$DTG.L – Dart Group – some thoughts

I’m not saying that Ryanair is a cheap-and-cheerful airline, but …

So a passenger was forced to land a plane after the pilot fell ill at the controls. Ryanair have since charged the passenger for his seat upgrade.

Or, how about:

Say what you will about Ryanair, but their tight fuel reserve policy guarantees a search radius of not more than 50 miles if one of their planes went missing.

If that tickled your fancy, then there’s more jocularity to had here: http://is.gd/iJjfJM

OK, now on to the actual point of the post …

RYA (Ryanair) released its full year report today, announcing that revenues had increased 12% and EPS increased a massive 69%. Load factors were up from 83% to 88%. The shares rose nearly 6%, as you might expect.

In initial trading, DTG (Dart Group) rose over 1.6%, presumably on the back of RYA’s report, but has since eased, and is now up only 0.2% to 403.25p.

It is interesting to note that RYA’s share have been range-bound since April, and now look to be making a breakout. Remarkably, DTG has been following a similar pattern since April 10, trading in a very tight range.

DTG had a great run before that, rising from 300p in mid-March to 400p by 10 April. That’s quite a move. I had been discussing the matter with WheelieDealer (https://twitter.com/wheeliedealer). He’s a nice chat, and undoubtedly a much savvier investor than me. He also runs a blog: http://wheeliedealer.weebly.com/

Given such a great run-up, a period of consolidation seems logical. My hypothesis is that it is part of a continuation pattern. There’s no guarantees of course, and I must once again remind everyone that I’m useless as a technical analyst. The consolidation period seems plenty long enough, too, so I’m hoping that it will make a move soon. Maybe RYA’s results will act as a trigger for a move upwards.

The share price did crash in June 2014. It went below 200p. I’ve looked through my notes, but can’t see my thoughts on the move. I really ought to do better than that! I remember being in two minds about what to do next. Many may have taken the view that DTG had gone far enough, and it was time to take money off the table. I am sure I had that view myself, so I certainly can’t hold it against anyone who sold at that time. If it was bought as a momentum trade, then I am very sympathetic with a decision to cash out. My view is that momentum trading definitely requires a selling discipline – which is something along the lines that you think that the trend is broken. There’s no point in going up hill and holding on all the way to the bottom, wherever that may be.

I am pretty sure that I saw the combination of a high Stock Rank and low EV/EBITDA as a reason to hold on. I think, also, that at the back of my mind that actually DTG is a good growth stock. Look at the numbers. DTG had revenues of £268m 9 years ago, compared to £1120m recently. Even during the credit crunch, revenues only dipped slightly, from £439m to £434m. The year after, they rebounded strongly to £542m.

The shares have been very volatile, and in 2008, actually trading at less than 20p. Imagine buying then!

EZJ (easyJet) have also been an excellent performer, too. Their shares have risen 505% over the last decade.

I am generally against AIM-listed companies and although DTG is listed on AIM, I actually think it is one of the small percentage that aren’t garbage.



About mcturra2000

Computer programmer living in Scotland.
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