Good Evening,
Kicking itself out of the FTSE 100 to the FTSE 250 is Tullow
Oil (TLW) and being replaced by Hikma Pharmaceuticals (HIK). This
evening saw the departure from the FTSE 250, Afren (AFR), Game Digital (GMD)
and Oxford Instruments (OXIG). In goes AA Plc (AA.), Imagination
Technologies Group (IMG) and Virgin Money Holdings (VM.)
As a positive, HIK has long been established in the do
not short category, near 5 years. With institutional owners reducing the
stock may see some selling in the short-term. The potential of Pfizer/Hospira
impacting on HIK's market is limited. With regions becoming more competitive
expect HIK's margins to be under-pressure with modest growth but resilient and very competitive.
With the Darwazah family holding at circa 30%, any
offer would have to be of stellar proportions to be sufficiently enticing to
gain the support of the family. With HIK's performance to date you'd be a fool
to bet against the company without sufficient news to validate the position.
Greggs may have just joined this rather exclusive club...
The reserves list being:
- Berkeley
Group Holdings (BKG)
- Cobham
(COB)
- Inmarsat
(ISAT)
- Merlin
Entertainments (MERL)
- Provident
Financial (PFG)
- Rexam
(REX) (canned/poor I know).
EMC: Greggs (GRG) Tuesday, 13 January 2015 longs were
validated after being categorically wrong. The profits up just over
40% today (Preliminary Results), benefiting from a smoother blend of
coffee (instead of floor sweepings (EMC View), expanding almost Costa like into
motorway service stations (even an Isle of Wright ferry) they are certainly
grasping the Greggs turnaround plan. With the bakery, pies and pasties still
the butt of jokes but key to the end-users perception of food on the go, namely
fresh and perceived decent value.
The risks are not to be ignored in terms of the food-on-the-go competition
hotting up, with a target of circa 2K stores, Greggs still has some decent
head-room and upgrades likely, with expansion paying well whilst consumer
confidence is positive. One would be wise not to get complacent. With a
reviewed target price of near 990 pence, patience may be needed as momentum is
clearly in place for the management and a favourable outlook with lower oil
prices, improved consumer mood, and employment on the up (if one ignores some
elements including zero hours). A real risk to Greggs is that it has been
suggested that some management may be enticed by "bigger fish."
Atb Fraser
N.B. Abusive or ignorant commentary will never be
published, don't waste your time as it just enters my spam bin.
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