Smartspace Software stop loss triggered; who’s flying high as we return to (a new) normal?
21st October 2021 |
There was a pre-Covid time.
Then the pandemic struck, early last year.
Now, it appears, we have moved into the post-Covid time.
But… what are the hard numbers that provide useful indicators of our progress towards normal – or, at least, a new normal?
The global airline industry is a good place to start looking for the answers to that question.
Few industries suffered more when the pandemic hit.
For 2020, passenger numbers dropped 75% in comparison to 2019.
But now, after 18 months of challenges and confusion, the industry is starting to look something like its old self.
Here in the UK, for instance, air travel restrictions have, for the most part, been lifted.
On 4 October 2021, the amber travel list was scrapped for good.
From the point of view of official and Covid-related restrictions, there is a red list consists of just seven countries and an ever-expanding green list.
Covid testing protocols are also being gradually phased out.
For example, passengers will no longer have to take a pre-departure Covid test before leaving for a non-red list country.
A more convenient, cheaper lateral flow test is now required instead of a two-day PCR test on return, too.
All this is music to the ears of UK holidaymakers and a lot of people whose livelihoods are closely linked to the operation of airports.
In terms of the Frontier Tech Investor portfolio, it is also good news for UK-based engineering companies who serve the aviation industry.
Rolls-Royce Holdings (LSE: RR) and Meggitt (LSE: MGGT) are cases in point.
Both of these companies are key suppliers of component parts and propulsion systems to the global aviation industry.
In both cases, share prices have risen sharply as investors have correctly anticipated an easing of air travel restrictions, both here in the UK and elsewhere.
Since 19 July, Rolls-Royce’s share price has risen around 58%, going from 87GBp to around 138GBp at the time of writing.
Over the same period, Meggitt’s share price has risen 88%, going from 397GBp to 750GBp at the time of writing.
Of course, a takeover bid on 2 August from United States-based Parker-Hannifin, which valued Meggitt at around £6.3 billion, validated our positive view of the medium-to-long term prospects for Meggitt.
We think there is still further upside to be had for both Rolls-Royce and Meggitt – especially as more economies across the world begin to follow in the UK’s footsteps and ease travel restrictions.
We reiterate our HOLD recommendation on Meggitt. Rolls-Royce is also currently a HOLD in the portfolio as it’s trading above our buy limit. Remember to stick to our buy limit instructions. See the portfolio for the latest advice.
Buy list update
Argo Blockchain (LSE: ARB)
Argo is a miner of cryptocurrencies, namely bitcoin.
Bitcoin is currently seeing a resurgence, with its price flirting with all-time highs. Its price at the time of writing is above $64,000.
This most recent strength in bitcoin appears to have been driven by several factors. For instance, it seems that the adoption of bitcoin as legal tender has been a success.
The listing on the New York Stock Exchange (NYSE) of ProShares Bitcoin Strategy ETF, an exchange-traded fund which invests in bitcoin futures, has also been seen as a sign that cryptocurrency is moving further into the mainstream.
Obviously, being a bitcoin miner, Argo’s value depends to a certain extent on the price of bitcoin.
What’s interesting is this: whilst bitcoin is back near all-time highs, Argo’s share price is nowhere levels that it was when bitcoin was previously at all-time highs.
For example, on 14 April 2021, when bitcoin was at a then all-time high of $64,234, Argo’s share price was 200GBp. Currently, Argo’s share price is around 138GBp.
Could this be a market mispricing?
We think so.
As such, we continue to view Argo as an unmissable, long-term opportunity that is probably cheaper than it should be at the moment.
We reiterate our BUY recommendation on the stock. You can find the original recommendation here. See the portfolio for the latest advice.
Equals Group (LSE: EQLS)
Equals is an international payments ecosystem that allows seamless execution of cross-border payments.
The company’s latest financial figures are robust.
For the three months to 30 September 2021 (3Q21), revenues were £11.7 million. This represents a 33% increase on second quarter (2Q21) revenues, which were £8.8 million.
Revenues are up by 62% relative to those of 3Q20.
Over the past 12 months, Equals has consciously moved away from the core businesses on which it has been built since its establishment in 2007 – consumer-facing, travel payments services.
