UK Stockmarket 2009 and beyond

sabretoothtigger

I like the colours on that graph I read tescos positive results touted as a reason for the rise today


Previously mentioned:

[FONT=Arial, Helvetica, sans-serif]Perfect Storm[/FONT]

[FONT=Arial, Helvetica, sans-serif]Diamond prices had been inflated throughout the years prior to the financial crisis as huge bonuses and massive earnings growth at the top end of the income scale created a huge market for luxury goods. As the financial crisis and the consequent recession struck, gem prices collapsed, falling by over 75% in 2008 alone. This hit producers like Gem Diamonds with a bang. Full year results in April 2009 were accompanied by unexpectedly large writedowns of $546 million (£379 million) against existing mines and development projects, which forced the company into a $577 million pre-tax loss. Worse, this forced the company into an emergency £75 million fundraising at a heavy discount to the then-prevailing share price, as the company faced the imminent repayment of $41 million of loans and convertible bonds, which would have left it with only $20 million of cash, a buffer its banks judged insufficient. Although the shares have begun to recover slightly, they are still way off of previous highs, and with luxury goods being one of the last sectors to benefit in an economic recovery the shares are still relatively unloved by the market. For a class act like Gem Diamonds, this represents a buying opportunity.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Diamonds starting to recover their shine[/FONT]

[FONT=Arial, Helvetica, sans-serif] De Beers recently closed its seventh sight of the year with sales totaling $450-$475 million, making August the largest sight so far this year and bringing year-to-date sales to around $2.2 billion. However, this compares with $4.8 billion this time in 2008 and makes 2009 the lowest seven-sight total in more than 20 years. Nevertheless, tightness in supply saw average prices rise by around 5% and there is potential for further price rises as De Beers scales back production by over 30% in 2009. As economic recovery kicks it will provide support for the diamond market, and during the longer term there remains huge potential to capitalise on the emerging demand from the growing middle classes of China (c.300 million people and climbing) and India.[/FONT]
Click for Full Charting facilities from ShareCrazy.com [FONT=Arial, Helvetica, sans-serif]A diamond in the rough?[/FONT]

[FONT=Arial, Helvetica, sans-serif]The main reason for owning shares in Gem Diamonds is its flagship Letseng mine in Lesotho, which has produced three of the world's 20 largest diamonds in the last three years alone. Staggeringly, four of the 20 largest rough diamonds ever recovered have come from this one mine. Recently, the 478-carat Light of Letseng was sold to Graff Diamonds for $18.4 million, following on from the discovery of the 603-carat Lesotho Promise in 2006 and the 493-carat Letseng Legacy in 2007. In the first half of 2009, the mine produced 20 diamonds which sold at prices higher than $20,000 per carat. The average for these stones was $29,563 per carat.

The company currently holds net cash of $120.5 million ($100 million to Gem Diamonds) which works out at around 45p per share. There has been talk of the company using its new-found financial strength to pick up assets on the cheap, but the Gem Diamonds recently indicated that it had been looking at some potential acquisitions but that it could not agree on the price. There still may be opportunities for the company to put its cash to use, but failing that there is also the prospect of a return of cash to shareholders through a share buyback or a reinstatement of the dividend.

Gem has been benefiting from the rise in diamond prices in recent months. The July sale averaged $1,875 per carat, up from the $1,308 per carat January-June average. Gem's year to date average is now $1,415 per carat versus broker RBC Capital's modeled price of $1,350 per carat for 2009. In the coming months, the company will have to formulate a new strategy which will include making a decision on the fate of its mothballed Cempaka mine in Indonesia and the rest of its mines which were put on "care and maintenance" due to low prices. Whilst this is currently acting as a drain on financial resources due to the fact that licence fees still have to be paid while mines are inoperative, it also means there is a significant 'output gap' that could be exploited should diamond prices continue to pick up. When combined with the cost reductions the company has made over H1 and continues to make in H2, there is significant operational gearing potential.[/FONT]
[FONT=Arial, Helvetica, sans-serif]*The value of investments can go down as well as up. Investing in equities can lose you part or all of your capital. Smaller company shares can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares. UK-Analyst.com is owned by t1ps.com Ltd which is authorised and regulated by the FSA and can be contacted at 5-11 Worship Street, London EC2A 2BH or on 020 7562 3370.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Recommendation[/FONT]

