Also, this

GRVG

grvg

Advertisements

Hate to say I told you so

But I told you so. It just took way longer than I thought it would.

zvzd

Should you buy now? No. The resistance levels are at 4000 and 4500. With the price being at just around 4000, it will most likely stagnate or fall, probably towards 3500 or 3000. Long term, it will likely go to 9000 after this one, so if you hadn’t bought your stash yet, keep a cool head and you’ll likely still have an opportunity to do so.

The reason for that is that if we look at the fundamentals, it’s still a good buy in the long term, nothing really changed in the last year or so. That’s why I haven’t been writing in a last year or so. Some people feel the need to reiterate their opinions over and over again. I find that to be somewhat over the top, especially since it doesn’t make me any direct profit and I’m not that interested in self-marketing.

Bad times ahead…

S&P seems to have broken a 5 year long uptrend. I’ve noticed this a few weeks ago, but it looks as it’s now confirmed:

index

What’s really bad news is that the central banks have really used up all their ammo, and they can’t inflate the bubble anymore. Also, there’s a very interesting indicator, called “total market cap to GDP ratio”, which pretty much shows whether the economy is overbought or oversold. Currently we are at near 120% of what it’s realistically worth. A strong drop is to be expected. I wouldn’t be surprised to see the S&P at 1400, or even 1200 in the near future.

http://www.gurufocus.com/stock-market-valuations.php

I believe Europe will not suffer as much, since the markets are in a pretty bad shape already, and local QE is just starting. Still, I’d rather stay in gold and bitcoin nowadays. Gold is getting close to its 1000$ resistance line, while bitcoin is currently quite a good buying opportunity thanks to forking issue which is imho overblown. Whichever blockchain bitcoin ends up on, it’s going to work just as it did before, with possible minor glitches at worst.

Though the most secure course of action may be shorting S&P.

Greece [GREK]

It looks as if the crisis in Greece may be near its end. There is quite an interesting W pattern which formed over the last 2 months regarding GREK, the index fund that tracks Athens stock exchange. Without further ado, here’s the chart:

grek

We have broken through the resistance line, and are on the way to approximately 14.5$. This means that the stock has the potential to go upwards some 20-ish % in the next month or so. Not bad at all. I also believe it may give a boost to other southern EU indexes as the ones I’ve already mentioned earlier (EWI, EWP, PGAL).

Annual and Quarterly Reports

So I haven’t written anything in a while, because really, there wasn’t anything to write about. I still don’t have much remarkable to say that I didn’t say already, but I’ll go over the freshly released results for the companies that I find interesting or that I’ve written about before in order to compare how my expectations aligned with reality. So let’s go.

ZVZD – A barely negative result in a quarter that is usually negative. Nothing great, nothing horrible, still boring and cheap.

KOES – Mild downsizing, but improved profitability. My guess is that the downsizing is a fairly temporary transition from CEFTA to EU markets. I believe the overall sales volume will increase in the future as new deals are made with EU grocery chains. Fundamentals are simply amazing – P/E 7, P/B and P/S below 1, debt 75%, EV/EBITDA 4.5…

SNBA – Still the cheapest bank on the Croatian market, but profitability is still low. At least it’s not negative, so I still consider it to be a good buy.

VPIK – A bit of disappointment here, getting to profitability may take longer than expected.

PTKM – A surprisingly good report (considering that mildly negative earnings are really good when measured by the standards of this company). What stands out is that their core business could actually be profitable if they weren’t stuck under a big pile of debt. Perhaps through some restructuring they could actually turn profitable, but that profitability will likely stay low for years to come considering the fact that their debt is huge.

RIVP – It looks as this year they may earn enough money to actually be forced to share some with their shareholders. I wouldn’t count on it, however, considering their good skills in hiding actual profits.

SAPN – C/P Koestlin, except with marginally worse stats, primarily in the form of higher debt.

BLKL – One of the best buys on the market IMHO. The stats are great. No debt whatsoever, good profitability, dirt cheap..what more to ask for?

RIZO – Starting to show some profitability, but not nearly as cheap as last time I mentioned them.

(The rest to come)

DDJH

Although this company is horribly managed, there is a substantial possibility that they may win an APC contract in the UAE. What would it mean for the stock? The chart is here

ddjh

As we can see, there is a potential W forming, which is usually a very bullish pattern. However, patterns generally mean nothing until they’re complete, so what we see here is only what may happen. In case the company does get the contract, it is likely either to rise to the pattern resistance, or to break through it. The pattern resistance is at 55, which means that it’s also the first target should the company get the job. If it does, and if it breaks through, the second resistance is at 70. The job is by no means certain, however, so the bad case scenario puts the target at 20. And, consequentially, 0, considering the fundamentals of the stock.

Whatever you do here, it’s a risky gamble. Even if the company gets the job, it is still unclear whether the job will raise the price to 55 and get stuck there, or whether the stock will rise to that level beforehand and shoot up to 70 if the deal gets done. The only way to play this safely is if the stock breaks through and closes over 55 after the deal gets announced, but still far enough from 70 to make it a worthwhile investment. It is unlikely the stock will break through 70 to the next level, 90, because of strong overhead resistance and horrible fundamentals. It is much likelier to bounce back, if 70 is ever reached in the first place.

SNBA

How high can it go? Pretty high, I dare say.

As I mentioned in my previous post, this bank won a significant lawsuit which severely threatened its assets. With that lawsuit out of the way, it is to be expected it will ultimately end up priced comparable to other Croatian banks. So how exactly are those banks priced?

Let’s take 3 most important parameters, P/S, E/P, and P/B. I will not include banks that are insolvent, near bankruptcy, or have incomplete financial information available. I am also using E/P instead of P/E because it’s much easier to calculate the average. Whoever invented the inverse nomenclature such as P/E is, in my humble opinion, an idiot.

Bank P/S E/P P/B
BPBA 1.4 0.075188 0.7
IKBA 1 0.084034 0.6
JDBA 0.9 -0.66667 0.6
KABA 1.4 0.038462 1.1
KBZ 0.7 0.11236 0.6
PBZ 2.3 0.084746 0.8
PDBA 0.7 0.017668 0.4
SDBA 1 0.106383 0.6
ZABA 1.4 0.095238 0.6
Average 1.2 -0.00584 0.666667

So how is SNBA compared to the average?

SNBA 0.5 0.005814 0.3

One obvious outlier here is JDBA. If we’d exclude them, the average E/P would be 0.076. Let’s therefore say that P/E (or E/P) is about average. How about other two parameters? P/S and P/B are almost twice as low as those of other banks. I believe it is safe to say that the bank is still severely undervalued. What would be the fundamental target price then? Probably a bit lower than the average would suggest, considering the fact it’s one of the smaller banks out there and the one that didn’t generate too much profit this year. All things considered, I would put the fair value of the bank somewhere around P/B of 0.6 and P/S of 1, perhaps a bit lower because of the profitability issue. That gives the target price of somewhere near 100, which is still quite a way to go from the current 60-something.

Technically speaking, there is unfortunately not much to see. But there are three resistance levels, at 70, 90, and 100. Any of these levels may prove as resistance lines. Personally, I would expect a small pause at 70, after which the levels of 90 and 100 will be tested. It would also result in a nice 5 way rising formation, and align neatly with the fundamental target.

snba