Multi-bagger, but in which direction?

This landed in my inbox today, from “The Right Side” with the headline “This has multi-bagger written all over it”.

Aye aye, who doesn’t want a mutli-bagger? The stock in question is AGTA – Agriterra. According to Stockopedia:

Agriterra Ltd is a Guernsey-based company engaged in investing in agricultural and associated civil engineering industries in Africa.

Well, the gist of it is:

AGTA has ploughed tens of millions of dollars into establishing what could be a fantastic business … over the coming year or two, I reckon this stock will start to come to life. As it moves into profitablility (and that might still be a year off), the market should come to recognise what this business is about. And then suddenly they’ll be very interested in how quickly the business is growing. For the moment, this is a speculative punt. It’s one to tuck away for the long term. At just over 3p, I would say this has multi-bagger written all over it.

Note that the above are the words of the article, not my analysis of the situation. AGTA reported revenues of £8.6m for 12 m/e 31-May-2012, and a market cap of £30m. PBV is about 1.4. The company has never made a profit.

Why am I bringing this up when most of my emails are usually deleted without further ado? Well, it is most certainly not to highlight an attractive investment opportunity. What caught my attention is that AGTA passes 3 short screens on Stockopedia. That must take some doing! The three short screens it “passes”, if that’s the word I can use, are:
* Berneish M-Score – which identifies the earning manipulation risk
* Montier’s “Unholy Trinity” Screen – which identifies combined high valuation, weak fundamentals, and to-rapid asset growth
* Montier’s “Cooking the Books” Screen – his so-called C-score – which is a bit like the Piotroski score, but in reverse

I thought that this would make an interesting case study of the red-hot sizzle-selling tipsters versus the more sober-minded show-me-the-money quant screens.

So let’s see who I get to name and shame, the purveyor of penny dreadfuls, or the robotic beancounters. I should warn you that the quant screens have been rather successful at identifiying shares that have significantly underperformed the markets.

And just so we’re absolutely clear on this: I have no position in AGTA.

See you in 6 months time.

2.97p

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About mcturra2000

Computer programmer living in Scotland.
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One Response to Multi-bagger, but in which direction?

  1. Wexboy says:

    Even if they were profitable, I’m sure they would remain cashflow negative anyway…

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