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Trade Setup: Rolls Royce Plc - Medium TermAlong with the Marks and Spencer Plc, one of the UK names I've been looking at it Rolls Royce Plc. Below are the key drivers as noted last week. Rolls Royce Plc (Industrials, LSE) - Recent earnings: back in profit - Sideways channel, potential to break up - Potential gap close at 182.00 - Price basing above 200-day - 2-tier trend line play - Long above 116.00 - Stop: 104.00 - Tgt: 144.00 (Also have a look at Royal Dutch Shell, which is nearing the upper range of an 18-month base). For me immediate (non-delayed) access to my insights and ideas, get in touch today.
LSE:RR.Long
by LD_Perspectives
Finally a strong breakout from strong support levelsSimply put, that fight for a big share of the engine market has been extraordinary costly – but it is now won. #RR. has finally reached 50% market share for wide-body engines, a milestone that consolidates its outlook and should see significant growth in share price. 'Its defence and power arms now each account for roughly a third of the whole and the former in particular has proved a stable business, while the latter works to a much shorter cycle than the aero-engine division and should therefore recover more quickly from the pandemic.' Share price is still at bargain levels, guaranteed gains in coming months. www.telegraph.co.uk
LSE:RR.
by mjtrad25
Ferrexpo pays out massive dividend as profits surgeFERREXPO Tip: SPECULATIVE BUY Current price: 353.60 Target price: 450 Bullish points: - Lowly shares valuation - Strong balance sheet - High iron price - Premiums paid on pellets likely to increase with stricter emission standards - Strong ESG credentials Bearish points: - Iron prices could fall back down to Earth - Shareholder has a controlling stake - Major litigation issues - Political issues In the latest interim results (on the 4th of August) , Ukrainian iron miner Ferrexpo saw profits rise to 661.426 million dollars or 482.841 million pounds using the dollar to pound conversion rate of 0.73. Nearly 500 million pounds in profit is a massive sum (not far shy of a quarter) in relation to Ferrexpo’s market cap of 2.08 billion pounds, even more impressive considering that profit was made in just half a year. It is also worth noting that these profits were on higher costs such as a 72% increase in freight costs. The group is also a strong cash converter with cash from operations standing at 660.58 million dollars, nearly a 100% conversion rate. As a result the net cash position soared to 213 million dollars despite the miner spending 93 million dollars making developments to their infrastructure. This allowed the board to pay out a 39.6 cents dividend, the company went ex - dividend on the 12th of August, meaning that adjusting for the dividend, I believe that the group will now have net debt / net cash 0. Ferrexpo’s shares clearly look cheap against mining major Rio Tinto. Rio Tinto’s profit of 12.2 billion dollars (8.96 billion pounds) compared to the valuation of 86.91 billion pounds, meaning that Ferrexpo has a p/e of around half of that if Rio Tinto’s (if you compare the interim results.) Cash conversion and balance sheet were only slightly better for Rio. I am comparing Ferrexpo to Rio Tinto, as Rio derives the vast bulk of its earnings from iron, also since Rio Tinto is a massive company the valuation can be a proxy for what the sector deserves (or what the market thinks is deserves) since the larger the company the less likely the shares will be anonymously priced. It is also worth noting that Ferrexpo sells high grade pellets instead of traditional iron ore. They can be more easily converted into steel and therefore can be sold at a premium. Ferrexpo’s pellets produce 40% less CO2 emissions than traditional sinter fines during the manufacturing of steel. As steel makers have to adhere to stricter emission standards the premiums can rise further, also the lower emissions of pellets are a plus for ESG credentials. The group is also building a 5MW solar facility and uses biofuel from the sunflower husk industry as fuel, another bonus for ESG, Ferrexpo has also been replacing diesel transport with electrical transport. The reason why it is cheap, however is no secret. The company is constantly facing legal struggles over deals that were performed a very long time ago. These deals are mostly concerned around controlling stakeholder Zhevago. With his 50.3% stake Zhevago wields a lot of power over the company, and has entered many agreements with Ferrexpo, perhaps at the expense of minority shareholders. For example, Ferrexpo shareholders have found themselves with interests in football club AFC Vorska Poltava, which seems a bit odd keeping in mind Ferrexpo is a mining company, which is not very related to football, what’s more is that an international arrest warrant has been issued for Zhevago, putting the company into more uncertainty. Ferrexpo have investors have good reason to be concerned about the issue with Zhevago, however the shares look very cheap and arguably Zhevago can in some ways help Ferrexpo, as he will benefit from Ferrexpo prospering. All in all Ferrexpo looks very cheap even if the iron prices come down from record highs, Ferrexpo is on a miserly p/e despite strong ESG credentials, a strong balance sheet and a strong cash conversion rate. Still the risks posed are huge so my price target of 450 is still a discount to the majors, I would recommend only buying a small amount until more of the legal issues have been resolved. SPECULATIVE BUY CURRENT PRICE: 353.60 TARGET PRICE: 450
LSE:FXPO
by hammochess
ITM Power Analysis 17.08.2021Hello Traders, here is a full analysis for this asset. The entry will be taken only, if all rules of your trading plan are satisfied. Therefore I suggest you keep this pair on your watchlist and see if all of your rules are satisfied. Leave your thoughts in the comment section, I will reply to every single one of them. P.S. Tell me which asset you want me to break down next and I will cover it in my next analysis _____________________________________________________________________________________________________________________________________________________________________
LSE:ITM
by basictradingtv
2
Stopping volume for Just GroupLSE:JUST These are definantly my favorite signlas. it gives a great insight into the volume & price analysis that I use for my setups. There are a couple of factors supporting the bullishness here. The main one being the size of the last trading candle compare with 2 days ago, its much smaller. However look at the volume at the bottom, its even slightly higher, this is telling me the buyers are absorbing all the sell orders getting thrown at them. There is also the support level to consider where it has fallen to previously. Looks strong and will look to get in tomorrow if the spread is sensible.
