Of course, French Connection’s near-term outlook is rather disappointing. It is expected to report a loss for its financial year just ended, while a further loss is forecast for the current year. However, investors may be feeling positive about French Connection’s price to book (P/B) ratio of just 0.9, which indicates that an upward rerating could be on the horizon. And with a cost reduction and store closure programme apparently on-track, margins at the company could be due for an improvement.

However, with there being a number of other retailers that are highly profitable and that trade on appealing valuations at the present time, it may be prudent to watch rather than buy French Connection right now.

Also rising sharply today is digital audio platform Audioboom (LSE: BOOM). Its shares are up by around 7%, and this week has been a rather positive one for the business, with it having been selected by Google to be a content provider for its Google Play application in the US. Audioboom was the only non-US partner chosen among ten others and this bodes well for its long term profit potential.

Clearly, Audioboom is a relatively high-risk business, being relatively small, and therefore it may only be of interest to less risk-averse investors. However, with Audioboom set to move into the potentially lucrative Indian market via a partnership with film company Eros, it could be a stock to watch in 2016.

Shares in W Resources (LSE: WRES) have also been among the major movers today, falling by around 5%. That’s despite the company releasing a positive update with regard to its mineral resource estimate at its La Parilla project in Spain. In fact, the total resources estimate for La Parilla has increased to 51m tonnes, which represents a rise of 16% in tungsten trioxide and a 29% increase in tin. Importantly, the quality of the resource definition has also increased, which is clearly positive news for the company’s investors.

With W Resources forecast to post a pretax profit in 2016 following five years of losses, investor sentiment in the company could begin to improve. Certainly, it remains a relatively high risk mining play and with there being many other profitable stocks within the same space offering low valuations, W Resources may have standalone appeal to less risk averse investors, but it could be worth looking elsewhere due to the relative attraction of its peers.

The post Should You Buy These 3 Major Movers? French Connection Group, W Resources PLC And Audioboom Group PLC appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Indeed, only a year or so ago, Circle seemed to have a bright future with a market cap in excess of £100m and a cash-rich balance sheet. But the plunging price of oil and an expensive exploration programme have taken their toll on Circle’s balance sheet.

At the end of September, the company reported that during the first-half its net debt pile had ballooned to $64m, and sales had fallen 50% year-on-year.

Circle’s market cap has slumped to £16.6m at time of writing, or around $25m. So Circle’s net debt now exceeds the company’s market value by two-and-a-half times. As a result, it could be wise to avoid Circle for the time being. 

Continued sell-off

It’s also shaping up to be another bad day for Concha (LSE: CHA). Shares in the company have fallen 16% on the day at time of writing, adding to last week’s declines. Over the last three business days, Concha’s shares have lost 65% of their value, although there’s been little in the way of news to explain the decline. 

Concha’s shares slumped 52% last Thursday, which prompted the company’s management to issue a statement saying that the group was “not aware” of any press speculation that may have contributed to the recent volatility in its share price.

The company’s last market update was back in September when management revealed that the investment company was evaluating a “specific global opportunity within its investment scope.” Last week Concha’s management confirmed that “discussions are continuing” although “there can be no guarantee that this investment will be successfully completed.” It seems as if the market has taken this statement badly.

Unfortunately, there could be further declines to come as, Concha’s book value is only around 0.35p based on year-end 2014 figures. Unless the company makes a high profile investment soon, its shares could fall back to the 0.35p support level. 

Profit warning 

Shares in Audioboom (LSE: BOOM) are also under pressure today after the company reported its full-year results for the year to November. They fell significantly short of market expectations. What’s more, the company doesn’t expect to become cash flow positive until 2017 implying that two more years of uncertainty and fund raisings could be ahead for the group. 

According to today’s year-end trading update, Audioboom’s real revenue growth only began towards the end of its fourth quarter, with revenue in the period more than double the previous three quarters combined. And the company expects this trend to continue into Q1 of the next year. As a result, management expects the shift in timing and pace of adoption will hit its expected full year revenues for 2016. 

