market commentary

Do you like my new product concept? I call it the “Loozebox”

ZZZ (Snoozebox) ended the day at 26p, down a monstrous 27% over the previous close. It issued an update stating that it will require additional capital to exploit its current pipeline of opportunities. My regular readers may remember that this was one my main concerns, along with its seeming inability to generate gross profit. ZZZ has decided to withdraw from two events where the prospective returns appear inadequate. Paul Scott has written about ZZZ today, far more intelligently than I ever could. It appears that he is quite interested in the business model. My own view is that the idea seems to “unorthodox” to be the real deal. ZZZ hasn’t been floated for very long, either, adding to my scepticism. The company has a long way to go before it sorts out its credibility, and ability to generate acceptable returns on its own capital.

OCDO (Ocado) ended the day at 266.43p, up 32% on the day, after it announced a tie-up with Morrisons. Shorters are being well and truly burnt here, proving that a heavily-shorted stock with momentum and a good story is a recipe for shorts getting squeezed by the technicals. You likey? – I made that one up myself. MRW (Morrisons) has a market cap of £6.7b, OCDO has a market cap of £1.7b – a ratio of 3.9. MRW has revenues of£18.1b, against OCDO of £0.7b – a ratio of 25.9. Clearly, there’s something of a valuation mismatch there.

QPP finished the day at 9.42p, down 4% on the day. I tweeted yesterday that momentum seemed to be slowing, and that we were perhaps topping out, despite bullishness on the Boards. I heard that the full financial statements were available today, although on a cursory glance I haven’t been able to locate them. I am bearish on QPP, and believe it will “do a Cupid”, where the share price irregularly declines over the subsequent period. The share price has been in decline since Jan 2013, and there is resistance at about 10p. The bulls cite a low PE and high growth rate as a reason to buy, but I am unconvinced. Its shares are lowly-rated, making further growth by acquisition through further share issues an expensive proposition.

CUP (Cupid) finished the day at 64.48p, down nearly 1% on the day. I’m interested to see if it manages to go sub-60p.

DXNS (Dixons) ended the day at 42.06p, up 5.1% today, extending substantial gains from yesterday. I hold these shares, so naturally I am well-pleased. John Rosier wrote about them today. He also wrote about SMWH (WH Smith), which is also owned by Jeff Lam, who has it as his entry in the NFSC.

THT (Thorntons) ended the day at 93p, up 4.5%. This is another good retailing share – which, again, I hold. It’s on its next leg up in a breakout, where it presumably settle down in a sideways range at some point.

LAM (Lamprell) ended the day at 170p, down 5%. I hold these. It issued an IMS today, basically reiterating what the market already knew.

There have been plenty of other interesting things happening in the market today, but that’s all I’ll comment on for now. Happy investing, all.

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About mcturra2000

Computer programmer living in Scotland.
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