I agree, and just used the last cash in my account to buy more.
Great write up. Have held tw for a few years and have been adding more lately. I think there are plenty more swings to this share price given ok going uncertainty so I’ll be focusing on managing our own household expenses and trying to pick up some more tw.
I have a few more UK stocks you might like analysing (super hope you do). These are my picks - focussed on growth & scalability.
GB Group plc
Some what worrying news on Future plc
Jack, would you share with us what are your current holdings, and why? thanks in advance!
Thanks again for all the great feedback and suggestions!
I’ll have a look at my holdings and give you guys a look at what I like to hold and my reasons behind it.
Plus I can have a look at some companies to analyse. My girlfriend has a busy day of meetings so I’ll have some free time in the sun to read some reports!
Seems today has been busier than I expected!
I cleaned up my current holdings sheet a little. Figured this was a good excuse to give it some TLC.
Highly profitable, stable business, currently experiencing high growth. Jumped on this with the recent rally.
Still holding it, had it a while. Likely will sell this once it’s back in profit and consolidate the holding with EA.
Smith & Wesson
From the days where the US was always facing calls to ban guns, this would cause a surge in pricing. Old legacy holding I need to cleanup. I think I’ll see at a lose and just move on.
Very strong fundamentals (weak value) and a recent rally. Jumped onto the hype train. Also they have just brought another company as well to expand their service desk offering.
Waste of my time. Brought into the hype. Just need to pull the plaster off and sell this. Not worth waiting on any longer in my mind.
Brought off the back of my analysis. Brought into my own hype!
Held for a long time, another high quality and momentum investment. Solid historic and future growth.
Cloud Computing ETF
Invests in a range of companies based on how “cloud” they are. Very sensitive but covers a lot of securities I wouldn’t normally directly invest in. I see this as a growth industry.
Really like their games. I brought these guys for the new IPs they were developing and working on. Decent quality and momentum. Just won the rights to a new game with my next holding.
Brought too late but I still like this holding. Reliable growth, good management, lots of innovation and they historically perform very well. Still recovering from COVID-19.
Greencoat UK Wind
Investment trust that focuses on wind farms in the UK. This is both my eco play and my dividend play. A strong performer historically and pays a reliable dividend as well. The dividend keeps me happy enough that I don’t worry about the value.
20+ Year Treasury Bond
Given the low rates of inflation, and also adding some protection, this felt like a smart move. Stable but in recent months has given me some excitement.
My other bond fund. This one focusing on the UK rather than US. Really these are just to anchor my ISA. Try and do a little derisking.
Legal & General
Had for a while and it’s still recovering from when I brought at a high. Poor timing of the buy but happy to keep it as is.
Brought into my own hype.
A very stable and reliable company. A long term position in my ISA where it happily ticks over. Solid high quality company.
Same as Mastercard. A solid long term slow moving quality company. Big enough I am not worried they are going to vanish, but agile enough to keep themselves innovating.
High momentum, excitement driven buy. I think there are better plays out there in the world when it comes to chip manufacturers, but Nvidia is just one of those holdings you always see. Picked up a few shares with dividend build up from other stocks to lock in some short term gains.
Brought in on my own hype. Earnings didn’t look good. Going to hold for now but a disappointing outcome so far.
Always been a fan. High growth, high momentum investment trust. Right now is doing extremely well. I am not looking forward to them really looking under the hood at the private investments (which they have voted to increase the overall holdings which are private.) This could be another Woodford if we aren’t careful.
Another gaming company. Really need to wrap all of these up. I’ll likely put it all into EA.
I was looking for another investment and as we start to ease out of lockdown this looked an interesting investment. Brought into my own hype again.
I recently took my ISA back into my full control, after looking after it, then moving most of the ISA to a managed solution and then back out.
The formulas I use in Google Sheets if anyone wants them.
Current value is
=GOOGLEFINANCE($C3,"price"), $C3 being the symbol (make sure you add the exchange if you see strange results.)
