Stop Loss Strategy

billchecker1

They do trade at a P/E ratio of 38 so you have to think about how much future profit expectation is already in the price.

This is true, PE ration is high. However EPS growth last year was 37% and that was in a relativley down period. I expect house sales to increase and threrefore think it reasnoble that EPS will also increase.

Despite not paying a massive dividend, they do have a buy back program in place thus improving EPS even more.

billchecker1

Another set of good results today:

Profits up 15% EPS up 20% and dividend up 22%.

Share price also up 6% today. Wish I had brougth some when they dipped. Oh well that is the way of things.

I still think they have some way to run before they run out of steam we are not yet at peak house sales levels and their overseas business is also increasing.

chrsfrm

Now I know this will make many smile & many cringe but......yes I am a newbie, having a go with AIM shares within a Hargreaves Lansdowne S&S ISA. My problem is that they do not set stop losses on any share outside of the FTSE 350. This means I have to closely monitor my shares and react accordingly. But, I do have a life and cannot spend 24/5 doing so, hence the beauty of stop losses. Is this only applicable to H/L? If so I think I will sell off, take cash to a new provider at the end of this fin yr. Grateful for your views. Please.....not too much teasing, lol.:beer:

Biggles

Barclays do operate stop-losses across all markets.

Glen_Clark

IronWolf wrote: »

P/E is only half the equation, the other is growth. One company at a PE of 20 could be undervalued while one at a PE of 5 could be overvalued. It all depends on growth (positive or negative)

What about assets?
At one extreme you could have a company like Hargreaves Lansdown, currently getting away with a 71% profit margin, making a £1 billion profit, but with very little assets - maybe rented offices.
At the other end of the scale you could have something like the Duchy of Cornwall owning £100 billion of land and property only making £1 billion in rent.
One could own assets worth 1000 times as much as the other. But if you only look at profits they would both be worth the same.

chrsfrm

Looks like X-O do too and are much cheaper to deal/share. May open a new ISA in April with them.

IronWolf

Glen_Clark wrote: »

What about assets?
At one extreme you could have a company like Hargreaves Lansdown, currently getting away with a 71% profit margin, making a £1 billion profit, but with very little assets - maybe rented offices.
At the other end of the scale you could have something like the Duchy of Cornwall owning £100 billion of land and property only making £1 billion in rent.
One could own assets worth 1000 times as much as the other. But if you only look at profits they would both be worth the same.

Assets of course have an effect, but are ultimately only worth what returns you can get from them. Net cash and debt should be accounted for £ for £. The problem with other assets is you usually don't really know what they're worth. They're carried on the balance sheet at the price paid but prices change.

I wouldn't value land at £100bn if it only made £1bn a year in rent, but land is a special case in that it "never depreciates".

IronWolf

chrsfrm wrote: »

Now I know this will make many smile & many cringe but......yes I am a newbie, having a go with AIM shares within a Hargreaves Lansdowne S&S ISA. My problem is that they do not set stop losses on any share outside of the FTSE 350. This means I have to closely monitor my shares and react accordingly. But, I do have a life and cannot spend 24/5 doing so, hence the beauty of stop losses. Is this only applicable to H/L? If so I think I will sell off, take cash to a new provider at the end of this fin yr. Grateful for your views. Please.....not too much teasing, lol.:beer:

My broker Saxobank offer stop losses on the ISA account as well as limit orders. But their coverage of AIM shares isn't great.

EdGasket

You are never guaranteed that your shares will be sold at the stop-loss limit you set; it could be significantly lower if the price is moving quickly.
Personally I don't use stop-losses; you can get sold out on a brief spike down only to see them end the day back where they started e.g. Shell last friday.
You are not clever enough to know that you can definitely sell and buy back in lower, so either take your profit on a rise or hold for the long term.

chrsfrm

Good advice EdG