Welcome to Getting Rich with Rich, I’m Rich, founder of Under the Radar Report. We’re in the middle of reporting season and my message is: so far so good.
I’m going to go through loads of stocks in a minute, but the key takeout is that as we’ve been saying, there is a bigger differentiation than ever between those stocks that have good management and are executing well and those that don’t.
Stocks we’ve been looking at have increased earnings guidance include:
- Southern Cross Electric (SXE) and Superloop (SLC) – we’ll be covering those two next week.
- Hansen Technologies (HSN),
- Integrated Research (IRI),
- Articore (ATG) and
- Retail Food Group (RFG).
What’s important to remember is that we’re investors. I own some of these stocks! That keeps me focused. I’ll tell you what I’m focused on. I’m focused on making money out of the gap between perceptions and reality.
That’s what these profit results are about. Looking through the spin and at the real business. I’m not interested in PR or sound bites. I’m interested in profitability.
Integrated Research (IRI) isn’t an easy story to get your mind around. The company has software that enables big corporates to troubleshoot in real time.
They’ve also been caught out by the cloud, because they’re an on-premise solution, but they do have a blue chip global customer base.
We spotted a turnaround opportunity and we got in at 30 cents. We surfed this and it traded as high as 90 cents. Share prices are like pendulums, they swing too far one way and then a bit far the other way.
Now the stock is trading at the mid-point. They’ve got a new guy coming in to run it. There’s uncertainty, but we see value.
Retail Foods (RFG) is a franchise operator that has been through the wringer. The company has been re-capitalised but it will take a while before investors stop looking at the rearview mirror.
It will take a while for management to regain trust. But it’s new management and young, I might add, and the business model is a good one – capital light with a broad customer base. They’re starting to thrive rather than just survive.
We look for stocks where we can see sustainable growth and are not expensive. It’s important to emphasise that sustainable growth in small caps is a different creature to mid-large caps.
It’s likely to be more rocky, which is why there are more opportunities to buy. Uncertainty is how you make money. It can be a case of one step backwards to take two steps forwards.
Hansen Technologies (HSN) has had to suffer the earnings consequences of an acquisition – the German-based Powercloud. They’re taking two years’ worth of hits on operating earnings in order to reposition for growth in the cloud, which complements the pre-existing business.
We’re here to help you understand the complexities so that you can buy at the right price and not sell prematurely when inevitable problems or frustrations arise.
What’s Coming up? Next Thursday we have a long-time friend and East72 fund manager Andrew Brown come and give members stock & market advice in our Ask the Analyst webcast; and yes, we’ve got stocks, stocks and more stocks coming your way – both big and small.
