FEBRUARY IS NOT SO BAD
So February is on the way… which could be good news.
Did you know February used to be a crap one for the markets and now it's the third strongest month?Well, you know now. So despite the fact it is a depressing month, maybe you might find some happiness on the markets.
There are tons of new issues around, and a lot coming up including probably Poundland. I had a very good ride with a lot of them such as doubling with Applied Graphene Materials. And the Royal Mail (nearly).
The problem really is working out which new issues are worth buying and which might be stinkers. How do you work it out? I think it's simply a matter of common sense.
Here are the things I think about:
- How likely is it that whatever the company makes or produces will be in more and more demand?
- Has the company got something tech-wise that others don't or have they got a nice edge over others?
There are two different types of floats: AIM and main market ones.
Main market ones are usually much less risky as the main market is more tightly regulated. So generally I'm more interested and would buy more.
AIM listings are far more risky. Take 24/7 gaming; it started life at 50p just weeks ago and now it stands at 12p.
Right, so let's have a look at a few I've either bought, am thinking of buying or am avoiding.
Starting with avoid. That's easy. Anything floating on AIM with Oil or Gas in its title. I'm just not interested. I have no idea whether they will find oil and in my experience it rarely happens and after mug punters buy in at the start shares usually drift. If I wanted to gamble I'd go to Kempton Park.
One example is I looked at RM2, floated on AIM. It's in the pallet market. Pallets are big business and the company has some kind of more exciting pallets that last longer than others.
But I just couldn't get excited about pallets. I know there's a decent recurring revenue and they will probably rent or sell quite a few. But my thinking was it's such a competitive market, another company could come out with an even better pallet and in any case how long is it going to take? A long time I suspect. Could I see the share price double up anytime soon? Not really. I'm all out of pallets.
Now onto some where I think the share price could move higher reasonably quickly.
City Fibre Infrastructure looks interesting. It raised £16m to expand fibre optic infrastructures, by connecting businesses, local government and consumer customers to its networks, and to deploy infrastructure in selected regional cities, either through building new networks or buying existing fibre infrastructure.
This strikes me as being a potential future winner. Something businesses need to spend money on, providing them with faster and better networks. Looks worth a shot.
One that sneaked onto the market with no fanfare at all was Action Hotels. This is the kind of share that comes on unnoticed and a bit further down the line the market wakes up to it. What I really like is it is developing 3 and 4 star hotels in the Middle East and Australia, filling in a gap in the market between the top end and the bottom end.
That seems very sensible and not only can I imagine this hotel group growing but I can also imagine it being snapped up by another group in time so for me it looks a sensible investment.
As I write I haven't bought any of those so far. There isn't going to be any news on them for ages so I think I can probably get a cheaper price maybe in March.
I have bought a few MoPowered. An interesting little one... the market for its services looks great. It helps businesses to make more of their mobile offering – ensuring their sites are more compatible with those trying to buy using mobiles. This is such a great growth market one would think MoPowered should really benefit if it gets its offering right. Risky of course but the potential rewards outweigh the risks for now.
Syqic is similar to MoPowered, high risk but potential great returns if it gets its offering right. This one is in the fast growing market of live TV and on demand video content across mobile and tablets. Could be in the right market at the right time. Again hard pushed to know when to buy it.
Of course all I'm doing is guessing with these newbies. The thing is, if you get one good one then you can make an awful lot. Of course what you don't want to do is halve your money in a few days either. So once you have bought into one, watch carefully and get out quick if the shares start to tank.
However if the shares start to rise and any new statements are positive then you can start to scale in. For example, I did this with 3d Printing (a US company). I figured 3d Printing was going to be a fantastic market in the future. I bought in at around 22 dollars originally and scaled in – it rose to 90 dollars giving me profits over a few months of more than £50,000.
If I had got that one wrong and it moved say below 19 dollars I would have got out taking a loss. Anyway, new issues are a risky market – some flounder but some made amazing gains. Once you're in a good one it often pays to hold on for a while before banking. Unless it doubles in a few days!
Also, it's worth being careful and not buying too many at the start in case it proves a stinker, otherwise it could be difficult to get out.