BOWLING
Welcome to the April 2024 “Bowls” update.
As I said in last year’s updates, “Bowls” are reasonably new to me, I’ve been looking for them and often investing in them for the past 3 years or so now.
They’re a concept I picked up from Richard Crow who, as I continue developing, still discuss Bowls with on a weekly basis – Richard runs his own Substack here
For me a Bowl is a basic charting pattern which often occurs when a stock has fallen and could be bottoming. It usually has 3 main characteristics I look for…
The rate the stock was declining slowed, indicating “Sellers almost done?”
The stock put in no lower lows, indicating “More Buyers than Sellers?”
The stock starts gradually rising, indicating “Buyers paying up?”
Hard to explain, even with a diagram, but here’s one anyway…
Bowls are a charting pattern and like most charting patterns, are often in the Eye of the Beholder.
Bowls are often “recovery” plays so to accompany any good looking Bowl I also like to see at least one of the following, preferably both…
Management changes, a new CEO in the last year or two, it takes them a while to get going! Not so significant but also worth checking for a new COO and/or CFO too.
Management buying, decent sized purchases within the past 12 months by, preferably, two or three Board members, certainly no selling except partials to cover option taxation.
Bowls (recovery play opportunities) seem to be best reflected in 3 year line charts. This kind of makes sense, most companies don’t decline overnight and likewise, most of them take a year or two, sometimes longer, to recover, or show signs of recovery.
For these reasons, a Bowl can be spotted over a period of a few months or over a period of 18 months or even more.
Anyway, I usually use 3 year line charts when scrolling through “Companies In My Universe” to look for Bowls as I’ve found over time, it’s what works best for me.
COMPANIES IN MY UNIVERSE
I don’t look at all UK companies for Bowls, I limit my criteria to those with a Market Cap >£50m and <£1bn. I also avoid those in the “Residential & Commercial REITs”, “Collective Instruments” or “Holding Companies” Industry groups.
Just my personal choice, and this leaves me with around 500 “Companies In My Universe”.
THIS MONTHS BOWLS
I have picked out 27 bowls this month, I will list them all later so you can, should you wish, export the list.
As always, each month I will look at the Bowls as a Beauty Contest, looking for the best 3, as I simply have no time to comment on all of them.
Gold - LIO
This was last month’s Gold pick and remains so this month. Remains a textbook bowl to my eye and still the second highest ranking (StockRank) stock on this month’s list (moved up from 94 to 96), TIFS is top with a StockRank of 99 (and still well worth a look, even following a Secondary Placing last week). As per my commentary on LIO last month…
There was a £110k or so CFO buy in January this year. Less than 10% dilution since pre-COVID. Forecast to do 75% or so of peak EPS (77.6p (24E) vs 106p (22A)) the share price is about 700p (now 633p) versus almost 2,500p then. A bit of a leveraged play on money coming back into the market on a PER of 10 (now <9) and yield around 10% (now 11%+).
Silver - SQZ
This is a sector I don’t usually invest in but with a StockRank of 91, a good looking short term “bowl” and other supporting criteria, it makes it to Silver this month.
There’s been a change of COO and CFO in the past 6 months and over £400k’s worth of Director buying this year. It’s on a PER of <4 and the yield is 12%+. There’s plenty of room here for this to double and still be off it’s All Time High.
I don’t currently own as I don’t know enough about this sector or this company. I am however tempted based on the above, to at least take a smallish position.
Bronze - CMCX
CMCX was in Silver position in January and has pushed on since then. Back then I said it was “a great looking bowl in the early stages here”, it has now progressed, after a favourable update, it’s now doubled and is a bowl in motion.
There was a £20k Director buy in November last year (by the new CFO, appointed 2 months previously) which was eclipsed by a £100k sell in September 2023 by the Deputy CEO (although there may well be a valid reason for this sale). There remains less shares in issue since there was 5 years ago. Revenue forecasts are still set to be 20% below the £400m+ seen in 2021 but the SP back then was 500p+ versus 235p or so at present.
So, although it’s already doubled in 2 months, there remains scope for that to happen again, although I would be surprised if it took 2 months!
SUMMARY
Quite a few bowls out there (SYNT is one that almost made the Top 3) but still not finding as many as I usually do, so maybe the market has bottomed and many shares are now up with events, with laggards now coming into play. As always, all bowls on this list are well worth a look as all have potential for a decent run up to previous highs in an improved economy and Bull market, IF that’s what’s on the way in the short/medium term.
Remember I may hold all, some, none, of the stocks mentioned in this article.
No investment advice intended, for information only, Do Your Own Research.
Until next time!
Jon
BOWLS STOCK LIST
TIFS
LIO
SQZ
CMCX
GAMA
MOTR
TMT
REVB
OTB
GLE
I3E
RCDO
TRST
888
NANO
AGFX
ENQ
GYM
SFOR
AVON
CBG
AWE
SYNT
FEVR
AXS
OXB
SOLG
this is bloody brilliant. Even more so because i own SQZ and CMCX.
Good list today John!
Thanks