Daily Reports
Mon
Trades:
Buy Aquis Exchange (AQX) 1,000 @ 494p. Continued follow through from breakout on Friday (which didn’t have volume). More volume coming in today, more than double Friday’s by lunch time. A great set up with a really good 8% stop position below the tight trading range it’s been in.
Earnings results:
Fonix Mobile (FNX) Full year trading update – 32/50 A cracking update. “Gross profit and earnings have continued to grow strongly and ended the Year ahead of market expectations.” Adjusted EBITDA grew 18.1% YOY. Total payment volume grew 12.8% to £302.4m. Started facilitating payment via Apple Pay, Google Pay & Pay Pal. Selected to support Eurovision in UK & Ireland. “significant opportunities for further international expansion.”
Medpace Holdings (MEDP) Q2 24 – Score 40/50. Results on the day of release weren’t too bad with revenue up 15% & EPS up 42%. However on their earnings call the next day they opened with a comment on order cancellations, which crashed the share price with a big gap down of 18%.
“Net new business awards entering backlog were down in Q2 compared to the same quarter of 2023. This was primarily the result of significantly elevated project cancellations, including backlog cancellations that were more than 2x, the quarterly average of the calendar year 2023.”
Tristel (TSTL) trading update – 30/50 Ahead of expectations. Rev up 16.4% to £41.9m, ahead of their three year target of 10-15% CAGR. Demand remains robust across all geographical regions, which now include USA & Canada.
Beeks Financial Cloud (BKS) trading update – 32/50 In line with expectations. Revenue for FY24 is expected to be approximately 27% higher than FY23. “Significant wins secured in H2 FY24, including (as announced in March) the Johannesburg Stock Exchange’s (JSE) Exchange Cloud Contract Extension and a Proximity Cloud Win with one of the world’s largest banking groups, have contributed to Beeks’ increasing levels of contracted, multi-year, recurring revenue, providing a strong basis for accelerated growth.”
Badger Meter (BMI) Q2 24 – 36/50 Catching up from last week, released on Friday post market. Revenue up 23% to $217m, EPS up 47% to $1.12. Utility water sales up 26% YoY. Sales of flow instrumentation products only up 5% YoY. Strong increase in net cash from operations, up 59% on last year, $36.4m for the quarter.
Tue
Earnings results:
Alphabet (GOOGL) Q2 24 – Score 38/50. Actually fairly decent results, though not good enough for the market. Rev up 14%, EPS up 31%. Cloud growing well with revenues over $10B for the first time & operating profits up 197% YoY. Search & YouTube growing steadily at 14% & 13%. Forward guidance is for decelerating growth though of 13% revenue & 17% EPS.
Tesla (TSLA) Q2 24 – Score 20/50. Poor earnings, revenue only up 2% YoY, EPS down a huge 46%. Total automotive revenues were down 7% to $19,878m. Energy & storage performed really well, up 100% YoY to $3,014m. It won’t be too long before it’s making a real meaningful difference to overall earnings. Elon Musk said they are between two growth waves right now, with their next advances being full self drive, their next gen vehicle & Optimus robot.
Manhattan Associates (MANH) Q2 24 – Score 30/50. Very impressive results with 15% rev growth & 35% EPS. If using basic EPS, forward guidance is for 32% YoY increase in Q3. Delivering in all segments, very competitive & building a solid backlog. Nice 10% jump off the back of results.
Enphase Energy (ENPH) – Score 8/50. Just a quick look as it’s a company I’ve kept an eye on for a while for a recovery. Still not there yet.
Visa (V) – Score 30/50. Another quick look. Nothing spectacular, steady numbers.
Mattel (MAT) – Score 26/50. I noticed they were starting to accelerate their EPS in a bug way, which continues here, up 177% YoY & guidance for 120% growth YoY for Q3. However they fall down on almost all other metrics. Did have a big 15% jump in share price, though not at an entry level yet.
Wed
Trades:
Sold Medpace (MEDP) – 15 @ $357 for a 19.6% loss. Huge gap down on earnings. I thought it was overdone so waited until the next day. Panicked in the morning and sold near open, typically I was right and it finished that day 7% up. Couldn’t avoid the gap down & really sticking to my rules I should have sold on the first day, so an unavoidable big loss.
Earnings results:
FRP Advisory (FRP) FY 24 – Score 38/50. Solid results, though not any real affect on share price. A stock I’ve only recently started following, score down from 42 to 38/50, due to declining forward growth estimates, as I’m seeing with a lot of stocks atm. Executing well with a decent market share in the UK.
Chipotle Mexican Grill (CMG) – Score 40/50. Decent results I think with strong growth. Talk about margin pressures for next couple of Q’s, due to increasing portion sizes & avocado prices. Sounds like a short term thing though. Share price continues it’s decline.
EMCOR Group (EME) – Score 40/50. Results are pretty spectacular with 20% rev growth & 78% EPS growth. They continue to experience strong market demand and demonstrate effective cost management. No real guidance for Q3 and I have a feeling current estimates will be upgraded, so I’ve guessed at $5.60 which is 57% YoY growth.
Carlisle Companies (CSL) – Score 28/50. Results show strong growth, some major acquisitions & divestitures, & further optimism for continued revenue & margin expansion. Major restructuring is disguising forward growth with diluted EPS. Normalised it’s 65% YoY estimated for Q3.
ServiceNow (NOW) – Score 28/50. Just a quick look as I saw it bouncing 13% on the day. Not familiar with the company, but for now doesn’t pass the checklist. Rev up 22% though EPS down 75%, but with reasonable forward guidance. Not sure reason for bounce as results look poor compared to recent history.