LSE:JUSTLong
by srmatthews888
Why I think this little known copper miner can more than tripleATALAYA - an update Tip: STRONG BUY Current price: 311.25 Target price: 1000 Bullish points: - Expansion plans - Strong balance sheet - Demand for copper is rising - Copper market in deficit - Lowly shares valuation - Strong ESG credentials Bearish points - Chinese commodity crackdown could hurt copper price - Expansion execution risks - Litigation issues Atalaya is a small copper mining company that is listed on the AIM. A strong copper price meant that profits for the first half of 2021 reached 65,993,000 euros, a material sum in relation to Atalaya’s market cap of £429.52 million or €508.83 million. Assuming that in the second half the profits are indentical, profit for the whole year will be 131,986,000 giving the firm a P/E ratio of 3.9. This is hardly an exacting valuation keeping in mind that the current copper price per pound is 4.35 dollars compared to the average realised copper price for the first half of 3.92, around 10% higher. Keeping in mind that miners operate on a relatively fixed cost base and that increased metal prices will drop straight into the bottom line implies that earnings could actually be even higher than this. Cash conversion was similarly strong with operating cash flow standing at 70,999,000. The company also has a very strong balance sheet with net cash of 37,777,000 euros meaning that on an EV to earnings ratio Atalaya is cheaper still. This implies that it should not be in financial difficulty, a working capital surplus of 90,892,000 euros reiterates this. Admittedly Atalaya is having some litigation issues with Astor management surrounding wether they should pay some interest on an expense (€53 million) which Atalaya paid early, but given their massive working capital surplus Atalaya should have no issue paying any bills which in themselves should be minor. What’s more is that the company is confident that no interest should be paid as Astor’s claims for an early trial without the need for a full trial have been dismissed. Atalaya also has the possibility for further expansion, currently its only producing project is Proyecto Rio Tinto, however it has expansion possibilities at Proyecto Touro, Proyecto Mass Valverde and Proyecto Rio Tinto Este. Admittedly, having a project is different from having a working mine, but Atalaya’s strong cash conversion and a working capital surplus should fund the exploration. Issues also surround the environmental impacts of the mining, for example Proyecto Touro was rejected by the local government due to the environmental concerns Pam however, the group have taken steps to lower the impact such as ensuring that there is zero discharge from the mine, the new project will be presented to the government in Q3 2021. With regards to the producing Proyecto Rio Tinto, further deposits have been found at San Dionsino and the Cerro Colorado open pit has been comforted as a long life status implying that copper production will remain robust. Atalaya also has found ways of boosting return without mining, for example it is building a 50MW solar plant at Proyecto Riotinto for self consumption and has also got plans for an industrial plant. I also believe that over the long term the copper price will remain high given the demand backing it up. True, China by far the biggest consumer of copper will want to cool down its overheating economy and in the short term could depress the copper price. However, Biden’s infrastructure bill should provide additional demand for copper. Also over the long term demand for copper will increase, in fact it is expected to double between now and 2050. This is as a result of increased demand from EV’s and renewable energy sources, for example electric vehicles use almost 4 times as much copper as internal combustion vehicles (ICE’s.) Moreover, per MW of energy produced renewables use from 4 to 6 times as much as copper than fossil fuel plants. Clearly, the transition to electric vehicles and renewable energy sources will benefit copper, throw in the fact that copper is currently in deficit and it is easily possible to envisage copper remaining at these high levels or even beyond. The fact that the shares are trading on a tiny P/E despite the strong demand for copper, strong balance sheet, strong ESG credentials, strong cash conversion and expansion plans it is easy to envisage a scenario where Atalaya’s share price will continue to rise strongly. In fact I am raising my price target to 1000p current price, current price 311.25 p implying that the shares can rise by over 200% and in fact my 1000p price target could be conservative. STRONG BUY. If you liked this article please give a like, share it and follow me at hammochess. If you have any questions or comments please place a comment. Thank you.