Today change is
=GOOGLEFINANCE($C3,"changepct")/100 I had to add the divide (it is a percentage already) as the percentage format kept messing with it.
All time change is the current value minus the average book cost then divided against the average book cost.
=(G6-F6)/F6 it’s new number minus old new number divided by new number.
Holding percentage is the sum of all the pound values which has been divided using the pound value of this holding.
Both the pound average book cost and pound value use this formula (adjusted to look at the book or value respectively.)
=($D6*F6)*IF($E6="USD",$C$29, IF($E6="GBX", 0.01,1))
It’s the number of shares multiplied by either the book or the value number. Then we multiple this by the FX. If it’s USD in the FX field then I have the latest FX rate used (0.83) in this sheet. If you find GBX in the FX rate then multiple by 0.01 to shift the numbers by two decimal places. Otherwise just multiply by 1 so there is no change (assume the FX is GBP.)
Link to sheet
I got a few requests to copy the sheet so here is a version for duplicating if you want. I’ve split it out from my normal sheet so I don’t break anything. It’s extremely basic at just tracking open positions but hopefully it helps some of you!
Not a super in depth analysis of my holding but hopefully it shines some light on what type of investments I like to make!
Considering initiating a position in either Activision Blizzard or EA, what’s your rationale on selling AB and consolidating the position with EA and not the other way around?
Not investment advice, interested in just your view
Because I played World of Warcraft once and someone stole all my gold.
I’m joking, it actually comes down to the diversification of their businesses and how they optimise cash flow.
Activision has a lot more going on in terms of product diversity but they are all large single projects. They are also heavily leaning on their subscription business.
EA has a laser focus on what they do and how they go about it. The scope of their business is much narrower but that actually plays to their advantage.
EA has almost have the market cap of ATVI, but EA brings in $5.3bn to ATVI’s $6.4bn.
EA has a profit margin of 20.59% compared to ATVI 23.16% but gross margin EA is 73.29% versus 67.73%.
ACTI has paid an Irregular dividend and EA has never paid any kind of dividend.
ACTI has a buy rating of 1.43 versus the more mixed 1.88 of EA (closer to 1 is better in this case.)
So why EA?
Because it has the better momentum and share price growth.
ATVI average target price is $77.06 (current price $73.92) compared to EA’s $125.75 (current price $117.32)
This might not seem like much but the sell-side analysts are way more punchy for EA’s growth compare to ATVI. ATVI is a slower beast which does well but isn’t blowing the doors off. EA is more volialite but has a stronger upside.
To me I see EA being a bit more in touch with what the boarder market wants and better at responding to that.
Even looking at the value metrics. P/E, EV/EBITDA, P/S, and P/FCF are all more attractive for EA (P/B less attractive.)
Generally I see EA as having more potential and better at execution than ATVI. Both are strong good picks, but I don’t need so much cross industry exposure, if I am going to consolidate I’m going to go for the one with better growth prospects right now.
My portfolio has other more defensive safer holdings, I don’t need another
After doing the portfolio holdings write up I figured it would be nice to double check on each of the articles I’ve written. Nothing like some harsh facts to put me in my place! Plus we have had a few more quarterly reports as well.
I’ll check each article, go off the close price and see what’s changed.
J Sainsbury’s - SBRY (Buy) 27th April 2020
If you had brought on the 27th at 201.10p it’s currently worth 186.50p, meaning a 7.26% loss!
BooHoo - BOO (Hold) 28th April 2020
Valued at 338p and currently 339.9p. The price is still bouncing around and not really doing anything too exciting. 0.56% gain.
Scottish Mortgage Investment Trust - SMT (Buy) 29th April 2020
Looking at a change from 667.50p to 723.82p, a strong 8.44% increase.
Domino’s Pizza - DPZ (Buy) 30th April 2020
Time scales are getting mighty tight now but it’s fun to check. $361.93 to $364.5, a small bump of 0.71%.
