Have investors missed the boat, or can these three stocks go on to post further spectacular gains?

This boat has sailed

Shares of AIM-listed Internetq (LSE: INTQ) crashed in December, following the publication of a highly critical report on the Greek mobile technology company. That the author of the report was Tom Winnifrith, who had previously done much to expose the dodgy accounting at Quindell (now Watchstone) and the fraud at Globo, led Internetq — which “does not normally comment on such matters” — to release an initial statement denying “the assertions made and the conclusions drawn” and a further statement responding to specific assertions.

Nevertheless, Internetq’s shares remained thoroughly depressed throughout December and much of January. The catalyst for the lion’s share of the 182% rise seen since the turn of the year was news in early February that founder and chief executive Panagiotis Dimitropoulos and private equity investors, who had pumped €17m into one of Internetq’s businesses, were looking at making a possible offer for the group.

A 180p a share offer came four weeks ago. Internetq is now set to move out of the public spotlight in a stock market delisting, so the boat has certainly sailed with this one.

A recipe for volatility

A recovery in the price of gold in recent months has catapulted the shares of several small gold miners into the ranks of the top risers for the year to date. Trans-Siberian Gold (LSE: TSG), which listed on AIM in 2003, has seen its shares rise by 133%.

As the shares soared, the company released a statement in February saying it was “not aware of any reason for the movement other than the recovery in the gold price and the general macroeconomic environment”.

This is the thing with gold miners: their fortunes are highly-geared to the price of gold. Put together the price of gold, a small company and operations in Russia and you’ve got a recipe for potentially extreme volatility. The shares of Trans-Siberian Gold could easily double again in the coming months; then again, they could just as easily halve. The world of small gold miners is a hugely speculative area of the market, more suitable for casino players than investors.

Longer-term focus

December was a terrible month for education software and services group Tribal Group (LSE: TRB), with its share price crashing to an all-time low under a welter of bad news: a second profit warning; a warning of a potential breach of debt covenants; a proposed rights issue to raise £35m; and a move down from London’s main market to AIM.

The 105% rise in the shares has come on the back of banks agreeing to waive covenants, and the £20m sale of one of Tribal’s businesses, enabling the proposed rights issue to be reduced from the originally-envisaged £35m to £21m.

With the injection of cash restoring the balance sheet to health, and a new management team, Tribal can now focus on the longer-term future. If the company can impress the market with a reduced cost base, improved operating efficiency and a compelling strategic plan from the new chief executive, the shares could make impressive progress over the next few years. A stock investors with a higher tolerance for risk might be interested in looking at.

The post Could Internetq Plc (+182%), Trans-Siberian Gold plc (+133%) And Tribal Group plc (+105%) Double Again? 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.

Digger declines again

Energy and metals giant Vedanta Resources (LSE: VED) suffered another steep fall in edgy Tuesday trading, the business last seen dealing 9% lower from the prior close, as the commodities sector washed out once again.

Although Vedanta can take heart from zinc prices rising to multi-month highs around $1,770 per tonne today — the galvanising metal is by some distance the firm’s largest market — worsening fundamental balances across other markets like copper, aluminium, iron ore and oil threatens to keep earnings on the back foot.

Vedanta saw earnings slump 51%, to $493.6m, between October and December, thanks to the enduring pressure across commodity markets. The City expects the London firm to clock up a second successive loss in the year to March 2016, and I do not foresee a recovery any time soon, given stuttering resources demand and rising production levels across many sectors.

A troubled tech play

Science and tech developers Allied Minds (LSE: ALM) also took a hefty whack in Tuesday’s session following its latest trading statement and was trading 5% lower on the day at the time of writing.

Allied Minds advised that revenues had collapsed 58% during 2015, falling to $3.2m, a result that was put down to sales weakness at its RF Biocidics (RF) subsidiary. The company noted that the unit “now requires certification for each individual installation and is subsequently delaying revenue.”

However, Allied Minds was quick to point out the progress it had made on the R&D side in 2015, having invested $102.8m across its subsidiaries. The business also added 90 research institutions to its partner network last year, taking the total to 160, while new collaborations with Bristol-Myers Squibb, Intel, AMD and Google have also been greeted with much fanfare.

