Long Term Stock Ideas

[ggkfc]

Are you referring to me? I assume not, but just checking.

Glad for you.

On the other hand anyone picking up BEAR/ BBOZ and waiting for the market to crash?

 

[systematic]

Glad for you.

Sorry? I don't understand.

 

[galumay]

Sorry? I don't understand.

I am glad you are confused! I thought it was just me.

 

[skc]

I wonder if systemic bought into DSH last year.. what a disaster!

Are you referring to me? I assume not, but just checking.

I think ggkfc is asking because you produced a list containing DSH (and others) back in Dec.

Going back to the OP, I realised that I don't have to look at quality (as I did in a previous comment) - the request is for prospects liked.

Okay, so if I had to pick some stocks that I had to hold for (say) 5 years...I'd stick to value / cheap stuff. I wouldn't worry too much about quality. I wouldn't look at momentum as I normally do. I'd be going for a basket of cheap stuff based purely on the mean reversion of value. This is usually the sort of list of stocks that normal people wouldn't want to own; too scary!
...
DSH Dick Smith Holdings

FWIW, the 3 month performance of your list looks like this (last column = percentage change since 14 Dec 2015).



If you put DSH at -100%, you'd still left with an average of +4.2% across the 25 stocks. Obviously 3-month performance is hardly befitting the "long term" thread idea.

 

[systematic]

I think ggkfc is asking because you produced a list containing DSH (and others) back in Dec.

...Thanks, skc. I wondered whether that was the case (and made a typo with, 'systematic') or whether he was talking about systemic issues with DSH or somesuch!

FWIW, the 3 month performance of your list looks like this (last column = percentage change since 14 Dec 2015).

If you put DSH at -100%, you'd still left with an average of +4.2% across the 25 stocks. Obviously 3-month performance is hardly befitting the "long term" thread idea.

Thanks, skc. After ggkfc's post I had a look at that today with pretty much same result (used open price 14.12.15) but agree with you...3 months is kinda opposite to the whole 'long term' idea! Which is interesting in itself, really. I think it's a lot harder for investors to be longer term than many realise, because of many factors (the news and prices so readily available, along with our own need for instant gratification).
I'm shocking for it, myself. I've often habitually checked prices daily (of stocks I actually own)...with absolutely no need whatsoever (there is nothing checking a daily price could do to my plan). But I still often do it! I've often thought of doing a one month challenge of not checking prices of the stocks I own...don't like my chances!

 

[ggkfc]

I think ggkfc is asking because you produced a list containing DSH (and others) back in Dec.



FWIW, the 3 month performance of your list looks like this (last column = percentage change since 14 Dec 2015).

View attachment 66090

If you put DSH at -100%, you'd still left with an average of +4.2% across the 25 stocks. Obviously 3-month performance is hardly befitting the "long term" thread idea.

haha you are right!

i thought he had bought into DSH!

 

[systematic]

haha you are right!

i thought he had bought into DSH!

But even if someone had bought DSH as part of this portfolio, it would have been a 4% loss. Is that a, 'disaster' in your world?

 

[sasch]

Adslot (ADJ)

Global digital publishing platform for advertising. Just about to become profitable based on trend of sales. But not anticipated to become profitable ~2017 due to ongoing expansion of the business throughout various countries.

Risks - other than the obvious one of running out of money - being beaten in this space by another competitor;
or if successful, being bought out before the upside is fully realised.

One to take a punt on.



Disclosure - holding via FAC purchase.

Adslot is tracking along nicely and slowly building momentum.

Priced at 9c at the time of my original posting, closed at 15c on Friday following the announcement of
a major contract:

"Adslot Signs Multi-Year Global Deal with World’s Largest Media Buyer
• Long term Symphony contract signed with the world’s largest media buyer, groupm (the
media buying division of WPP)
• Global deal with immediate focus on multiple market deployments across Europe and APAC
• Immediate, significant impact on Trading Technology revenues anticipated via increased,
contracted Licence Fees
• Value of media executed via Symphony expected to more than double from circa $3 billion per annum to more than $6 billion per annum over the next 2 – 3 years
• Represents an effective doubling of the future Trading Fees revenue opportunity via AdslotSymphony integration
• Positions Adslot as a leading provider of media workflow and trading technology globally"

 

[So_Cynical]

(4th-December-2015) At the Micro end of the scale.

• HZR - Hazer, has blue sky technology commercializing Iron + NG to Graphite & Hydrogen.
• CTT - Food Revolution, Health drinks targeting the Chinese market.
• NRR - Alcidion Corporation, Patient/hospital management software.

i hold

• HZR, Share price has tripled, up 220% ~ uptrend with some sideways.
• CTT now FOD, Share price down a lot, 25% ~ downtrend.
• NRR now ALC, Share price down a little, 5% ~ down trend that has just turned.

Im still holding HZR and options, FOD i sold for a small profit and ALC have averaged (double position size) down to now be in a profitable position...picking them is only half the fun.