Royal Dutch Shell - RDSB (Hold) 1st May 2020
The future might be uncertain, and we will need oil for a long time, the share price has kept ticking up, great for anyone looking to exit. £12 to £12.67, a strong 5.65% increase.
Activision Blizzard - ATVI (Buy) 4th May 2020
A fantastic growth from $66.70 to $72.88. Earnings were as solid as expected. A very strong 9.27% increase.
Imperial Brands - IMB (Buy) 5th May 2020
The dividend cut has been poorly received. A nasty lose of £16.49 down to £15.39, a 6.7% decrease.
Qualcomm - QCOM (Hold) 6th May 2020
This has been another bouncy wild stock. Glad I went with hold for this one right now! $78.87 to $79.93, a 1.34% increase.
Lyft - LYFT (Buy) 7th May 2020
Sadly brought right at the peak on this one! Rebounding now but having to make a recovery. $31.78 down to $30.34, a 4.53% loss.
Aston Martin Lagonda Global - AML (Sell) 11th May 2020
The biggest change so far. 43.1p down to 38.63p, if you had shorted this would have been a 10.37% gain!
Legal & General - LGEN (Buy) 12th May 2020
Another dip which is recovering. £2.00 down to £1.93, meaning a 3.18% decrease.
Ocado - OCDO (Hold) 13th May 2020
Still struggling in the short term. We are still losing value here. £21 down to £19.16, a nasty 8.83% decrease.
Taylor Wimpey - TW (Buy) 15th May 2020
Finally the latest piece I’ve written. £1.40 up to £1.45, an encouraging 3.27% increase
Naturally these are all longer term positions but when you check your portfolio every day it’s important to understand the shorter term emotions and changes!
I’ll get some analysis done this afternoon, I’ve been seeing some great suggestions.
Thank you so much for sharing your sheet - I have used it to create my own, albeit with a greater proportion of red boxes on the far right
It’s tough times for the market and investors. Lots of unknown, FOMO, and doom. If you want to enhance the sheet and do more with it, e.g. upcoming dividends, then have a look at what @finki has been doing. You can hook his APIs into your sheet and get even more data.
Good if you want to expand the sheet from just current holdings P&L, to actually recording your track record and past trades!
thanks @jcksmith850 for the shout out
@jcksmith850 I would LOVE to see what your analytics of Live Nation would show. The stock seems to be picking up interest from investors after Saudi Arabia’s Public Investment Fund brought a $500 million stake in the company a few weeks ago
Awesome I’d love to add more stuff since I have time on my hands - where do I go to the code for the Sheet Finki?
This happened to me once but I got it all back!
head on over to finki.io/finkiAPI.html , email for an API key … follow the quick demos on site or see how some other folk integrate it into their G Sheets tracker… for example, Sean’s videos here >>>>
I’ve got a company I’m looking at over lunch but this does seem interesting. They have lost a lot of value and seem extremely sensitive to COVID-19. However the analysts do like the looks of it.
Source Yahoo Finance Analysis
Might be worth revisiting tomorrow or another day for a deep dive but long term it looks a strong pick. The short term financials are very scary though. They made a loss in Q1, and the expectation is a very heavy lose in Q2 and potentially Q3 depending what happens. Highly sensitive to the lockdown.
Halfords - HFD (Buy)
Thanks to @jazzersi for the suggestion.
I have to say reading through the investor documents and website, Halfords is very transparent. I was surprised how open they are with investors about potential issues, actions they are taking, and the financial impact. Which might sound expected, but some of the companies I’ve looked at don’t make it easy.
With the 2020 results coming out 7th July, and the last trading notice published 6th May, there is unlikely to be any new announcements. We have some insight into the business during COVID-19 as well as how their plan is going. Let’s ride on down to analysis town.
What Does Halford’s Do?
Most of us would remember going down to Halford’s to pick up some car oil, new car mats, or even getting our first bike. What are they doing now though, and have they adapted over the years?