The Neil Woodford-backed firm is not expected to swing into the black any time soon, however, and the number crunchers have pencilled in a fourth successive annual loss for 2016. And given the early stage of much of Allied Minds’ technologies, I believe those expecting a bottom-line uptick any time soon may end up disappointed.

Mobile specialists move down

Mobile marketing play InternetQ (LSE: INTQ) completed the set in Tuesday business following its own trading statement — the business was last seen dealing 2.8% lower from the previous close.

At face value InternetQ’s update couldn’t be considered half bad. Revenues advanced by around 15% during 2015, to some €150m, the company advised, with sales at its B2B mobile marketing arm contributing almost three-quarters of this amount.

Investor appetite for InternetQ has surged in recent days, following a takeover attempt by a consortium led by chief executive Panagiotis Dimitropoulos. Discussions are still at an early stage and the group is yet to make a formal offer.

InternetQ’s shares took a whack last year after the self-proclaimed ‘Sheriff Of AIM’ Tom Winnifrith launched an attack on the firm’s stated profit figures, debt levels, operating costs and cash generation. But with the City forecasting a 31% earnings leap in 2016 — resulting in a mega-low P/E rating of 1.7 times — many investors may consider the tech play worth a look at current prices.

The post Should You Buy Vedanta Resources plc, Allied Minds PLC & Internetq Plc On Tuesday? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• 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?

Royston Wild 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.

From starting December at a shade under 148p per share, InternetQ careered to a record low of 54.25p late last week. And although the London business enjoyed a brief uptick in recent days, shares have sunk by more than a fifth in Tuesday’s session and was recently dealing around 61p.

Winnifrith strikes again

The rockiness over at InternetQ was prompted by a worrying blogpost earlier this month from Tom Winnifrith, the man who helped sound the alarm concerning financial irregularities over at Watchstone Group (or Quindell, as it was formerly known).

Through the Share Prophets website, Winnifrith claimed that InternetQ had capitalised “the majority” of its operating costs, allowing it to report “high” profits. The stocks commentator also made a series of other statements, from questioning the firm’s debt levels and cash generation through to the value of acquisitions made in recent years.

In response, InternetQ took the unusual step of releasing a winding, 3,000+ word rebuttal to Winnifrith’s claims on Monday. The tactic initially did the trick, sending the stock value 36% higher as investors piled back in. But some of the mud has clearly stuck, hence why shares have resumed their downtrend today.

The market has taken little comfort from InternetQ’s impromptu trading update released last week in response to the share price descent. The Athens-located business advised that “there has been no material change to the operational and financial performance or outlook for the business,” and that “trading remains in line with management expectations.”

InternetQ advised in November that revenues galloped 20% higher between January and September, to €105.6m, a result that pushed pre-tax profit 4% higher to €7.9m.

And promisingly, InternetQ noted that it was experiencing “accelerated revenue growth in the second half of the year,” adding that “we expect that the continued shift towards adtech campaigns will have a positive effect on our top line and cash conversion going forward.”

So what does the City think?

Well, The Square Mile’s army of analysts certainly remain bullish concerning InternetQ’s investment case during the medium term, at least. The business has a solid record of generating double-digit earnings growth over the past few years, and further advances to the tune of 19% and 31% are projected for 2015 and 2016 correspondingly.

And thanks to evaporating investor appetite, these projections leave the business dealing on bargain-basement P/E ratios of 2.2 times for this year and 1.7 times for 2016.

Of course, many will point to Winnifrith’s success in highlighting irregularities at the likes of Quindell and more recently Globo as reason not to invest in InternetQ at the present time. But should the so-called Sheriff of AIM’s latest allegations prove wide of the mark, InternetQ could turn out to be a very canny purchase indeed.

The post Does Internetq Plc Represent a Bargain At Current Prices? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• 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?

Royston Wild 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.

If you’ve been a holder since the shares’ peak in late February 2014, you’ll be sitting on an 86% loss today! But who is InternetQ, what does it do, and why the fall?

Mobile software

InternetQ is a software development company based in Greece, doing “marketing and digital entertainment” for mobile networks, and today it released a response to the adverse share price movement. The collapse, it tells us, is due to allegations made in a blog post which the company claims are inaccurate. So who is the blogger and what do they say?