All in all, this was a pretty dismal trading update from Audioboom and it was, in many ways, a multi-year profit warning. 

The post Today’s Small-Cap Disasters: Concha PLC, Circle Oil plc And Audioboom Group PLC appeared first on The Twelfth Magpie.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

There hasn’t been a huge amount of director dealing overall, but there has been substantial buying at most of the heavyweight companies in the unloved resources sector, as well as one or two notable deals in the technology space.

Recent hefty purchases at oil supermajor BP (LSE: BP), miner South32 (LSE: S32) and small-cap tech firm Audioboom (LSE: BOOM) are the latest trades to catch my eye.

BP

Directors at BP’s rival Shell were not slow to avail themselves of the opportunity to buy shares after the company released its half-year results at the end of July — trades I highlighted for readers this time last month. There’s been further director buying at Shell since, but now it seems that some directors at BP also see value in their company at current depressed levels.

In particular, BP chairman Carl-Henric Svanberg has nailed his colours to the mast by purchasing a cool one million shares on Monday. Mr Svanberg’s total investment was £3.43m, having paid 343p a share.

You can buy BP today at around the same price, on a current-year forecast price-to-earnings (P/E) ratio of 14.5, falling to around 12 for 2016. A whopping 7.7% dividend yield may, or may not, be sustainable, but, either way, BP appears a good buy at the current level for far-sighted investors.

South32

South32 was demerged from mining giant BHP Billiton earlier this year. I recently highlighted director buying at BHP Billiton, and fellow FTSE 100 heavyweights Rio Tinto and Glencore, but South32’s directors have been as keen to open their wallets as their counterparts at the larger companies.

We’ve seen the following purchases, since the company released its maiden results on 24 August.

The shares have moved up a bit in recent days — to about 75p, as I write — but with a forward P/E of not much more than 10, and a 3% dividend yield, they still look reasonably cheap.

However, while the directors are clearly in bullish mood, South32 is unproven as a standalone company, and, with great value also on offer from the big established businesses in the sector, I find it hard to get too excited about the Billiton spin-off at this stage.

Audioboom

Nick Candy was appointed a non-executive director of Audioboom in April this year. Mr Candy is co-founder and chief executive of a top luxury real estate designer (projects include One Hyde Park in London) and is not short of a bob or two.

Nevertheless, a £480,000 investment in Audioboom last week by Candy Ventures is hardly small change. The 16,000,000 share purchase at 3p a pop takes Mr Candy’s beneficial interest in Audioboom to 40,820,000 shares (7.62% of the company). The shares have since risen to 5p, giving the company a market value of £27m.

Audioboom is a digital audio platform focused on the spoken word, and the company is aiming to create “the world’s first aggregated audio content syndication and advertising network”. The business is currently loss-making — and will continue to be for the foreseeable future — and is impossible to value on any conventional financial metrics. However, investors who like the odd “blue-sky” punt might want to dig deeper into the company’s potential, following Mr Candy’s latest show of faith.

The post Should You Follow Director Buying At BP plc, South32 Ltd And Audioboom Group PLC? appeared first on The Twelfth Magpie.

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G A Chester has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

And the company has some wealthy backers behind it, including property mogul Nick Candy and UBC Media. Unfortunately, after media group 7Digital acquired UBC Media earlier this year, the company sold its 10.8% stake in the company. However, it has been announced today that Nick Candy has been adding to his position, buying £480,000 worth of shares of the small-cap app developer. 

Still, during the past year Audioboom has struggled to win over the market, and year to date the company’s share price has been cut in half. After hitting a high of 16.5p at the beginning of October last year, Audioboom’s shares have slumped by more than 70%.

The question is, can Audioboom return to 16.5p?