Source: Halford’s 2019 Annual Report
Halfords is the UK’s leading provider of motoring and cycling services and products. With 446 Halfords stores, 4 Performance Cycling stores (trading as Tredz and Giant), 371 garages (trading as Halfords Autocentres and McConechy’s) and access to 77 mobile service vans (trading as Halfords Mobile Expert.) Their business is split across vehicle parts, vehicle servicing, and performance cycling (we’ll touch on their regular cycling business too.)
Source: Halford’s Market Breakdown
The car parts aspect of the business is for DIYers who want to pick up individual parts and tools to help them service their cars and vehicles. These day’s Halford’s have their brand in-store and online (rather than just selling other manufacturers goods), but this isn’t a focus for the business going forward. The longer-term view is owners will not be able to keep up with more complex modern cars and to focus on their servicing solutions rather than selling products and parts. Expect your traditional large Halford’s stores to be refurbished or closed down.
Source: Halford’s Market Breakdown
The car servicing business is all about their garages, mobile fleets, and general “do-it-for-me” services they can offer for your vehicles. Modern cars need to be serviced less, and on the whole are more reliable. However, the cost per service is increasing. The added complexity and increased integrated technology mean more specialism is required. Excellent news for servicing providers like Halford’s, terrible for anyone who wants to change a headlight.
Source: Halford’s Market Breakdown, left is regular cycling, right is performance cycling
The cycling business is slightly different as this graphic is now out of date.
Halford’s had its mainstream cycling focus with the Cycle Republic brand. 16th March Halford’s confirmed they would be closing the Cycle Republic brand. They want to focus on the online brand Tredz and zero in on the performance cycling industry, think e-bikes and high-end luxury branded bikes. The Cycle Republic made an of loss of £4.3m last year and is expected to post a loss this year too. 6th of March it was confirmed that 11 Cycle Republic stores would transfer to Pure Scooters Limited, though finer details of the deal are not currently known.
Cycle-to-Work vouchers are a big driver for Halford’s and servicing new electric-assisted pushbikes is a growing market. Likewise, with cars, more complex and expensive vehicles are translating into higher service costs which require specialist skills.
Source: Halford’s 2019 Revenue Split
What About COVID-19?
I’m sure you have seen the queues outside Halford’s and the influx of cyclists around the country. Has this influx of discovering and fixing your bike and doing some work on your car, translated into more sales for Halford’s or has the increase not offset the losses of lower car service requests?
25th March and 6th May we had some updates relating to COVID-19. Starting with the first update we saw some tactical decisions being made. As you would expect the first action was to bolster the company’s cash position. They drew down on the revolving credit facility in full giving them approximately £118m of cash on deposit, plus roughly £20m of an overdraft if required. Critically they suspended their dividend, resulting in a cash saving of approximately £24m for 2021. Halford’s has offered an increasing dividend, which makes it an attractive investment, which many will be keen to see returned. Additionally as one of Halford’s biggest expenses is the physical stores which also hold stock (fun fact, 85%~ of online order are click-and-collect!) they have applied for business rate relief for the whole of 2021, this translates to a cool £26m per year saving.
All in all, we saw a lot of financial bracing for the unknown. We can compare this with the trading update on the 6th of May to see some more clarity in the business changes.
They have been able to keep open 325 retail stores, 346 garages, and 77 mobile service vans. Which results in the coming financial results looking better than expected in terms of sales. The expectation is Adjusted Profit Before Tax will be at the upper end of their targetted £50-55m range. Sales during lockdown were 23% below last year on a like-for-like basis, which is better than they initially expected. They did see strong performance in cycling and motoring essentials, but generally, they have felt the pressure of lockdown still. We also saw an update on their cash, with Halford’s having approximately £159m liquidity available, an increase from £138m (£118m cash + £20m overdraft) a month and a half ago.
While they have been harmed by COVID-19, we have seen some robust measures put in place and seen an appropriate response from the business.
What About The Financials?