It turns out it’s ace bear-catcher Tom Winnifrith, he who helped expose the problems at Quindell (now Watchstone Group) and Globo. In his latest at ShareProphets, Tom has been been taking a close look at InternetQ’s accounts — and he doesn’t like what he sees.

InternetQ has been reporting impressive annual growth for the past few years, but at the same time it has been raising cash though new equity issues and expanding through acquisition — the most recent was in 2013, a year in which the company reported a 25% rise in EPS (after a 100% reported rise the previous year). Borrowings have been growing too, and the firm reported €18.5 million of bank debt at its interim stage this year — a period in which adjusted EBITDA was reported to have risen by 34%, although cash flow declined by 6%.

One thing the firm has been doing, which Mr W picks up on, is capitalizing a lot of its operating expenditure as software development. That means that instead of going down as a simple cost and just reducing headline profit, the expenditure finds its way onto the books as intangible assets — and Tom estimates that reporting it as conventional ongoing expenses would knock around 50% off 2014’s reported EBITDA.

Trade receivables have been growing too, which is rarely a good sign.

Super low P/E

So what do we do now? InternetQ’s fundamentals look impressive — the shares are trading on a forward P/E for this year of just 4.7, and that drops to only 3.6 based on 2016 forecasts. And EPS growth forecasts put the PEG ratio at just 0.2 and dropping to 0.1 (where growth investors typically see around 0.7 or less as being good).

But there only appears to be one broker issuing recommendations, and that’s InternetQ’s own broker and adviser Canaccord Genuity — perhaps unsurprisingly, they rate the stock as a Buy, and have a price target of 528p on the shares — nearly ten times the current price!

Other things being equal, a very low P/E like this could indicate a stunning bargain. But it can also mean that institutional investors are keeping well away for very good reasons. And in my experience, Mr Winnifrith is pretty good at spotting those reasons.

It’s bargepole time for me.

The post Why Has Internetq Plc Crashed 60% Today? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• 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?

Alan Oscroft 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.

Of course, a number of stocks have underperformed the index. One obvious example is Lloyds (LSE: LLOY) which is down over 7% in the last four weeks despite already trading at a super-low valuation. For example, Lloyds traded on a price to earnings (P/E) ratio of just 9.5 one month ago, which represented a huge discount to the FTSE 100’s P/E ratio. However, it still proceeded to underperform the index and it now has a rating of just 8.8.

Looking ahead, it seems unlikely that Lloyds’ valuation will move much lower. That’s because the bank has a sound strategy, a relatively low cost:income ratio and the UK economy (which is a key market for Lloyds) is performing relatively well. Clearly, the problem for Lloyds is convincing the market that it has a sound long term growth outlook, but its expected increase in dividend payments could act as a positive catalyst on its share price in the meantime.

For example, Lloyds is forecast to raise dividends per share by 58% next year. That is a staggering rate of growth and means that Lloyds is due to yield 5.3% in 2016, which puts it in among the highest yielding stocks in the FTSE 100. However, with shareholder payouts still set to represent just 49% of profit, there is scope for further dividend rises in 2017 and beyond.

As well as dividend increases, the end of state (part)ownership could have a positive impact on Lloyds’ share price. In fact, it could convince the market that Lloyds is now a very viable entity with a sustainable business model that offers a relatively appealing risk/reward opportunity. Clearly, it may take time for Lloyds to become a more in-demand stock but, with such a low valuation, it remains a very strong buy for the long term.

Meanwhile, Internetq (LSE: INTQ) has also underperformed the wider market in recent weeks. For example, its shares are down 55% in the last month even though its performance as a business has been relatively strong. In fact, last week Internetq updated the market on progress made in the first nine months of the year, with both revenue and pretax profit rising on the back of strong momentum in both of its businesses.

Looking ahead, Internetq is forecast to post a rise in earnings of 22% in the current year and a further increase in its bottom line of 31% next year. This puts it on a forward P/E ratio of just 2.7, which indicates that it offers superb capital gain potential.

However, investors may wish to hold off purchasing Interntq since its shares are continuing to fall, with them being down another 10% today. This indicates that market sentiment remains weak and, with such a low valuation, it may prove to be a case of ‘too good to be true’.

The post Lloyds Banking Group PLC And Internetq Plc: Buy, Sell Or Hold? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Lloyds Banking Group. 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.