It has been operating since 2007 and raised Y62bn (£378m) during the year to March 2023. The plan is to become involved in cold-chain logistics and expand into other Asian markets. Being listed could help this to happen.

In the year to March 2023, revenues were £34.3m and EBITDA was £3.2m. In the latest six months, revenues were £27.8m and EBITDA £11.6m. NAV is £26.4m.

Bowen Financial is issuing shares at 15p each and that will value MOH at £34.5m. This is a one-quarter premium to the suspension price, which is the highest the share price has been.

Due diligence is being undertaken and legally binding documentation has not been agreed. There will also be third party consents required for the deal to go ahead.  

Income: Lettings fund dividend growth

Andrew Hore
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Income: Lettings fund dividend growth

Residential sales have declined in the past year or so, but those property services providers with strong lettings businesses can offset this downturn. One of these companies is in the top 70 AIM performers during 2023 and it still offers a yield of 4%.
The dividend is covered 1.8 times by forecast earnings. Even more importantly, the dividend could grow at around 7%/year.
There are two-thirds of revenues that are recurring, and forecasts have remained steady. Lettings revenues were 12% ahead in the first half and they are set to continue to grow. The ONS UK annual private rental index was 5....

Aquis weekly movers: Share price of new artificial intelligence flotation nearly trebles

Andrew Hore
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Aquis weekly movers: Share price of new artificial intelligence flotation nearly trebles

Kondor AI (KNDR) joined the Access segment of Aquis on 21 September having raised £1.5m at 3p/share and by the end of the week the share price was 8.25p. There was £400,500 raised in November. Kondor AI intends to develop artificial intelligence products in areas such as health diagnostics, search and text recognition. A beta demonstration product is being tested.

Last week’s new admission Investment Evolution Credit (LON: IEC) has risen 233% to 20p on the week. The flotation price was 4.5p.

Secured Property Developments (LON: SPD) has appointed Paul Ryan as executive director and Noel Lyons as non-exec and they have acquired £150,000 worth of shares at 26.11p each. The existing directors resigned. It appears likely that the focus may change to technology and cleantech. Peterhouse has become corporate adviser. The changes sparked a 60% rise in the share price to 20p.

Coinsilium Group (LON: COIN) says a recovery in cryptocurrency markets is having a positive effect on the company. The expected approval of the first spot Bitcoin ETF should create more opportunities. The share price recovered 29.6% to 1.75p.

Aquaculture technology developer OTAQ (LON: OTAQ) had a strong second half and full year revenues will be £4.4m, which is higher than expected. Oil and gas demand has improved. There was positive EBITDA in the second half. There are opportunities in Geotracking for next year. The share price moved ahead 28.6% to 4.5p.

Vanadium flow batteries developer Invintiy Energy Systems (LON: IES) says full year revenues will be at least £21.6m, which is below forecast, and the EBIDA loss will be higher than expected at £22m. That means net cash will be around £1m. Forecast revenues for 2024 have been downgraded and the loss raised. This is based on exiting projects. Canaccord Genuity believes that there will be a cash injection from a strategic partner, which will offset the cash outflow in 2024. The share price increased 16.4% to 32p, the highest level for one month.

Valereum (LON: VLRM) has renegotiated the acquisition of the GSX Group, which is dependent on the approval of shareholders. It is paying five million shares and 10 million warrants exercisable at 1p each. The deal includes GATENet DFMI intellectual property, which puts the group in a strong position in tokenisation. The GATE token will the sole token used. As part of the deal former AIM boss Simon Brickles will become a non-executive director. GSX chief executive Nick Cowan will take up that role in the group. The share price improved 11.4% to 4.9p. This is the highest the shares have been since June.

Good Life Plus (LON: GDLF) completed its reversal into Semper Fortis Esports. There was £1.4m raised at 2p/share. The share price improved 11.1% to 2.5p. The business has been trading for just over two years and it offers members daily prize draws. There are more than 21,000 active members and monthly recurring revenues are £210,000. The company is currently loss-making, partly due to investment in marketing, although the increasing scale means gross profit is improving. The cash will fund further investment in marketing. Sportingbet founder Mark Blandford is one of the new investors.

