Diploma Share Discussion Threads

[eggbaconandbubble] 01/11/2012 15:48

A lot of very small trades! What causes that?

[alphabeta4] 28/10/2012 01:53

Thanks Jeffian.

Makes sense and as a result I won't hold my breath on the residential side making a direct first round material difference.

I also agree that the housing effect could be very useful from it's impact on the consumer and second round effects. Seeing how consumers often treat housing as a store of wealth should follow will help the economy (finally) help sustain some signs of life and bring some confidence back.

Would be nice to see some fundamentals take charge, feels like we've been relying on governments and central banks for far too long now and would help everyone if the US could finally crack it!

[jeffian] 27/10/2012 18:30

My guess is 'not a lot'. The seals and gaskets that Diploma supplies are for hydraulic machinery which is normally associated with heavy earth-moving (they refer to heavy construction, infrastructure and mining). Other than the groundwork for residential development (site levelling, drainage, roads, hardstandings etc. - normally carried out by 'JCB'-type equipment) there isn't that much use of hydraulics in residential development which is smaller-scale. Having said that, any improvement in the residential market is good for the economy generally and would undoubtedly have benefits.

[alphabeta4] 27/10/2012 15:43

I personally think that the 500 marker was just too big a psychological resistance level for now.

I topped up at 449, on balance I'm still keen on this company to go further. My biggest concern is the American fiscal cliff and risk to construction spending. I will be keeping a close eye on this.

Something however caught my eye on page 3 of the Mar 12 half year review that I have a question on:

'In North American, the aftermarket businesses within the HFPG group (Hercules, Bulldog and HKX) all benefited from the increased confidence in the industrial economy. In particular activity levels were robust in heavy construction and infrastructure projects (though not yet in residential construction) and in non-traditional makrkets such as shale gas exploration and surface mining which require significant site preparation work'.

Is there any way of working out how much revenue Diploma generates from residential construction? Just asking because if you think (like I do) that North American house prices (barring above cliff!) have bottomed out and will be supported by the FED buying mortgage backed securities this could be a good revenue generator going forward as construction companies start to boost their profits again leading to higher residential building starts.

Any thoughts?

[jeffian] 25/10/2012 14:34

It's the old 'fear & greed' thing, isn't it? It's had a good run so some people will bank profits in an uncertain market. As I posted earlier, the same thought had occurred to me! It is beginning to look expensive on fundamentals but that may just be a reflection of the continued growth prospects. I continue to hold.

[silverfern] 25/10/2012 13:43

well, it's getting back there. WOuld you now say the rise is caused by insider trading to be followed by good news?

[quantumx] 12/10/2012 13:49

I think that DPLM got ahead of itself this week. Can see a retreat to 400p before base building starts again. Failing that, this could be insider trading to befollowed by some negative news for the rest of us plebs. Lets see.

[ianms2012] 27/9/2012 14:24

Just bought in. 993 shares at 473.76. GLA

[silverfern] 25/9/2012 21:40

I top sliced at 480p.That is selling. I bought back in at 460p yesterday. THat is petty for a longerterm invester but it means free shares for a two day gamble, and I have over 25k in my ISA DPLM, and that's a lot of money to me. NExt year oh no...the market is due a re-rating to signify it is not all over for the world, and companies like DPLM will be similarly re-rated Predication over, back to my box :) I do belive this co. will make further acquisitions and continue to grow- my target is 600p. Prediction really over.

[westcountryboy] 25/9/2012 20:45

I think it's perfectly reasonable to take profits on DPLM, though I haven't done so myself. I haven't done so because I also think it's perfectly reasonable to take profits on most other mid and smallcap shares with good profit growth and cashflow, many of which have risen as much. Let's face it, the market has done well and there are few real bargains any more. So this is the most difficult point for the value investor. Do you hold on when the prospects of immediate gain are less than they were? Philip Fisher would say yes, unless you can find a better prospect to move into. In practice I find myself selling some of my better-performing shares, but not many, because where else does the cash go? DPLM still not that expensive, so it's one of those I am holding....

[apad] 25/9/2012 14:37

Difficult aint it.
Maybe we can both get in at £4?
GDWN is my favourite "engineer I don't own" at present.
Having said that all the engineers are terribly perky.
apad

[blippy2] 25/9/2012 14:26

@ianms Thanks for your kind words. I bought DPLM in Jan 2011 at 307p, so I've made almost exactly 50% profit - inc. all transaction costs but excluding divvies. I think there were two factors which, for me, I consider a great return:
1) we've had some PE expansion on DPLM, which is all very helpful
2) we've had a nice earnings increase over that period.

I still think DPLM is a nice above-average compounder, but I think the scope for a similar earnings increase is limited, and with the expanded PE, I think the share price might struggle to move forward significantly.

I have said in the past - although not on this board - that at the time, if an investor found about 10 companies of similar quality, prospects and price, then they'd do well.

It's very difficult, isn't it? Do I hold, do I sell? One thing that my investment in BATS (Brit Amer Tobacco) taught me is that you can make a surprising amount of money in good-quality companies, even if they aren't rapid-growers.

Once again, best of luck to you all. I will, of course, kick myself if I've made the wrong decision. We shall see.