[FONT=Arial, Helvetica, sans-serif]Broker RBC Capital has a NAV-based price target of 310p for the shares but this is based on average prices of $1,350 per carat for 2009 and $1,750 per carat for 2010. As I noted above, prices already average $1,415 per carat for the year to date, and in July they averaged $1,875 per carat. Unless economic recovery stalls significantly then I cannot see why prices should not continue to appreciate. Gem Diamonds is well placed to benefit from this trend, it has strong cash backing, and its 70% Letseng mine is perhaps the best diamond-producing asset in the world. This looks like a good time to tuck these away. Buy at 243.625p. [/FONT]
[FONT=Arial, Helvetica, sans-serif]Key Data[/FONT]

[FONT=Arial, Helvetica, sans-serif]EPIC: [/FONT][FONT=Arial, Helvetica, sans-serif]GEMD
Market: AIM
Spread:[/FONT] [FONT=Arial, Helvetica, sans-serif]242.625p - 244.625p (.82%) [/FONT]

TEF own O2 who operate in the UK

Intel: Buy Ahead Of Earnings, Morgan Stanley Advises






By Eric Savitz

Morgan Stanley analyst Mark Lipacis this morning repeated his Buy rating on Intel (INTC), asserting that the company is likely to report better-than-forecast results for the third quarter.

“Based on our proprietary channel checks in the server channel, positive trends in the Asia supply chain and back-to-school sales, we think Intel will report revenues above the midpoint of its revised guidance and consensus estimates” when it reports earnings next week, he writes in a research note.

For the quarter, he sees revenue of $9.2 billion, at the high end of the guidance range of $8.8 billion to $9.2 billion, with EPS of 28 cents, up from a previous estimate of 27 cents. For 2010, he now sees EPS of $1.38, up from $1.31, and well ahead of the Street consensus of $1.19. Lipacis writes that he continues to see upside from an enterprise spending cycle for PCs in 2010.

Lipacis maintains his Overweight rating and $24 price target.

INTC today is up 35 cents, or 1.8%, to $!9.45.

along with GS earnings, intel surprise earnings were one of the factors for the july reversal



12 take over candidates and why inc cby
http://www.businessinsider.com/10-buyout-candidates-2009-10#cadbury-cby-8

turbobob

sabretoothtigger wrote: »

I like the colours on that graph I read tescos positive results touted as a reason for the rise today

I thought Tesco's results were positive but their shares actually fell today. A case of 'sell on the news' maybe? AFAIK the rally in commodity shares was more to do with the fall in the US dollar, and the rises in commodity prices. Australia's decision to raise its interest rates might be a factor. Also the pattern seems to be if the dollar falls, US equity indexes rise, and the UK and elsewhere follows.

cloud_dog

sabretoothtigger wrote: »

I like the colours on that graph

POG up over 16% today, YAU up over 10%. In fact all of them had a good day (exc MXP).

Oh............. if only I had clicked the buy button the other day when most of them spiked down. Oh well, will have to make do with only half as much gain and..... will need to re-assess where they may go from here and what re-entry points might be available to me.

With such strength in the gains they *should* continue with the uptrend although looking at a few examples (CEY, FRES, POG, YAU) not sure the volume is there to act as a back-up.

At this point I would welcome all views..........

tradetime

Yup, impressive move today following on from yesterday and a big hit to the correction attempt, the one concern would be that volume has lagged the two down days that preceded, however volume has not really proved a very reliable indicator since March.