Tap Global (LON: TAP) is reporting figures for the year to June 2023 on 28 December. The shares are 10.8% higher at 2.05p.

Wishbone Gold (LON: WSBN) is exercising the option over the Crescent East lithium and gold project in Western Australia. In return, 18.6 million shares worth around £400,000. Gold mineralisation has been confirmed and there is potential for lithium in the southern area. The share price rose 3.57% to 1.45p.

Incanthera (LON: INC) has secured a commercial deal with a subsidiary of health and beauty company AS Watson for the launch of the Skin + CELL skincare range. This should generate significant revenues in 2024. The plan is to roll out the brand to 1,000 stores in Europe, followed by Asia. Manufacturing has been subcontracted. To fund this, £800,000 was raised at 7p/share and £200,000 of debt owed to the University of Bradford was converted into shares. There was net debt of £199,0090 at the end of September 2023. The share price improved 3.17% to 6.5p.

Personalised medicine company EDX Medical (LON: EDX) had £1.1m in the bank at the end of September 2023. There was £1.5m outflow from operating activities in the six months to September 2023. The share price edged up 2.22% to 5.75p.

FALLERS

Mydecine Innovations Group Inc (LON: MYIG) is the largest faller on the week with a 70.6% decline to 2.5p, even though it has received notice of allowance from the US patent office for the MYCO-005 compound. It mimics psilocin but without some of the side effects.

ChallengerX (LON: CXS) has moved from net assets of £282,000 to net liabilities of £33,000 at the end of June 2023. The share price dipped 11.1% to 0.8p.

Rogue Baron (LON: SHNJ) has raised £50,000 at 0.35p/share. The share price dipped 9.52% to 0.475p. The spirits company is still performing due diligence on the acquisition of a vodka brand.

Marula Mining (LON: MARU) says dual listings on the Nairobi Stock Exchange and JSE should happen in the first quarter of 2024. Indicative terms have been received indicative terms for an offtake agreement with a European commodity trader for the lithium output of Blesberg lithium and tantalum mine. Transportation of the modular processing plant for the Kinusi copper mine will not happen until early 2024. The share price fell 5.77% to 12.25p.

Cadence Minerals (LON: KDNC) investee company European Metals Holdings (LON: EMH) says that the definitive feasibility study for the Cinovec lithium project in the Czech Republic has been delayed until the first quarter of 2024. This will allow time to complete capital and operating cost estimation and project implementation scheduling. The Cadence Minerals share price slipped 7.62% to 4.85p and the European Metals Holdings share price slipped 21.9% to 20.5p.

SulNOx Group (LON: SNOX) says that its Ghana-based distributor has purchased 3,700 litres of SulNOxEco fuel additive and committed to a minimum of 15,000 litres each year, which is valued at £250,000. SulNOx has raised £1.8m at 23p/share. The share price is down 1.92% to 25.5p.

Income: Building the dividend

Andrew Hore
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Income: Building the dividend

This AIM-quoted building products supplier has sharply outperformed AIM with a gain of 18% in 2023. Yet it is still offering a forecast yield of 6% with potential for steady growth in the dividend.
The dividend is covered 2.3 times by forecast earnings. That dividend cover can be rebuilt as the business recovers. The latest acquisition should be immediately earnings enhancing. Improved efficiency and new product launches have helped to hold up profit in a tough time for the construction sector.
CPA forecasts were released in the summer showing the overall construction market set to fall by 7%...

AIM weekly movers: Helium One Global shares fall below placing price

Andrew Hore
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AIM weekly movers: Helium One Global shares fall below placing price

Bidstack (LON: BIDS) has sorted out its problem with Azerion and the share price more than doubled to 0.75p. The in-game advertising technology provider has reached a settlement with Azerion, which will pay €3m to Bidstack. The two parties will form a new non-exclusive commercial partnership in 2024.

Video games publisher tinyBuild (LON: TBLD) has secured the cash it requires for working capital. The fundraising includes a one-for-six open offer and should raise $14.2m at 5p/share. The share price recovered 81.8% to 4p. Interactive entertainment company Atari is investing $2m. Chief executive Alex Nichiporchik will underwrite up to $10m of the fundraising. The video games market continues to deteriorate. Full year revenues are likely to be between $40m and $50m with a greater than expected proportion of lower margin games. Cost cutting should reduce cash outflow by up to $10m/year.  