[gco1133a] 25/9/2012 12:00

Lol Blippy2 not that anyone could accuse you of being fickle. My original buy-in price was 55p, and everytime I have thought the share price looked up with the events it has continued to perform well. I wouldn't be surprised if we did 40p of earnings in the year to Sep 2013, or a shade over 11X not expensive. I expect to see a healthy increase in the final dividend.

[blippy2] 25/9/2012 11:13

You guys are going to hate me for this, but I decided to sell out of my shares in DPLM today and move onto a different prospect. Why? Well, I still believe that DPLM is a solid company, and that management are competent and will continue to grow the business solidly. I believe that the shares are "high enough" for their growth prospects, though. It's a company that I would be happy to buy into again at a substantially lower price. Maybe we'll get a correction in the market, or something, I dunno. I'd be very sceptical about chasing momentum in this share, though.

Good luck all, and hope I haven't confused or angered anyone in my decision to sell today.

[ianms2012] 25/9/2012 10:09

@blippy2

Thanks for your comments and hope your investing is well.

I researched Diploma using their pre-closing update of 24/9, Interim Announcement ending 31st March 2012, and full year September 2011. Based on these figures I have tried my best to predict what the , revenue pre-tax profits, EPS, P/E Ratio will be. But I am not an exact science.

Since I have only researched this company yesterday and because I may have missed 'something' that could effect the share price, I would rather watch it for now.

I certainly would want to know if the share price went down and would find out why, asking the question.. Did I miss something?

If it continues to rise, and as 'silverfern' mentioned; I would rather invest in upwards momentum.

Hope this makes sense and good luck to you.

[silverfern] 24/9/2012 12:09

My 2ps worth: there is such a thing as momentum investor (let the trend be your friend). I invariably buy on ticks up rather than ticks down. Maybe I lose a bit that way, but better I think to buy a share that is being bought because of its performance, than one being sold for the same reason. With the market so fickle it is hard to call how any results will be read out there. If this hits 470p on results it will hit 500p soon after imho

[blippy2] 24/9/2012 11:18

@ianms Doesn't it make sense for you to want to see the share price fall, so you can get in cheaper?

I think DPLM is a good solid company, and I don't think the market "knows" anything from which you can draw investment inferences from share price action - at least not for this company.

DPLM looks like it is continuing to deliver on what I expect from it - a nice steady compounding at reasonable price. I love the "net cash being strongly positive", too. Management have been doing a good job of methodically growing this business. We're unlikely to see explosive growth, but I sure could think of worse companies to invest in. Much worse.

[ianms2012] 24/9/2012 10:53

Good trading update. With estimated year end pre-tax profit comparative to market cap at 11 times. The share price I think is still slightly undervalued. With all other fundamentals within my limits. This share goes on my watch list with a view to buying 1st November, should share price rise.

[ianms2012] 24/9/2012 10:51

The Company anticipates reporting a strong set of results for the year ending 30 September 2012 in line with market consensus. Revenues for the year are expected to be ca. 13% ahead of those reported last year. After adjusting for currency effects and acquisitions, underlying revenues for the year are expected to have increased by ca. 6%. The underlying increase in fourth quarter revenues is likely to be 5% which is unchanged from the third quarter increase. Strong cash flows in the final quarter of the year will result in year end net cash being strongly positive.

Operating margins remain ahead of the prior year, but below the record level of 20.8% reported in the first half of this financial year, as the Group makes good progress with its planned investments in new facilities, IT and senior management to support the future growth of the business.

The Preliminary Results for the year ending 30 September 2012 will be announced on Monday, 19 November 2012. There will be a presentation to analysts of the results at 9.00am, at Butchers' Hall, 87 Bartholomew Close, City of London, EC1A 7EB.

[jeffian] 15/9/2012 01:01

I liked the way you said it the first time!

[silverfern] 14/9/2012 23:25

oops I meant 600p not 900p!

[apad] 14/9/2012 09:10

Jeff,
The forecasts bring the PER down to about 14. It's on my watch list and I keep on "doing nothing" which seems to be a good strategy to me, because it is too expensive.
So, ELM and PVR have been bought instead.
The reasons for you not to sell are numerous, but I suspect you know them all.
apad

[jeffian] 13/9/2012 23:23

Yes I do but that doesn't necessarily help if the PER is too high and the dividend yield too low. As you yourself point out in #378, the PER is currently at high (if not absurd) levels and that simply means that you are paying for tomorrow's growth today (i.e. it has to hit those earnings forecasts just to make the current price worthwhile). And although you say that the average PER over 10 years is around 12, even that is quite high for what is, after all, a distributor (albeit they provide above-average levels of expertise and service to provide 'barriers to entry' against competitors). And a doubled divi over 5 years would still only represent a 5.5% yield.

Don't get me wrong; I like this company/share a lot. I've held it a long time and it was one of the few I bought more of (sub £3 in 2011) when I reviewed my strategy and asked myself why I kept searching for 'the next best thing' when existing shares in my portfolio still provided good value. It's just that I need to train myself to recognise that 'this is as good as it gets' and I've had a few very painful lessons since 2008/9 watching profits disappear into thin air. This is one of the few in my portfolio which is looking toppy at the moment and I'm torn between 'running winners' and taking the money and running!

[blippy2] 13/9/2012 19:36

@jeffian Let me frame a question to help you decide: do you think earnings will be materially higher 5 years from now?