LSE:ATYMLong
by hammochess
Why I think that this copper miner can be a multi-bagger tradeATALAYA Tip: STRONG BUY Target price: 900p Current price: 310p Bullish points - Strong copper price - Copper market is in deficit - Transition to EV’s and renewable sources of energy to increase demand - Expansion plans - Lowly shares valuation - Net cash - Strong cash conversion rate Bearish points - Litigation issues - Expansion execution risk - Copper price could fall back from all time highs Atalaya mining is a copper mining company listed on the AIM. Bouyed by a record copper price Q1 2021 profit surged to 33,702,000 euros a massive increase from the 2,931,000 euros profit posted in the Q1 2020. Cash generation remained similarly strong with operating cash flow standing at an impressive 36,803,000 both the profit and cash flow for the quarter are a material sum in relation to the 428.46 million pound market cap (credit google finance) in euros this is 505.58 million using to pound to euro conversion rate on 1 to 1.18. On top of the strong copper price Atalaya saw production of copper increase 5.7% from 13,229 tonnes to 13,979 tonnes from Q1 2020 to Q1 2021. However, it is likely that over the long term the group can continue to increase copper production as a result of expansion plans at Proyecto Touro and Proyecto Masa Valverde. Admittedly, plans for expansion at Proyecto Touro have been rejected by the local government on grounds of environmental concerns, but the company has take steps to try and reduce the impacts of its mining meaning that it could soon be approved. Proyecto Masa Valverde seems promising and is 28km South West of it’s producing mine Proyecto Riotinto, exploration work is currently being done and the environmental permits are expected to be approved during 2022. The group also has a very strong balance sheet with net cash standing at 10,588,000 euros, even after paying 53 million euros (earlier than required) to Astor management. Admittedly there could potentially be legal issues with wether some interest on the payment should be paid, however it is unlikely that they will have a severe impact on the group especially keeping in mind it has ample cash to pay its bills. From this we can see that the market is expecting for the copper price to fall dramatically and diminish earnings. However, I believe that it is very unlikely to happen. Firstly, the average realised price of copper in Q1 2021 was 3.6 dollars per pound, the price currently is 4.29 dollars per pound around 19% higher. This means that if copper prices remain where they are and production stays the same, even though I believe that long term it could increase, revenue will increase by 19%. But since, miners have a relatively fixed cost base the earnings will go straight into the bottom line, meaning that quarterly earnings could increase to 50 million dollars. Secondly, I believe that the price of copper could potentially rise even more as the market has gone to a deficit from a surplus and electric vehicles use 3 times as much copper as ICE (internal combustion engine) vehicles, solar panels also use significantly more copper than fossil fuels. For these reasons Atalya has strong ESG credentials, copper is vital towards the transition towards renewable energy. Moreover, it is planning to develop a 50MW solar plant at Proyecto Riotinto due to the abundance of light, this lowers emissions and also lowers operating costs, another plus for Atalya. All in all a strong copper price, a strong balance and strong ESG credentials coupled with expansion plans all on a very low p/e implies that Atalya is a bargain. I set my price to 900p compared to the current price on the 9th of August of 310p, however, if the copper bull market continues and the expansion plans do well I can see Atalaya rallying to 1000p and even beyond. STRONG BUY Note: Results in two days August the 11th If you liked this article please place a like and follow me at hammochess for more articles please also share it. If you have any questions or comments feel free to write them in the comments bar, thank you.
LSE:ATYMLong
by hammochess
DARKTRACE STRATEGY (Buying the dips/averaging down)Head and shoulders formation developing here? Already 25% invested to take advantage if it bounces/reverses at first support level and resumes uptrend - in for the longer term here as this story has plenty of room to develop - targeting 50% profit take @ 1500p (£15) per share minimum. Early institutional investors selling/profit taking - huge volumes yesterday (IPO lockdown expiry/share doubling since IPO). This is creating a significant downward move (still plenty of buying volume though - or drop would be more rapid/precipitous - into 400-500s). We’re about half way through the selling, so Monday will likely see a continuation of the downward trend before we meet the next support level and potential reversal point. Volatility very high, so difficult to call anything precisely given what’s happening..looking to lock in advantage and buy remaining 75% of target investment in chunks on the way down, as far as the red baseline. Risk of temporary reversals followed by continuation of downtrend - whilst more meaningful reversal is entirely possible at any stage given the upcoming earnings/ other expected news in the run up. Mapped out support levels/potential reversal paths (blue arrows )to determine potential directions moving forward. Strategy > buy limit orders set at or near to support levels to average down cost - down to the baseline if necessary. Thoughts/comments most welcome. Thanks!
DLong
by spriritchaser1
2