Hurt in a fall

Clearly, Lonmin continues to be a relatively uncertain business. It has been severely hurt by falling commodity prices and has struggled to maintain investor confidence, as evidenced by its 99.9% fall in share price during the last five years.

However, with a new strategy and a fundraising which should allow the company to deliver on its turnaround plans, Lonmin could continue the share price rise of 70% which has been recorded since the start of the year. Certainly, its outlook remains relatively risky, but with Lonmin due to return to profitability next year, it could be of interest to less risk averse investors.

Prudent to wait

Also volatile today are shares in Nighthawk Energy (LSE: HAWK), which are 9% lower at the time of writing. That’s despite there being no significant news flow released by the company today, although investor sentiment has been weak since the company announced a reduction in the limit of its borrowing facility. Previously it had been $23m, but it will now be $13m and Nighthawk stated in the latest update that it was consistent with many other operators’ reserve based loans in a challenging oil environment.

With Nighthawk having borrowings of $23m and $2m of cash, it is exploring other options with its lender to address the deficit. For the company’s investors, now is a highly uncertain time and although Nighthawk has an appealing asset base, and the potential to deliver high levels of profitability in the long run, it may be prudent to await further news before buying a slice of the business. That’s especially the case since the resources sector remains cheap and offers a number of other stocks with superior risk/reward ratios at the present time.

Improving sentiment

Meanwhile, shares in Metal Tiger (LSE: MTR) have been up by as much as 6% today and this took their gain to 371% since the turn of the year. Clearly, they have benefitted to a significant degree from the upturn in the outlook for the wider mining sector in that time, with Metal Tiger’s various investments benefitting from improving investor sentiment towards the wider mining sector.

Certainly, there is the scope for further gains in future and in a number of commodity markets it could be argued that the worst of the bear market is now behind us. However, even though Metal Tiger has a relatively well-diversified asset base, it could prove to be highly volatile and may only be worth a closer look for the least risk averse of investors.

The post Why Are Traders Moving Lonmin Plc, Nighthawk Energy Plc And Metal Tiger 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.

AO World (LSE: AO) released a pre-close trading update for its financial year ending 31 March, which saw its shares rise by as much as 15% to 198p in early trading.

The online retailer of major domestic appliances reported UK fourth-quarter sales and earnings “ahead of our expectations”. The company said it expects full-year UK revenue growth of around 18.5% (AO.com 27%) and UK adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of about £17m.

UK revenue growth the previous year had been 22.3% (AO.com 33%), so growth is slowing, although still impressive. However, the EBITDA performance is considerably less impressive: following last year’s £16.5m (up 47% on the previous year), this year’s £17m represents growth of just 3%. It has taken £87m of additional revenue to add £0.5m to EBITDA.

Meanwhile, AO is loss-making in Europe, where its entries into Germany and, more recently, the Netherlands are still in the early stages of building scale. There were no numbers on European revenue and EBITDA in today’s update.

The shares have come off their early-morning 198p high and are currently trading at 182p, giving a market capitalisation of £766m. I don’t believe this low-margin business merits that valuation, and AO remains a ‘sell’ in my view.

Fully valued

Speedy Hire (LSE: SDY) also released a pre-close trading update for its financial year ending 31 March this morning. The shares of the tools and plant hire group have recovered to 38p, having fallen by as much as 8% in early trading.

While the company confirmed that full-year profit is anticipated to be in line with market expectations, the Board said it will be writing off £45m of goodwill on the balance sheet — a non-cash item.

In a competitive environment, Speedy Hire is in the process of implementing a number of measures to attract and retain customers, improve operating efficiencies and reduce the cost base.

The shares are trading on over 50 times expected earnings for the year just ended, falling to 25 times for the year ahead. That seems a rather full valuation to me at this stage.

Hard to value

Metal Tiger (LSE: MTR) shares shot up 17% in early trading this morning. They’ve fallen back a little since, and are changing hands at 3.9p, as I write, giving the company a market capitalisation of about £19m.

I haven’t previously taken a look at Metal Tiger, which is focused on mineral exploration and development. First impressions:

• It’s not the most straightforward business, having one arm investing directly in metal projects, and another trading in other resource companies’ equities, warrants, royalties and so on.
• The company is a prolific issuer of Regulatory News Service (RNS) announcements, with the company releasing no fewer than 29 statements during March, which may be some kind of record.
• There is much to be “extremely positive“ about, which has the Metal Tiger team “very excited and enthused”, as it goes about its mission of targeting “a very high return for shareholders”. Meanwhile, a recent share purchase by the chairman’s wife is apparently “a positive validation of the Company’s business model”.

The nature of the business, the plethora of RNS announcements, and the excitable tone of the director-speak don’t immediately strike me as appealing. Metal Tiger may or may not deliver, but I’d want to work through the valuations of the company’s sizeable number of projects and assets in the trading arm, before considering investing.

The post Should You Buy AO World PLC, Speedy Hire Plc And Metal Tiger PLC On Today’s News? 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.