My alphabetic research is still on the letter I, and this weekend I stumbled across IQE:IQE, a company that makes semiconductor wafers. The fundamentals were strong, with 80% free cash ratio, ROCE 11%, P/E ratio only 9.33, reasonable debt 3.7 times earnings, market to book ratio 1.3, asset to liability ratio 2.9 and significant growth in earnings last year despite not being fully commercialised yet. The only negatives were a lack of dividend, but not surprising in a company focused on growth, and price to net tangible asset ratio of 3.1 when I prefer less than 1.2. A significant proportion of their assets are intangible, presumably patents and IP.
This got me interested enough to look in more depth. I was so excited about what I found that I had to get them quick. They have loads of avenues of work, in wireless, photonics, infrared, solar, CMOS++ and power. It's another share that's pushing the boundaries of tech with potentially global game-changing outcomes.
I can't resist this sort of thing, and with it trading at around 28p a share and the potential of being 51p a share if the P/E ratio was the average 15, it seems to be very cheaply priced. Results are due tomorrow, so there is a risk that the recent price increase will be a typical rise on rumour with a drop on results, but I'm willing to take the risk. If only I'd got to them a few weeks ago in my alphabetic search, I would have bought at a far cheaper price.
So, I had to sell something in order to buy these, and the one to sell was DOTD:dotDigital. I was impressed when I first saw these, but was mostly influenced by the fact they had been made a platinum Magento partner. This was before the advent of my research spreadsheet. I was rather forlorn when I input them to find they had a P/E ratio of 30 and some of the other fundamentals are a bit shaky too, like market to book ratio of 8 when I look for less than 2.5, price to net tangible assets ratio of 10 when I look for less than 1.2, assets to price ratio of just 15% when I look for 66%. Generally the price ratio to both earnings and assets suggests they are over priced, with my fair price indicator showing 35p.
They have been at a loss in my portfolio ever since I bought them, dropping as low as 40p, but have staged something of a recovery so I sold them at 49.75p making a £63.70 (6.3%) loss. With them I bought 3,612 shares of IQE:IQE at 28.1875p costing £1,027.08. Tomorrow will reveal whether I made a terrible mistake or a fantastic stroke of genius.
There was another purchase today in my SIPP, as the regular monthly savings got 59 shares of JLG:John Laing Group at 264.87p costing £158.55 with stamp duty and £1.50 commission. I've decided to switch the monthly share next month, as I now have £634 worth of John Laing, and after recent price rises they are no longer cheap. I'm excited by IPO:IP Group (also found while researching the letter I) which is like a British version of ALM:Allied Minds, commercialising university inventions. These companies have bags of potential in the long run, so I think it's a good one to get in a SIPP.
I was preparing for grave disappointment when checking the portfolio value this evening, as it was a bad say in the market. However, I was amazed to find the portfolio up by £500. This was thanks to AMYT:Amryt Pharma going up 0.5p which is worth £135, ARL:Atlantis Resources going up 8%, CWR:Ceres Power going up 6%, SLP:Sylvania Platinum going up 4%, but most of all KIBO:Kibo Mining going up an amazing 25% and taking my potential profit to £1,468. Boy am I glad I left my holiday money in this one!! If it keeps going like this it will have paid for the whole holiday - especially when the free gold mine shares are issued.
So it was an exciting day, and tomorrow promises to be even more exciting. Will IQE:IQE have stellar results? Will KIBI:Kibo Mining keep climbing or will there be massive profit taking and a drop (oooh - but would you deny yourself those free gold mine shares?!), and will OPTI:Optibiotix stop being a right royal pain in the bum and start behaving like the mega share it knows it wants to be?
We shall see...
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