 

[Cashflows]

One share that I have been buying into with a long term view (more than five years) is TPI enterprises (TPE). It manufacturers/refines narcotics into the concentrates that can be used to produce pain killers. It has a few strong competitive advantages that I like:

The first is the regulatory barriers to entry. It takes substantial time and effort to get through all the red tape to receive a license to manufacture narcotics legally. I believe there is also a limit on how many licenses are given out, or something to that extent - at least the cost of invested capital and the required return to justify the time and money needed to get into the business.

The second is their unique way/technology of refining the narcotics. They use a water based refining process which costs about 20% of the initial required invested capital when compared to the traditional method. Moreover, expanding the facilities and they're production capacity has similarly reduced costs. lower required capital expenditure means less shareholder dilution from the company needing to raise additional cash and also greater return on the invested capital.

in conjunction with their refining process, TPE has also modified the traditional harvester to reduce the amount of chaff that gets collected in the machine. The result is that the raw material brought in has a much higher concentration of raw narcotics, and the production capacity has jumped by about 50% from 100 tonnes to 150 tonnes.

In terms of profitability, they hit break even at 30 tonnes and recently announced a contract worth $30m - or about 14 tonnes. if they hit 100 tonnes in sales by 2019 - they're own stated goals - they will hit $30m in ebitda a year with minimal expenses after that.

I would love to hear what other members thought.

 

[Triathlete]

One share that I have been buying into with a long term view (more than five years) is TPI enterprises (TPE). It manufacturers/refines narcotics into the concentrates that can be used to produce pain killers. It has a few strong competitive advantages that I like:

The first is the regulatory barriers to entry. It takes substantial time and effort to get through all the red tape to receive a license to manufacture narcotics legally. I believe there is also a limit on how many licenses are given out, or something to that extent - at least the cost of invested capital and the required return to justify the time and money needed to get into the business.

The second is their unique way/technology of refining the narcotics. They use a water based refining process which costs about 20% of the initial required invested capital when compared to the traditional method. Moreover, expanding the facilities and they're production capacity has similarly reduced costs. lower required capital expenditure means less shareholder dilution from the company needing to raise additional cash and also greater return on the invested capital.

in conjunction with their refining process, TPE has also modified the traditional harvester to reduce the amount of chaff that gets collected in the machine. The result is that the raw material brought in has a much higher concentration of raw narcotics, and the production capacity has jumped by about 50% from 100 tonnes to 150 tonnes.

In terms of profitability, they hit break even at 30 tonnes and recently announced a contract worth $30m - or about 14 tonnes. if they hit 100 tonnes in sales by 2019 - they're own stated goals - they will hit $30m in ebitda a year with minimal expenses after that.

I would love to hear what other members thought.

It may have a good story in your view....but I can only see one financial statement at present Dec 15 on Lincoln indictors which shows that the company based on the financials is in a Distressed state presently.

So based on that alone any investment in this company at present is nothing more than a punt until we can see some improvements.

It is also an illiquid stock so that is a problem also IMO if you need to get out quickly.

Market cap is only 144mill
$69k traded daily.

Nothing stands out Technically either......

 

[Klogg]

One share that I have been buying into with a long term view (more than five years) is TPI enterprises (TPE). It manufacturers/refines narcotics into the concentrates that can be used to produce pain killers. It has a few strong competitive advantages that I like:

The first is the regulatory barriers to entry. It takes substantial time and effort to get through all the red tape to receive a license to manufacture narcotics legally. I believe there is also a limit on how many licenses are given out, or something to that extent - at least the cost of invested capital and the required return to justify the time and money needed to get into the business.

The second is their unique way/technology of refining the narcotics. They use a water based refining process which costs about 20% of the initial required invested capital when compared to the traditional method. Moreover, expanding the facilities and they're production capacity has similarly reduced costs. lower required capital expenditure means less shareholder dilution from the company needing to raise additional cash and also greater return on the invested capital.

in conjunction with their refining process, TPE has also modified the traditional harvester to reduce the amount of chaff that gets collected in the machine. The result is that the raw material brought in has a much higher concentration of raw narcotics, and the production capacity has jumped by about 50% from 100 tonnes to 150 tonnes.

In terms of profitability, they hit break even at 30 tonnes and recently announced a contract worth $30m - or about 14 tonnes. if they hit 100 tonnes in sales by 2019 - they're own stated goals - they will hit $30m in ebitda a year with minimal expenses after that.

I would love to hear what other members thought.

Where did you find the information about $30M EBITDA from 100tonnes?

 

[Cashflows]

''....but I can only see one financial statement at present Dec 15 on Lincoln indictors which shows that the company based on the financials is in a Distressed state presently.'

- My view is that with major shareholders such as Washington H. Soul Pattinson and Thorney group, the chance of such major players letting this business go bankrupt is unlikely. The evidence of this being the July 27 announcement of the extension of the $30m loan facility from WHSP and the recent raising of $4m from the incoming director - simon moore.

'Where did you find the information about $30M EBITDA from 100tonnes? '

page 24 of the AGM presentation:

 

[Klogg]

'Where did you find the information about $30M EBITDA from 100tonnes? '

page 24 of the AGM presentation:
View attachment 67820

Thanks, much appreciated.

