Restaurant group TAST (Tasty) announced its prelims today (https://goo.gl/Xcb824), sending the shares down 38% to 71.25p. This comes as a personal pain to me, as I am a holder in the shares. They announced revenues up 28%, gross profit up 26%, but the killer blow was:
Trading since year has proved challenging and the Directors are now expecting headline operating profit for 2017 to be below that achieved in 2016
The group has also decided to slow down its expansion from 15 new restaurant openings to 7, which dented its credentials as a growth company, and hence the price investors are willing to pay for growth.
Paul Scott, at Stockopedia, gives the following opinion (https://goo.gl/qBWZ4u):
I’m prepared to give the company the benefit of the doubt … I’ve satisfied myself that I’m happy to continue holding
The bulletin boards have been uniformly negative, saying that the shares are overvalued even at current prices.
The shares started going wrong near September of last year. What’s interesting is that the 50dMA was in downtrend, and provided heavy resistance.
I had bought some shares in TAST on two occasions: October 2012 and April 2013. I was up around 200% at one point, but that has been scaled back. I am up only 18% as of writing.
I have been unhappy with the performance of my portfolio since 2016, and TAST adds to the growing list of disappointments for me. I have thought about it, though, and I will continue to hold TAST for now. My thinking seems to be very much along Paul’s lines. I had not topped up, however. I am very loathe to catch falling knives these days. It also demonstrates, once again, that no matter how confidently you might think something will work out, you can never be sure.
Although it does not attract much attention, I am finding that my public Magic Hat portfolio over on Stockopedia has been acceptable in terms of its performance. For my regular write-ups, I basically just work through the like of Greenblatt Screen stocks, and pick any one that has a stock rank of at least 90. It’s so easy, quick and requires no skill! You won’t obtain the kind of returns that someone like Paul Scott or others can obtain, but you should be able to obtain market-beating returns.
Other Stockopedia screens that I would class as my favourites: CAN-SLIM (its performance has been really remarkable, and I think that there is a likelihood that its performance is durable), Naked Trader-esque screen, Richard Driehaus Screen, and Winning Income & Growth. There are others which are pretty good, too, so if your preferences differ, then fine. I like the idea of having a favoured screen in each category, and rotating between them. That way, if value is doing poorly, say, then maybe growth, or perhaps momentum, etc. is doing well.
Stay safe out there.