BOWLING
Late this month and no update last month as I have mostly been in holiday mode after a good long break in Vietnam. Anyway, back now, so here we go…
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 just 20 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
An absolute textbook bowl to my eye and the second highest ranking (StockRank) stock on this month’s list (94), TMT is top with a StockRank of 96. 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 versus almost 2,500p then. A bit of a leveraged play on money coming back into the market on a PER of 10 and yield around 10%.
Silver - TIFS
A nice looking bowl, already 50% off the lows, but with plenty of room left to go to previous highs. No Director buying to report here, in fact the balance is to the sell side in the past 12 months (a slight concern). There has been no dilution since pre-COVID. Attractiveness here is the PER of 7.5, PEG of 0.6 and the almost 5% yield. Was double the current share price in in 2021 with EPS less than the current forecasts.
Bronze - FEVR
This (chart wise) looks good with 20% or so to go to a very long term “Cup & Handle”. Director buying in the past 12 months has been favourable with the Non-Exec Chair recently buying £438k. No dilution since pre-COVID. Forecast to do more than half the EPS is was doing when it was trading at almost 4,000p (currently 1,200p) suggests there’s maybe 2x upside if it can get back to the same rating. On a PER of 35+ with a <2% yield though, this for me, is one for the more optimistic out there.
SUMMARY
Quite a few bowls out there but 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
TMT
LIO
CHRY
CMCX
WIX
MOON
TIFS
AO.
ANCR
GAMA
DFS
GLE
MOTR
TRST
DOCS
AVON
GBG
AWE
WNWD
FEVR