Align Technology (ALGN) – Score 6/50. Another stock I keep an eye on for a recovery that I used to own. Not there yet, but will continue to keep an eye on.
Thu
Trades:
Sold Lam Research (LRCX) – 6 @ $906 for a 15.8% loss. This one was a mistake. It passed my stop a few days earlier, but I waited for it to jump back above, which it did. Though a few days later it fell back below & I’ve ended up getting out well below my stop. I think I need to be stricter on my stops, not allowing for a wait & see attitude. I can’t actually set hard stops with AJBell for US stocks, but I need to act as if they are, if they hit the line, sell!
It also doesn’t help, as is the case with all of these US sells this week, that I’m getting charged huge FX fees, around £80 total for buy and sell of a £5,000 position. Add to that that the pound has strengthened by a couple of percent over the past month or so, which goes against my trades.
Sold Arista Networks (ANET) – 10 @ $312 for a 4% loss. So this one & Google are really annoying. Both were targeting 25% short term trades. Both were up 20% plus & I’ve given all the gains back, & in ANET case gone into a small loss. Now the loss is due to fees and FX change as my sell line on the chart is actually in profit, but a loss is still a loss. I need to update my strategy for short term trades, more in strategy comments below.
Sold Alphabet (GOOGL) – 40 @ $168 for a 3.8% profit. As above have given back most of the gains on this one. I sold ahead of my stop to ensure I didn’t go into a loss like ANET. There’s been a huge sell off in US tech stocks this week & GOOGL is looking really weak. It was the correct call as GOOGL is down more at the weekend. Their results were not even bad, it’s just the stage of the cycle we’re in at the moment.
All in all a pretty tough day, even stocks I haven’t sold are down quite a lot.
Earnings results:
AppFolio (APPF) – Score 38/50. Results IMO show solid operational strides: AI-powered efficiency, broader market reach, and growing customer adoption of their property management solutions. However the price was down 11%, which I think is due to lower than expected unit growth. I had a look back & really not that bad though at 9% vs 10-13% for previous four quarters. Unfortunately I entered before earnings so unless there’s a bounce on Monday I’m out with a loss.
Deckers Outdoor (DECK) – Score 38/50. HOKA continues to drive growth as usual, but UGG is still putting up decent numbers. Excellent growth for this quarter, though Q2 not looking as strong. Slight upgrade to FY EPS.
Ones to catch up over weekend / next week:
KNSL, DXCM, TXRH, FSS, SKX, RCL
Fri
Earnings results:
Comfort Systems USA (FIX) – Score 40/50. Very good results with rev up 40% & EPS up 94%. Strong growth in both mechanical & electrical segments. Backlog remains high & they are seeing strong demand, especially in industrial sectors. Familiar story of declining earnings guidance though with only 17% expected next quarter.
Weekly wrap
Trades made:
Buy Aquis Exchange (AQX) 1,000 @ 494p
Sold Medpace (MEDP) – 15 @ $357 for a 19.6% loss.
Sold Lam Research (LRCX) – 6 @ $906 for a 15.8% loss.
Sold Arista Networks (ANET) – 10 @ $312 for a 4% loss.
Sold Alphabet (GOOGL) – 40 @ $168 for a 3.8% profit.
Thoughts on strategy, anything else:
So this was a tough week & I’ve definitely made a few mistakes to boot. The market in the US has been tough for tech stocks with a rapid rotation from large cap tech stocks into small caps, value stocks & more defensive sectors such as healthcare & industrials. The mistakes I made were simply holding on to stocks past their stop loss, though to be fair looking now it was only LRCX I did this with, the rest were simply large one day pullbacks that went below my stop, or drawdowns that didn’t hit my stop, but gave back all profits. So on the whole maybe I have been following my rules reasonably well & it’s just been a difficult week. On the positive note the UK side of the portfolio has done really well this week.
I think I need to look at my short term trading strategy for US stocks & whether it’s really viable with an AJBell account. For a £5k trade I have around £40 of FX fees each way, that’s 1.6%, plus the £5 each way dealing fee (far more reasonable). I’m thinking of only taking longer term trades for US stocks, or at least only targeting the strongest set ups, with longer bases and at least 2x volume.
Looking through my recent sells:
GOOGL didn’t have volume when it broke & it wasn’t a long base.
ANET did have 2x volume, though it was a very short base, not even really a base at all.
MEDP had a decent base & volume, but only 1.5x. It’s regularly had 3x or more volume in the past when breaking out of bases.
LRCX was a very short base & only had just over 1x volume. Even with my current rules I should have had a super tight stop as it was likely to fail. There’s no way I should have allowed a 15% loss!
So going forward, only the best set ups. 2x plus volume & a decent base. Plus the other parameters, RSI etc. If targeting a shorter term trade, be more selective & have a super tight stop. Use a trend line as the stop rather than a MA. In Google’s case this would have got me 16% profit & ANET 7%. Far better than 4% profit & a 4% loss. Certainly sell if price crosses the 50 day MA, as it did in ANET’s case.
It’s very frustrating giving gains back, though this has been a particularly hard week for my strategy. We’ve had two of the worst days for big tech since the start of 2022, in a one week period. Every time there’s a week like this I like to think I’m improving, as I’m learning from my mistakes, so really it’s a good thing. At least that’s how I’m trying to frame it. I’m still very early in investing terms. Remember that most of the best traders in the world say they took 7-10 years to really feel they were doing well. I’m still in my first three years, it will come. Keep grinding!