US Indices stalled around the 61.8% retrace of the down move so far, but the tentative downtrend lines on S&P and Dow were broken, the Nasdaq despite outperforming on the day remains below it's downtrend line, since the Nas has been the leader this hints at a note of caution for piling in on the long side. By and large imho the market continues to be driven by daytraders, today was all about the US$ which got crushed in the early going after a UK newspaper reported that secret meetings involving Arab Gulf States, Japan, China, Russia, and France had taken place. Personally I don't think the end of the US$ as the defacto reserve currency is new news, I think that is pretty much inevitable, but it will take quite some time.

uk_steve

well so far i have been shocked but happy lots of blue screens:D


so much for the bear what i said:rotfl:

the ftse has been doing well this week


i have increased my holdings in
GEMD
NTG
WICH

i have gone for an outsider CHAR


also re got WMH on Monday and sold today 5% up

i have been quite bizzy actually looking at stocks and doing my day trades


but did buy a boo boo two weeks back its been suspended this week

RLX


i still got a lot to learn it had danger all over the company but Steve goes and buys;)



apart from that its been a good week so far:cool:

tradetime

Looks as though Alcoa got US earnings off to a good start after the close, with a beat on the top and bottom line, Nasdaq managed to get above the downtrend line in the last hour of trading, to join the S&P and Dow. A strong rally tomorrow would put an end to another correction attempt, certainly the bias has returned to the upside.

sabretoothtigger

Char is a Fund manager like an investment trust then? Seems worth a look, what drew your interest on it, oversold?

Who was suspended, not Rex. I think that would make the news


Just had a new stockbroker pop up on my screen, a white label for IB apparently?
http://www.guardianshares.com/process.php £6.79 per trade

• Good or extensive product knowledge for any product you wish to trade.

• Prior execution of 100 or more trades (any product).

• A minimum equity deposit in cash or stock of USD 5,000 (or USD equivalent).

• US regulators require a minimum account value of USD 25,000 (or USD equivalent) at all times in order to day trade US stocks, US options and US Single Stock Futures.

tonygee wrote: »

Nothing wrong picking up distressed/unloved shares.
I bought BA.(BAE Systems) Friday after it hit 4 year low
Ones to avoid at mo are anything thats done too well,they will be hardest hit when correction comes.
Youre spot on with Unemployment(also many other concerns voiced)
As for property,tends to cool September onwards.You may have witnessed some local distressed selling

as all I see in my area is increasing For Sale signs.

I also bought a bit of BAE recently, seemed cheap and holding up well enough. Rolls royce might be a good alternative considering they are one of the worlds leading aircraft engine manufacturers and this could be part of a recovering world market

the bias has returned to the upside

Yes I agree, I tried to buy ftse future at 5100 on a spreadbet but there was alot of indecision before it took off but I was right in theory closed at 5123 vs 5108

With such strength in the gains they *should* continue with the uptrend although looking at a few examples (CEY, FRES, POG, YAU) not sure the volume is there to act as a back-up.

At this point I would welcome all views..........

They are strong because currency is so poor. So taking profits sounds good but where will you use the cash, anything you dont need should be moved sideways.
So rather then worry about when to leave your present position maybe it would be better to choose where to invest next and place your timing by that

ses6jwg

Any views on CCVU?

Doesnt seem to get much press and has low volumes but seems like a good businnes to hold in the run up to xmas and results have been very promising

tradetime

Just had a new stockbroker pop up on my screen, a white label for IB apparently?
http://www.guardianshares.com/process.php £6.79 per trade

Yes, interesting, they are in some sort of partnership with IB to use their platform and order routing, though I notice they charge you an extra 95p on UK trades, for getting in the middle, and twice the price for US trades.

StockTrader6080

tradetime wrote: »

Yes, interesting, they are in some sort of partnership with IB to use their platform and order routing, though I notice they charge you an extra 95p on UK trades, for getting in the middle, and twice the price for US trades.

Unless they are available in places that IB is not, it's kind of useless.