Source: Genuine Impact
We are looking at a business which is competent in terms of their quality, with revenues of £1.12bn and a profit margin of 3.68%. Historically they have offered a strong dividend offering 11.22% yield, however, we know the next one has been cancelled.
Source: Yahoo Finance
With the value, we know the business has been heavily discounted, but understandably so. Keep in mind a lot of the value ratios are based off official figures, and we haven’t seen updated COVID-19 impacted numbers. This does mean the cheap value score should be taken with a pinch of salt. Remember the majority of revenue comes from the car arm of the business, and that is feeling the pressure the most right now. While 2020 profits are on track, it’s the 2021 numbers which will feature the true impact of COVID-19.
Source: Genuine Impact
In terms of sell-side analysts, we are seeing a heavy leaning towards a buy rating. While the future revenue and earnings are weaker than the rest of the market, they have a high sentiment from analysts.
Now I’ve looked into this a bit more as there seems to be some different data depending on who you ask.
Source: Yahoo Finance Analysts
Here we see more of a hold position (still a few strong buys) but you also see a high target price. With even the lower estimates being higher than the current price. The target prices are generally set to be achieved within the next 12 months.
Source: Genuine Impact
We see a high target price rank here as well, though not quite the rank I would expect for an almost 100% increase in target price.
Source: Market Beat Target Price
Looking at market beat we see a very different set of analysts views and target prices again.
Seems data for the analysts is a bit spotter than you would hope for. Sadly with a lot of US-focused research tools out there, this happens more than I would like.
Why A Buy?
Looking at the data there is something which stood out to me. While some of the target price estimates look tasty, the different data points raise a lot of questions.
For me this is a strong long term buy because of the strength of the management team. I like their approach during COVID-19, they have closed down one of the brands to keep the business-focused, and they are zeroing in on the brand they want to be tomorrow.
The 2018 investor day presentation gives a lot of insight into the business and how they see it transforming. Released in September 2018 it gives you a real flavour of what they hope to achieve, and it’s interesting to compare the vision from then to now.
This details their transition into a do-it-for-me service provider who offers a very select and focused range of products. They have actively gone out to research why people don’t shop at Halford’s and what don’t they like. Looking back at 2018 they had 6 vans doing at home and work car services. During the lockdown, we have 77 of these vans is operation.
They highlighted the growth of the cycle industry but also the fact 10% of cycle shops close each year, and the majority are independents, they are now focusing on their digital experience and leveraging their “service” buildings rather than expanding the underperforming retail outlets. We are seeing more synergies, more personalisation, and a lot more future positioning for a world where Halford’s doesn’t think your kids will be drivers or car owners.
These are bold bets, backed by data. This is the kind of turn around strategy and focus I like to see.
I feel like there is a lot to like about Halfords, but in the short term, I would expect some pain. 2021 will show the full impact of COVID-19 so expect some corrections and volatility in the current year.
Looking ahead they are positioning themselves for an increased dividend and strong future growth. The lower 2021 figures are expected, while not detailed as guidance hasn’t been provided, we know this is on the cards. I see a brighter future for a new digitally focused service orientated Halfords, and now is a cheaper price to buy into that future.
Hope you liked the write-up if you think I’ve missed anything please do let me know! I love to hear your thoughts and feedback.
Thanks for reading and stay safe.
This is cracking as ever - thanks for this. I took a small position in Halfords a few days ago (seemingly at the peak of their recent price increase ) but happily your longer term analysis and like of the management style matches up with mine.
It’s longer term play for sure, it really does come down to the change in business focus over the long term.
They are a fairly simple business which is actually great. It’s really easy for them to control their spending and know where stuff is going. The year ahead it looks like steady share price increase and a return to dividend late 2021 or start of 2022.
A nice value buy for a 5-10 year horizon.
Great suggestion by the way! I’ve never looked at these guys before (didn’t even know they were listed!) and I was surprised at the level of transparency about their business and positioning. Gives me a lot of confidence for the future.