Struggling 

Looking at the figures, it’s pretty easy to see that Audioboom is struggling. For the six months to 31 May 2015, the company reported sales of £46k but losses before tax of £3.30m. At this rate, the company is burning through around £2.7m in cash every six months, which doesn’t look good. Indeed, at the end of May the company only had a cash balance of £6.20m.

So, unless sales increase by approximately 6,000% over the next six months, Audioboom will run out of cash at some point during the second half of next year. 

Unfortunately, it looks as if investors can rule out a sudden jump in sales. Over the five years from 2010 to 2014, Audioboom’s revenues fell by 44%, and management expects that the company will continue to burn cash “for the foreseeable future”. What’s more, management notes that the group has some heavyweight “direct competitors”, which have deeper pockets and a wider existing user base than Audioboom. 

Improving performance 

From a financial standpoint, Audioboom looks like it will struggle to survive for the next 24 months. However, the company’s presence is expanding, and the group has some wealthy backers, which could help bankroll its near-term growth. 

And for the time being, it seems as if Audioboom’s management is putting user growth ahead of financial performance. User key performance indicators are all heading in the right direction.

The number of users who posted content during the first-half of the year hit 3,000 for the first time and Audioboom’s number of registered users has hit an all-time high of 4m. 200k registered users joined the site during May alone, a new record for the company. Also, during May 550k users downloaded Audioboom’s new iOS and Android apps, another record-breaking figure, taking the total number of app installs to 1.5m. 

Audioboom’s management intends to update the market on these KPIs at some point during September. 

The bottom line

So, can Audioboom return to 16.5p? It doesn’t look like it can, to me, at least in the short term. The company is concentrating on growth, and until Audioboom can show that it can stand on its own two feet by generating a profit, the market is unlikely to place a high value on the audio provider.

The post Can Audioboom Group PLC Return To 16.5p? appeared first on The Twelfth Magpie.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

According to the Wall Street Journal, which broke the story, the investigation reportedly involves allegations that Diageo boosted its sales figures by shipping more cases to distributors than they actually ordered.

Diageo’s US-traded American Depository Receipts (ADRs) fell by nearly 5% yesterday following the report, but the firm’s UK-listed shares have not fallen quite so far, and are down by 1.8% as I write.

Strange coincidences?

This investigation only appears to relate to US sales and I don’t expect it to become a major issue for Diageo. Despite this, the WSJ article highlights some interesting coincidences that shareholders might want to consider.

In January, Ivan Menezes, Diageo’s chief executive, said during a call with analysts that the firm would shift the focus of its reporting away from shipments to distributors and towards the sales made by distributors. Mr Menezes said that this could reduce the level of inventory held by distributors.

In June, Diageo’s North American President, Larry Schwartz, announced his retirement. The firm’s chief marketing officer for North America and a US sales president have also departed recently.

These revelations come at an awkward time for Diageo, as the firm is currently the subject of reports that Brazil’s richest man, brewing tycoon Jorge Lemann, might be considering a bid. This could be one reason Diageo shares have not reacted much to today’s news.

Although I still rate Diageo highly, I suspect there may be better buying opportunities in the months ahead.

Is Audioboom lacking volume?

One of today’s biggest fallers is small-cap internet audio platform Audioboom Group (LSE: BOOM). At the time of writing, the firm’s shares have fallen by 9% to 5p, leaving them down by 50% so far this year.

The trigger for today’s fall was Audioboom’s interim results. Registered users were up 27% to 4m, while the number of active content partners rose by around 50% to more than 3,000.

However, there was no real evidence that Audioboom is making progress with monetising its service. Revenue from the last six months was just £46,000. Although this was nearly double the £24,000 generated during the same period last year, it’s not enough to be material.

The only glimmer of hope was news that Audioboom has signed a revenue sharing agreement with Cumulus Media. However, this deal was inked after the half-year ended and the firm did not provide any information about how much revenue this is likely to generate.

Based on its £6.2m current cash balance and cash consumption of £2.7m over the last six months, Audioboom has enough cash left to operate for a year or so.