''....but I can only see one financial statement at present Dec 15 on Lincoln indictors which shows that the company based on the financials is in a Distressed state presently.'

- My view is that with major shareholders such as Washington H. Soul Pattinson and Thorney group, the chance of such major players letting this business go bankrupt is unlikely. The evidence of this being the July 27 announcement of the extension of the $30m loan facility from WHSP and the recent raising of $4m from the incoming director - simon moore.

I wouldn't pay too much attention to what Lincoln indicators has to say...

 

[galumay]

I wouldn't pay too much attention to what Lincoln indicators has to say...

Normally I would agree, but a quick scan of the financials shows a VERY distressed company!!

I doubt they are a good long term stock idea - mainly because unless there is a massive change in the fortunes of this business it wont be round in the long term!

 

[luutzu]

One share that I have been buying into with a long term view (more than five years) is TPI enterprises (TPE). It manufacturers/refines narcotics into the concentrates that can be used to produce pain killers. It has a few strong competitive advantages that I like:

The first is the regulatory barriers to entry. It takes substantial time and effort to get through all the red tape to receive a license to manufacture narcotics legally. I believe there is also a limit on how many licenses are given out, or something to that extent - at least the cost of invested capital and the required return to justify the time and money needed to get into the business.

The second is their unique way/technology of refining the narcotics. They use a water based refining process which costs about 20% of the initial required invested capital when compared to the traditional method. Moreover, expanding the facilities and they're production capacity has similarly reduced costs. lower required capital expenditure means less shareholder dilution from the company needing to raise additional cash and also greater return on the invested capital.

in conjunction with their refining process, TPE has also modified the traditional harvester to reduce the amount of chaff that gets collected in the machine. The result is that the raw material brought in has a much higher concentration of raw narcotics, and the production capacity has jumped by about 50% from 100 tonnes to 150 tonnes.

In terms of profitability, they hit break even at 30 tonnes and recently announced a contract worth $30m - or about 14 tonnes. if they hit 100 tonnes in sales by 2019 - they're own stated goals - they will hit $30m in ebitda a year with minimal expenses after that.

I would love to hear what other members thought.

In these kind of situation, you're not really investing for the long term... you're investing for the future and are willing to wait a long time for reality to catch up with the potentials.

LT investment ought to be companies so great that you don't really mind overpaying a bit for, and obviously better if cheaply bought for, because you know its future is bright and you're gonna stick around.

Why the semantic?

If a company is the one where you'll have to wait a while to see if its potentials are realised or not... that company's payback, if any, ought to be so over the moon that it'll pay your kids' education and half a mortgage.

Why else would you want to risk putting good cash on hold for a few years, and still risk that nothing might come of it?

So is this company worth that risk?

In terms of profitability, they hit break even at 30 tonnes and recently announced a contract worth $30m - or about 14 tonnes. if they hit 100 tonnes in sales by 2019 - they're own stated goals - they will hit $30m in ebitda a year with minimal expenses after that.

At $30m/14Tonnes, that's $2.14M rev per tn, or for 100T revenue would be $214M.

With $30M EBITDA at $214M sales, operating [?] margin about 14%... tax won't be much at that point; DA would be pretty high I'd imagine; Interests owed would also be high given the investment/borrowings...

So net profit might be $10M or $15M at best.

This profit is when the company would gain another 6 similar contract [100/14 = 7].

For sales to increase 6 times current pipeline, profit is around $15M at best.

How likely will this company win that many contracts; how much would a company that earn $15M be valued at by the market? What's the company's current market cap compare to that... and will that potential, once realised, if realised, be enough for you to hang around.


That's how I would approach it.

 

[Klogg]

Normally I would agree, but a quick scan of the financials shows a VERY distressed company!!

I doubt they are a good long term stock idea - mainly because unless there is a massive change in the fortunes of this business it wont be round in the long term!

Agreed, I've looked at TPE in the past and its financials don't scream 'buy me'. It's more the idea of relying on someone else's analysis without backing it up yourself that I find incorrect.

 

[systematic]

While we're updating:

SHM +35% (only 5 months though)

Portfolios from this post


5 stock portfolio:
+13.8%

25 stock value portfolio (with 100% loss on DSH):
+30%

But - it's not even a year yet, so plenty of time to fall!

 

[galumay]

... It's more the idea of relying on someone else's analysis without backing it up yourself that I find incorrect.

Absolutely, its lazy.

 

[sasch]

• HZR, Share price has tripled, up 220% ~ uptrend with some sideways.
• CTT now FOD, Share price down a lot, 25% ~ downtrend.
• NRR now ALC, Share price down a little, 5% ~ down trend that has just turned.

Im still holding HZR and options, FOD i sold for a small profit and ALC have averaged (double position size) down to now be in a profitable position...picking them is only half the fun.

There is always someone that goes one better - well done on HZR So Cynical.

I agree that picking an approach to trading/investing/gambling? in micro stocks is fun.

Along with my initial holding, have been trading in and out of ADJ regularly, as it has presented good
trading opportunities and liquidity for $10000 parcel sizes. Never want to completely close a position in these
types of stocks, as I am always paranoid that there will be massive price spike when sitting on the sidelines.