Smith (ds) Share Discussion Threads

[skyship] 03/6/2019 08:31

I have two stocks which I'm waiting to buy and which just seem to defy fundamentals and Trading Updates; sinking to ever lower levels - SMDS & BBY.

Institutional selling just not being absorbed as buyers hold back and increase their cash reserves, as Brexit and global trade concerns dominate the news.

At this rate we could easily see a double bottom back at the 300p level...

[jeffian] 01/6/2019 19:41

Whilst, on balance, I have done OK over the years, I have to say that on occasion the stock market is a tool used to transfer money into thin air!

;-)

[gabsterx] 01/6/2019 19:37

Logan is right, "the stock market is a tool used to transfer money from the impatient to the patient."

[loganair] 01/6/2019 12:47

As an investor, I think long term which means where do I think DS Smith will be in 5 or 10 years from now.

Plastic will not disappear over night, however hopefully the world will be using 25% less plastic packaging etc in 10 years then it is now.

[alotto] 01/6/2019 12:14

loganair that's my feeling too but this downtrend is very annoying. I wish I didn't buy that early

[alotto] 01/6/2019 12:14

loganair that's my feeling too but this downtrend is very annoyingood. I wish I didn't buy that early

[loganair] 01/6/2019 11:39

Who is going to supply all the paper packaging when less and less plastics are used.

It seems to me reasonable to think DS Smith will pick up quite a lot of this is why I am positive on DS going forward.

[gabsterx] 01/6/2019 10:12

Yeah built it myself, it's not very hard to do and you can get the past 10 years FCF data from Morningstar. Don't forget to subtract the net debt from the Equity Value at the end otherwise shares will be overvalued.

[alotto] 01/6/2019 09:56

Thanks guys!
Gabsterx where did you get that spreadsheet from? did you build it?
I was hoping in a return to the £5 range but it sounds unlikely now

[gabsterx] 01/6/2019 09:35

pireric, yes that was what came up using Excel's forecasting function based on the previous 10 year trend. I'll do a recalculation with more conservative parameters once I have access to my sheet and post the results.

EDIT: Done.

Taking a 5% growth for the next 5 years and same we get a fair value of 376p, which still offers a 17% margin of safety by today's price.

[alotto] 01/6/2019 09:34

Thanks gabstee and pireric
Pirreric from 5 to 10% how much would the value of the shares differ?

[pireric] 01/6/2019 09:26

10% FCF CAGR over the next 5 years organically feels pretty stretching. Would peg it closer to 5%

[gabsterx] 01/6/2019 09:14

alotto, based on my latest DCF analysis with the parameters below I find the fair value of DS Smith to be 470p.

- Next 5 years FCF CAGR of 10% (last 10 years was 28%)
- Long term growth rate of 2%
- Required rate of return 8%

[alotto] 01/6/2019 08:51

GabsterX do you have an estimate of the value of smith on fundamentals?
I'm genuinely asking

[gabsterx] 01/6/2019 08:33

Ignore the sensationalist headlines. Trade war, over supply, Mexico, etc.. are just short term bumps in the road that create buying opportunities for long term investors. The market is a tool for transferring wealth from the impatient to the patient.

If you're a trader on the other hand you might want to steer clear as short term the stock market is a popularity contest.

[essentialinvestor] 31/5/2019 12:45

It's packaging, proxy for risk on/off sentiment.
Global macro weakening and the Tangerine man now targeting Mexico.

Ian, I'm surprised, your surprised.

[jeffian] 31/5/2019 12:44

I'm the same. Every time I think it's touched bottom it goes down again! I still think that in a few years time we'll look back and think we got it cheap, though.

[alotto] 31/5/2019 10:40

DS Smith has lost around 25% in 6 months or so. I thought at 350 was well oversold, apparently I was wrong. I wonder if there is something I can't see, as they say "the market knows best".

[loganair] 30/5/2019 12:18

etome hasn't posted since 2013, maybe good idea to start a new thread with up to date information.

If anybody does, please do not make the 'Header' too long like too many do.

[jeffian] 30/5/2019 12:13

Having just had a quick skim through SKG accounts, I'm not sure it looks any more or less "conservatively run" than SMDS (at least so far as the balance sheet goes).


By the way, I don't know if etome, who created this thread, is still about but that link in the header doesn't relate to this company! He may wish to fix it.

[essentialinvestor] 29/5/2019 18:43

Unaware of China developments, but the sector
Has suffered from overcapacity previously. There are some
secular growth trends that arguably were missing in past cycles -
substitution of plastics, e-commerce growth etc. Longer term supportive imv.

I hold SkG, rather than SMDS, so on a company specific level unable
to add much more. Luck with your holding.

[alotto] 29/5/2019 18:25

EssInv What do you think about it?

[essentialinvestor] 29/5/2019 15:11

Ah right, many thanks, much appreciated.

[jeffian] 29/5/2019 14:11

I haven't really researched SKG. I just thought this looked cheap on fundamentals. (I hope I don't find out why!). Looking for places to park the ill-gotten gains from RPC.