The firm’s broker is forecasting revenue of £7.0m for 2016, but given today’s results, I’m not totally convinced.

In my view Audioboom is a very risky buy, and I believe there are currently far better opportunities in the small-cap sector.

The post Why Are Diageo plc And Audioboom Group PLC Falling Today? appeared first on The Twelfth Magpie.

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Roland Head owns shares of Diageo. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

These companies are way too cool to have names like Moss Bros, A&J Mucklow or Jersey Electricity Company. They’re also way too cool to be making any profit! However, fans are not concerned with current losses; it’s the potential size of future earnings that turn heads.

Will it be boom or bust for investors in AudioBoom, blinkx and WANdisco?

AudioBoom

AudioBoom describes itself as “the audio equivalent of YouTube“. In the three years to 2013, the company generated revenues of £136,000 and racked up losses before tax of £3.2m. The company’s main backer and other shareholders were unable or unwilling to continue financing the cash drain, and spent nearly a year touting the business to Venture Capital and Private Equity in the UK and US. There was no interest.

However, AIM investors lapped up the AudioBoom story when the company was reversed into a cash shell last summer with a notional market capitalisation of £7m. By 30 September, the market cap had increased 11-fold to £77m, and the company raised £8m in a discounted placing. At today’s share price of 9.6p, the market is valuing AudioBoom at £50m.

AudioBoom will continue to burn cash “for the foreseeable future”, and has some heavierweight “direct competitors” — it names Soundcloud in particular — and “indirect competitors”, such as Spotify, as well as facing the potential threat of better-resourced new entrants.

Venture Capital and Private Equity — who could have cut an infinitely better deal than AIM investors are getting today — turned AudioBoom down. That tells me there’s a high risk of bust for investors in this company.

Blinkx

Video search engine firm Blinkx at least has a money-making history, posting a $17m profit on revenue of $247m for 2013. The company’s shares reached 230p (market cap £850m) in November that year, but were hammered the following January by a critical blog post from Harvard University professor Ben Edelman. Edelman alleged that some of the company’s methods were so dubious that the business model was unsustainable.

Blinkx immediately denied the allegations, and on 6 May reported strong results and a confident outlook (with no further reference to Edelman). However, eight weeks later, the company issued a profit warning, blaming “industry-wide issues of efficiency and effectiveness … compounded by the lingering effects of the disparaging blog”. A further profit warning followed in October, and in November the company reported a half-year loss of $12m.

Today, Blinkx’s shares trade at 28.7p (market cap £115m), suggesting the market has serious doubts about the viability of the business model and management’s explanation for the poor performance. It’s been an 88% bust for investors who bought into Blinkx at the highs. Whether the shares will boom from the current lows looks a high-risk bet. In my view, Blinkx has it all to prove.

WANdisco

WANdisco does “Big Data” and is loss-making: $20m in 2013, with further heavy losses expected into the foreseeable future. This time last year, the shares were trading at 1,370p (market cap £325m). Today we’re looking at 397p (market cap a bit under £100m).

Nevertheless, WANdisco has its share of enthusiastic AIM investors, who are ready to keep stumping up cash in the hope of vats of jam tomorrow. The company has recently proposed another discounted placing to raise $25m.

How much money AIM investors can be persuaded to stump up — and how frequently — isn’t a particularly reliable guide to how successful the company will be in delivering shareholder value in the future. However, banks tend to be a little more judicious, so I’m quite taken with the fact that WANdisco has been able to negotiate a $10m revolving credit facility with HSBC on very attractive terms. HSBC said: “We were sufficiently impressed with the company’s growth prospects to make a commitment at investment-grade interest rates”.

WANdisco could just be the pick of the three firms as a potential boom stock for investors with a high tolerance for risk.

The post Will It Be Boom Or Bust For Audioboom Group PLC, Blinkx Plc And Wandisco PLC? appeared first on The Twelfth Magpie.

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• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

G A Chester has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.