Financial Website operator ADVFN (LON: AFN) was hit by a tough retail environment. Revenues declined and the loss increased despite a reduction in costs. Management believes that investing in a new app and other parts of the product offering will help it to recover. The plan is to increase income via traffic growth. Hosting and IT expenses can be reduced further. There is £5.6m in the bank. The share price bounced back 65.2% to 19p.

GCM Resources (LON: GCM) is still waiting to receive a further drawdown of £300,000 on the Polo Resources loan facility. The cash is required before the end of the year. The share price rose 46.7% to 2.75p.

FALLERS

Helium One Global (LON: HE1) announced a placing raising £6.1m at 0.25p/share. The share price has fallen by 78.3% to 0.245p. This will fund the drilling of the Itumbula West-A well starting in early January. There will also be 25.1 million shares issued in lieu of fees.

Supercapacitors manufacturer Cap-XX (LON: CPX) says interim revenues were 35% ahead. The focus is building up sales, but a full year loss is still expected. Cap-XX lost a patent infringement case in the US with Tesla subsidiary Maxwell Technologies Inc. The case affirmed that the Cap-XX patents were invalid, so Maxwell Technologies does not infringe them and does not have to pay licence fees or damages. The share price slumped 54.4% to 0.775p.

Investment company Mindflair (LON: MFAI), formerly Pires Investments, raised £730,400 at 0.8p/share to provide additional cash for investments. Investee company Emergent Entertainment is set to be placed in liquidation. This investment contributed 0.7p/share out of NAV of 4p/share at the end of June 2023. The total cost of the investment was less than $200,000. The share price dived 37.9% to 0.9p.

Fewer M&A deals completed by Convex Capital has hit the 2023 outcome for RBG Holdings (LON: RBGP). Trading of the core legal services business was also disappointing. It means that there will be a small loss for 2023, rather than a previously forecast pre-tax profit of £5.6m. Net debt is likely to be £23.1m at the end of 2023, just below the total facility level of £24.5m. The share price slipped 37.9% to 10.25p. Discretionary clients of Dowgate cut their stake from 3.64% to 2.78%, while Dowgate advised Onward Opportunities (LON: ONWD) has increased its stake from 4.17% to 4.35%.

Identifying Value Stocks in the World of AI

UK Investor Magazine
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Identifying Value Stocks in the World of AI

The stock market is an ever-evolving beast, constantly shaped by new technologies that aim to give investors an edge. The addition of artificial intelligence (AI) to the mix is one of the biggest developments in recent years. With deep insights and predictions that were previously unattainable by humans, investment platforms using AI to analyse performance have completely changed how people approach the stock market. Investors are opening up a world of data-driven decision-making by utilising machine learning, which allows them to identify possible value stocks with previously unheard-of accuracy.

Understanding AI’s influence on market analysis

More than a mere buzzword in the tech industry, artificial intelligence fundamentally revolutionises investment strategy development. AI systems undergo processes where they analyse vast volumes of market data. This includes not only financial reports but also global economic indicators. The goal is to learn and adapt; over time, it enhances their predictive models, thus revealing potential investment opportunities that traditional analysis might otherwise miss, especially within the value stocks domain.

Advances in AI technology are actively reshaping strategies and levelling the playing field for retail investors, thanks to its dynamic synergy with market data. No longer exclusive to hedge funds or institutional investors is sophisticated market analysis, as these developments democratise financial data analysis. Consequently, this empowers retail investors by granting them access to tools that enhance decision-making precision; furthermore, it may potentially unveil hidden gems within value stocks through insightful investigations.

Deciphering market signals with machine learning

In the daily deluge of market noise, AI efficiently filters signals suggesting undervalued stocks. It analyses myriad variables – such as company performance, market trends and economic factors – that contribute to the determination of a stock’s true value. Moreover, AI systems use benchmarking against historical data to compare current performance with past trends; this strategy enhances their forecasting ability and proves particularly beneficial for value investors seeking long-term returns.

