Sell Alert: patience will be rewarded
7th May 2020 |
Originally published under Growth Stock Network on 7th May 2020.
It’s been a busy few weeks for us.
I’ve so far brought you three new stock recommendations and a stock re-recommendation in the last four weeks. That’s a lot more than I’d normally recommend.
In normal conditions, I’d really be looking at bringing you one new stock idea and recommendation each month.
But extraordinary times call for extraordinary measures.
And Aston Martin (LSE:AML), Hyve Group (LSE:HYVE) and Marston’s (LSE:MARS) we see as having tremendous bounce-back potential as we unwind from lockdown and return to some “normalcy” of life as we once knew it.
I still believe that come the end of the year, this will all be a distant memory. There may be a few hangovers from it that will take into 2021 to unwind. But on the balance of things, we’ll be in a remarkably similar place when it comes to the UK as we were at the end of last year.
That’s my view on it. And I believe that history will look back at the calamitous actions of government, particularly economically, as one of the worst handled events ever.
But that’s another conversation, for perhaps another piece of content down the track.
What I’m saying is that overall I think these are some of the stocks that I think will bounce back just as the world returns to normal. But also each with their own unique value proposition.
Aston Martin in particular I think has something special brewing under the hood (so to speak). But there’s still a lot of downside risk there which is why I also recommended a conditional trailing stop/loss 50% below the entry price.
But it’s been a mixed bag for Aston Martin since our initial recommendations. I would remind you to keep an eye on the long game here. There will be volatility in these stocks for a while.
We would like them all to pop higher and maintain that right away. But it’s a crazy market still and will be for a while. So be patient, keep to the long plan with these bounce-backs and I think that patience will be rewarded.
Anyway, I’m keeping an eye on the UK markets still, as I may release another one or two new stocks to you out of the regular cycle, should I think the environment is suited to it.
So continue to keep an eye out as these may come to you on any day during the week (except a Friday) after the UK market closes.
Immotion and the bouncy stock price
Now, as mentioned I also re-recommended a stock to you in early April, Immotion Group (LSE:IMMO). At the time, Immotion had closed at 2p, a price I thought was simply too cheap to ignore.
Subsequently it seemed a lot of readers agreed, and on the open the next day the stock popped but found a level around our buy-up-to price of 3p. And that’s what I decided to record as our entry price for track record purposes.
Well, Immotion’s stock price plummeted from 3.5p at the close on Tuesday to close on Wednesday at 2.65p – a fall of just over 24%.
Big drop. But why?
Well it’s simple. Immotion announced to market it was doing a placement, a capital raise, for £1.3 million at a price of 2.5p. Hence the dramatic fall in price.
The funding will be used to cover operation expenses during lockdown and to assist in the ongoing costs of business as markets return to normal in a post-Covid-19 world.
As a lot of the company’s success rests with sites in the US, things may take some time to get back to normal. However, I see things coming faster in the US than perhaps anticipated, particularly with Donald Trump’s plan to reopen the US and really get its economy firing again.
Still, with the placement, Immotion plans to be covered financially for some time.
Didn’t take it long to raise the funds either. A few hours later Immotion released another announcement saying the £1.3 million placement had been successfully completed. That’s a pretty good sign. Albeit likely it didn’t give all shareholders the chance to snaffle up some more stock.
Nonetheless, while the price might have taken a hit, it’s actually still considerably higher than the 2p when I decided Immotion was incredible value. As such, I don’t think you should be too bothered about the price.
If anything, as it’s now trading below our buy-up-to price of 3p the stock is an active BUY again. It’s a chance to top up on stock, or if you missed out after my initial recommendation, a good chance to get your hands on some.
Again, a reminder if it heads over 3p, the stock will move back to a HOLD recommendation.
Exit NXP Semiconductors
Finally a quick SELL recommendation on NXP Semiconductors (NASDAQ:NXPI). At the time of writing NXPI is trading at US$100.38. That represents an 6.8% profit in just over a year and a half.
NXPI is a massive US-listed semiconductor giant. Its market cap is around US$28 billion. It’s really not the kind of focus I’m taking on here with Growth Stock Network going forward.
My mission is to hunt down and uncover for you the best most exciting small-cap stocks listed on UK markets. That’s where I see massive opportunity for investors in the short and long term.
It is truly a mega-exciting market that I think I can really dig into and deliver great stocks both on the AIM sub-market and the main LSE market.
NXPI just doesn’t fit that mould. Hindsight says we should have tapped out in February. But we didn’t see the extreme draconian measures of lockdowns and shutdowns coming. Still, while NXPI took a hit, it’s still showing a profit. And I think that now is a great time to exit the stock, take that capital and reallocate it to more exciting, explosive potential stocks I can deliver to you on UK markets.
Action to take: SELL NXP Semiconductors (NASDAQ:NXPI) at market prices.
Regards,
Sam Volkering
Editor, Growth Stock Network