Now, Equals is primarily focusing on its business-to-business (B2B) offering, which allows companies to settle cross-border payments in a variety of currencies, 24 hours a day.
It has been a strong area of growth for Equals. For the half year ended 30 June 2021, total revenues were £16.9 million, with B2B revenues accounting for £11.6 million, or 69% of the total.
Equals looks set to continue targeting its B2B side of the business for revenue growth.
As a result, we remain very excited about Equals’ future prospects.
Its share price is also on an upwards trajectory.
Since 8 July 2021 (the date we recommended this stock to you), its price has risen from 44GBp, to around 69 GBp at the time of writing.
We reiterate our HOLD recommendation on the stock as it’s trading over our buy limit. You can find the original recommendation here. See the portfolio for the latest advice.
Kanabo Group (LSE: KNB)
Kanabo Group is a medicinal cannabis manufacturer and distributor.
The company has enjoyed a successful year, which has seen it agreed (but not yet complete) a deal to acquire Materia, a Maltese-based processor and distributor of medicinal cannabis and cannabidiol (CBD) products.
2021 has also seen Kanabo’s CBD line being made available at UK retailers for the first time.
And now, Kanabo has formed an exciting, forward-thinking partnership with Medocann Pharma, an Israeli-based producer of medical-grade cannabis.
In the deal, announced on 7 October 2021, Kanabo and Medocann will develop new medicinal cannabis products at Medocann’s state-of-the-art facility, and earn exclusive distribution rights in the German and UK medicinal cannabis markets.
The deal is worth €9 million.
Kanabo and Medocann are hoping to have the newly developed products on sale over the first three years of the agreement.
The deal is another step in the right direction for Kanabo.
In particular, the exclusive distribution rights will further strengthen its position amongst Europe’s two largest and most competitive medicinal cannabis markets.
We reiterate our BUY recommendation on the stock. You can find the original recommendation here. See the portfolio for the latest advice.
Smartspace Software (LSE: SMT)
Our stop loss on Smartspace Software has been triggered, which we set at our entry price of 108.5GBp. The stock has been trending down lately from a recent high of 182.5GBp, which it hit on 30 June 2021.
So, we have broken even on this one. There has been neither a loss nor a gain.
This counts as a situation of where we should have taken profits earlier, but successfully used a stop loss to obtain protection on the downside. If you haven’t done so already, SELL your holdings in Smartspace Software.
The Frontier Tech Investor “Top Three”
Sometimes it’s hard to decide on which stocks to invest in from our buy list.
Below is our Frontier Tech Investor “Top Three” section showing three stocks in open BUY positions. If you’re trying to figure out what to invest in next, these are three that we think are a great place to start.
This doesn’t mean our other stocks are no good, this is just a tool to help you spot the next Frontier Tech Investor stock that could be worthy of your consideration.
Mode Global Holdings (LSE: MODE) – our most recent recommendation, Mode, looks to revolutionise the way in which payments are being conducted. Its platform provides a seamless way to manage and spend assets from both monetary systems; the old, fiat currency system, and the new, crypto and digital assets system. The platform has unique features, such as the potential for you to earn interest on your bitcoin holdings. We see the popularity of Mode rising in line with the wider adoption of cryptocurrencies as a means of payment. You can find the original recommendation here.
Argo Blockchain (LSE: ARB) – Argo is, as noted above, crypto mining company. It is the first pure-play crypto mining company to list on the London Stock Exchange. Its listing on the exchange shows how quickly the transition to the new money system is taking hold. Through its powerful mining rigs, the company has the capability to mine thousands of bitcoin each year, earning potentially lucrative returns in line with the price of bitcoin. You can find the original recommendation here.
Mirriad Advertising (LSE: MIRI)- Mirriad is changing the advertising game. This inventive, and hugely exciting, technology company has come up with a unique solution that inserts advertising into content after it has been produced. It provides abundant opportunity for product placement, which it monetises by taking a cut of advertising campaigns. With the company expanding into the most valuable advertising market in the world (the United States) there isn’t a better time to take a position in this stock. You can find the original recommendation here.
Sam Volkering
Editor, Frontier Tech Investor
Elliott Playle
Junior Analyst, Frontier Tech Investor