AI’s machine learning algorithms outperform in detecting subtle patterns within extensive datasets. These patterns may signify a stock’s undervaluation or forecast future growth. Some AI platforms sort through news articles, social media conversations, and financial documents by integrating natural language processing; this allows them to measure market sentiment. This capacity can serve as an influential indicator for assessing the potential prospects of a value stock.

Combining technological and human insights

Although AI has strong analytical capabilities, humans are still necessary. AI is used by investment platforms for sophisticated data curation and projections. Investors must consider qualitative factors, such as changes in the industry and management calibre, which are sometimes difficult to quantify, to fully comprehend these results in a broader context. AI and human cooperation, which aims to find the optimal balance between algorithmic recommendations and expert judgment, allows for a more sophisticated approach to stock selection.

Achieving success in the investment world requires finding a balance between highly developed AI insights and skilled human judgment. An investor can effectively construct a hybrid strategy by harnessing AI’s expeditious data processing capabilities in conjunction with their expertise for qualitative analysis. This synergistic amalgamation proves most advantageous in assessing the intrinsic worth of stocks amidst pervasive market unpredictability.

The metrics of successful AI platforms

Investors have the crucial task of evaluating the proficiency of AI-powered investment platforms, with a specific emphasis on two critical performance measures: precision in market predictions and the ability to identify high-potential stocks. A steadfast track record of consistently recommending stocks that outperform market benchmarks serves as a credible gauge for assessing the merit of a platform. Furthermore, when fellow investors voice their triumphs resulting from heeding AI counsel, they can substantially attest to a platform’s promise.

When assessing AI platforms for potential investors, one must take into consideration their transparency and prior track record. The term ‘Explainable AI‘ refers to a platform’s ability to provide clear explanations of its algorithmic methods that result in definitive outcomes; this strengthens the confidence of investors. By placing greater faith in transparent AI decision-making processes, investors have the opportunity to improve their own decision-making abilities.

Adapting strategies in an AI-driven market

In a market where artificial intelligence reigns supreme, investors must maintain their adaptability. As AI continues to advance, it elevates existing analytical methods and unveils innovative avenues for interpreting data, making it imperative for proactive investors to regularly assess their strategies in light of these advancements – ensuring alignment with the most current market data available. To stay ahead in this emerging landscape, one must acknowledge the importance of understanding how AI could redefine value within the stock market.

The incorporation of AI into the investment sector represents a noteworthy transformation in the process of identifying and utilising profitable stock selections. By combining the knowledge of investors with AI-generated intelligence, a potent approach is established for navigating the intricacies of the market. In this sophisticated and information-driven environment, the insight of astute investors ultimately guides critical decisions that pave the way for potential financial progress and triumph, despite valuable contributions from AI algorithms.

Tekcapital shares soar on upbeat corporate update

UK Investor Magazine
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Tekcapital shares soar on upbeat corporate update

Tekcapital shares surged higher on Friday after the technology investment company released an upbeat corporate and strategy update ahead of the new year.

Investors were evidently encouraged by a year of progress at Tekcapital’s portfolio companies and were looking forward to another year of growth in 2024.

Notably, Tekcapital said they saw ‘accelerating commercial traction’ for their portfolio companies in the coming year.

Shareholders would have also welcomed an update on the MicroSalt IPO.

Tekcapital said they were still assisting the low-sodium salt technology company with the completion of their IPO. Although Tekcapital did not state when they expected the IPO to be completed, the language used suggests MicroSalt may be trading in London before long.

The company noted significant MicroSalt orders and alluded to promising news from the company in 2024.

“Despite challenging macroeconomic conditions in 2023, we have never been as excited about the near-term commercial opportunities for our portfolio companies, and we expect to report significant additional milestones for them in the coming year,” said Dr Clifford Gross, CEO of Tekcapital plc.

“We are grateful for the terrific teams we have assembled, the IP and innovation they have acquired and developed and their steadfast efforts to bring useful and valuable products to market that can make a positive impact on the customers they serve.”

“Further, we are most appreciative of our dedicated shareholders who have made this journey possible. We wish all members of the Tekcapital family a safe and happy festive season.”

Tekcapital shares were 6.9% higher at the time of writing.

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