Especially and exclusively for BullBearings readers we have delved about for trading ideas and come up with four under-the-radar tips. This includes two shares that you can buy or 'go long' on using your share dealing account, plus two stocks that you might short sell using your spread betting or CFD accounts.
Private on parade
Last week, small-scale finance house Private & Commercial Finance Group wrapped up a fresh banking facility that should see it embark on a much needed turnaround.
The company, which provides finance to small and medium-sized companies to enable them to pay for equipment, plant and vehicles, not only secured the new £7 million facility but also put its pen to a contract to acquire a £6 million portfolio of finance receivables, funded by a separate bank deal.
The chairman, Anthony N Nelson, argued that the two deals marked the beginning of an upturn in PCF's fortunes, after business was painfully crunched in recent years. Indeed, last year pre-tax profits slipped 13.5 per cent to £455,336 on turnover down 3.8 per cent to £57.9 million.
But Nelson points out that the company has now trimmed its costs and with the new funding – its first new facility since the start of the credit crisis – is now well placed to take advantage of demand for its services and 'increasing confidence' in its markets.
Broker Westhouse Securities has pinned an ambitious target price of 14p on the shares, currently trading for around half that, based on its calculation of a forecast net asset value of 16.4p and a 10-times p/e multiple of 2012's expected earnings per share of 1.24p. As the shares were changing hands for more than 25p when the crunch came, it's worth a punt that that might creep back towards that mark if the conditions continue to improve.
(Click here to trade PCF on the BullBearings virtual trading games.)
Go short on SocialGO
Almost everybody in the world is now connected to some form of social media, be that big names like Facebook, Bebo, Myspace and Twitter – as well as the new 'Google+' function; through popular communities that are less well known outside the world of the web, like Tumblr, Flickr and Foursquare; to community-based chat rooms or message boards. Companies have 'social media strategies' now, and many other companies make their entire living from specialising in this no-longer-niche area.
There are not only dozens and dozens of social networks (see this Wikipedia list for most of the top ones, it also includes such big names in China and the rest of Asia like RenRen and Qzone which despite their multimillion users would elicit a 'Who?' from most westerners), there are also dozens of ventures that have set up to enable anyone to set up their own social network. For no other reason than to ram home my point, a list of these includes the well-funded Ning as well as gazillions of others such as PeopleAggregator, SocialSpring, OneSite, CrowdVine, Mzinga, Haystack, Moli, KickApps, Pringo – to give you a mere taste of the smorgasbord of all those offering a similar product.
Into this crowded room, AIM-listed SocialGO is trying to squeeze itself, after floating on the junior market of the London Stock Exchange last year. It should be relatively easy to raise cash in this space at the moment, so creditable restraint is being shown by the board to have only come to the market for £300,000 at 2.75p each in January and £1.34 million at 2.95p a share in February to add to the half-million it raised last summer. The shares, which topped 4p around Christmas, have since fizzled to 1.85p.
So, even though the company may be well run by a competent board of directors and possess software with some excellent functions, due to the sheer level of competition it's up against and the unimpressive history of UK-listed internet start-ups, I'm not holding my breath for SocialGO. GO short, I think is the safest bet for now.
Serve called out
Here's an another opportunity to short on a stock using your spread-betting or contracts for difference (CFD) account, as broker Panmure Gordon believes shares in support services and construction group Interserve will soon run out of steam.
Although the company just today won a £6.5 million five-year building maintenance contract with the London Borough of Lewisham and has been on the up of late, Panmure analyst Andy Brown is determined that his long-held 'sell' will pay off eventually, saying all the positives are already included in the price, which has risen from 200p to 330p since last autumn. Also on the downside, Brown sees uncertainty in some of its markets, plus rising debt levels.
Not the most aggressive of sells, that's for sure, so watch out for signs of the falling momentum before you consider acting.
(Click here to trade IRV on the BullBearings stock market games.)
Before I go any further I should say that I own some shares in this AIM-listed gold explorer, bought earlier this year. The reason I bought the shares was because I expected plenty of activity in the coming months. I could perhaps have waited a bit as the price has withered slightly since. Doesn't say much about my advice does it?
But anyway, the activity I expected has now arrived. Last month the company began a scoping study for its Araguaia project in the Carajas mining district of north central Brazil (with results to be delivered towards the end of the year) and then today has announced it is kicking off a significant drilling programme at its Falcao joint venture (JV) gold exploration project on the Serra da Inaja Greenstone Belt 100km to the south of Araguaia (with results expected to be announced towards the end of the third quarter).
This joint venture is with AngloGold Ashanti – a giant South Africa gold digger that last year produced some $5.3 billion worth of the yellow metal – which is involved as Horizonte's 100 per cent-owned project is a 4,700m mineralised corridor with the potential to host a substantial gold deposit. This new drilling exercise is to test a gold soil anomaly currently 4km long and varies from 200m to over 800m in width at values of more than 50ppb Au (50 parts per billion of gold) – which is significant.
Drilling by previous owners (who were more interested in base metals) did identify gold at deeper levels, but wasn't adequate to provide a sufficient understanding of the geology. According to house broker FinnCap, the current "best guess" suggests either "a low-grade bulk mineable target" or a "orogenic gold target, which would result in mining being more selective". Due to the large size of the anomaly, we believe it is not unreasonable to think that both styles of mineralisation could exist."
This is still very early stage drilling (the full announcement on the company's website here), and could result in some or many dead ends – and even if good levels of the metal are found there will be a number of further drilling programmes to come in future years for the companies to get anywhere near commercial extraction. However, certain nuggets of good news along the way may give a fillip to the shares. That's what I'm hoping for anyway!
(Click here to buy HZM on the BullBearings virtual share trading games - stocks, spread-betting or CFDs.)
> Oliver Haill is consultant editor of BullBearings.co.uk.
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Next Article >>> Two neglected blue chips
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- A trio of tasty tiddlers: Three small caps stocks for the risk-loving investor including Moneysupermarket, ZincOx ansd Software Radio Technology.
Oliver Haill is the former head of research at a LSE-listed financial publisher and his writing has featured in the Financial Times, Proactive Investors and Growth Company Investor. Tweet @BullBearings
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Warning: Remember, particularly if you are new to trading in the stock market and in forex, that the prices of shares and other investments can fall fast and you may not get back the money you originally invested. The material here is for general information only and is not intended to be relied upon for individual investment decisions. Take independent advice before making such decisions. Also, the BullBearings free stock exchange simulation portfolios are a good way to practice trading techniques.
Thu, 1st Jan - * (ShareCast News) - BHP Billiton said on Monday that it plans to spend around $900, or 18% of its overall capital budget on exploration next financial year.