Bill1703
20 Jan 2018
Re: hmmm "... Barclays downgraded AA target price from 2.70 to £2 and reduced earnings estimates, hence the drop yesterday (although they are still overweight)..."Yes, it has been Barclays doing the latest SP damage - still a positive recommendation, albeit with lower EPS and TP, and plenty of near-term caveats, including possibly losing the dividend.Edited highlights from their report below - in essence, it is not far from my oven view, ie. no shortage of troubles and concerns, but ultimately just still too cheap... ********** *****"News flow in the short term is likely to highlight current challenges, namely the need for additional investment in the business which prolongs a meaningful uplift in FCF until FY20-21e, and the negative impact cold weather may have on short-term profitability.We now model a £10m yoy decline in EBITDA in FY19e and include an incremental £50m of capex over FY19/20e reflecting investment in patrols, the insurance business, call centre personnel, IT and Car Genie. We also cut the dividend from our numbers; at ~7x leverage we believe this is prudent, it releases c£60m p.a. of cash and we calculate the Class A dividend covenants will mandate a reduction anyway.There is no ‘quick-fix’ as attempts to de-lever rapidly are complicated by: 1) redeemed Class A notes require ‘make-whole’ payments covering all outstanding interest to maturity; 2) the capital raise required to lower leverage to a ‘normal’ level (we estimate c£2bn) may not be plausible.Longer-term, we believe the equity return story and investment case remainattractive. At the business review in April we expect the CEO to deliver a robust defence of the roadside business. This should renew confidence that the core business will be well-invested, stabilised and have an appealing membership proposition. The insurance business could also be poised to deliver meaningful growth. Over FY19/20e – despite the investment programme – we forecast debt pay-down of £75/100m worth ~7.5/10% to equity p.a., improving to c£140m in FY21/22e (+14% p.a.). Factoring in modest EBITDA growth (mainly driven by insurance) takes total equity returns to greater than 20%. We lower our price target from 270p to 200p, applying an unchanged 10.5x EV/EBITDA multiple to our 10% lower CY19e EBITDA forecast."
contrarianstyle
19 Jan 2018
Re: hmmm its in the times today that Barclays downgraded AA target price from 2.70 to £2 and reduced earnings estimates, hence the drop yesterday (although they are still overweight)
paul1945
18 Jan 2018
Re: hmmm Sold a few weeks ago small profit just noticed Barclays buy rec. today ! target 200pjust missed buying before close good or bad?
Eagerbeaver66
18 Jan 2018
Re: hmmm I think its probably relatively small movement exaggerated by low liquidity.Although I can see short positions crept up on AA in recently, I think that reflects a wider trend of shorting companies with high debt/low growth and weak balance sheets, especially retail ones- but AA debt look quite manageable for a strongly cash-generative business.Just needs another good year-end update like the 6-month one, to show how much cash is coming in, to give them a leg up.
emisbod
18 Jan 2018
Re: hmmm Things like this make one wonder whether we poor retail investor saps are just fodder for the inside traders. Someone knows something....
Recovery required
18 Jan 2018
Re: hmmm Still nothing and still falling.
Jedi Council
18 Jan 2018
Re: hmmm I cannot see any news either, but volume is high for this stock so most be some news out there!!
contrarianstyle
18 Jan 2018
hmmm Anyone know the reason for the large fall today, can`t see any new releases...
gamesinvestor
08 Jan 2018
No Free Punches Well they say there is no such thing as a free lunch!It seems the former AA boss threw a few punches that could cost him £1.2M[link] -- So it's OK to take prescription drugs drink beer and wine and expect to excused when you lamp someone eh !! -- What an eejit!!
Bill1703
04 Jan 2018
Re: share price support and resistance l... "I still think the support levels will hold... Have added back long and bought shares... Maybe I am wrong... It`s a volatile share, didn`t really think it would be..."Soi - yes, looking at the relatively stable core Roadside business - with quasi-utility characteristics (albeit with a long-term twist) - you would have thought not. But it's the massively leveraged (legacy) capital structure that is key here... it means on a medium term (say, 3 year) view and beyond, the range of feasible outcomes is exceptionally wide. Anything from, in the broadest terms, possibly 500p, down to maybe 50p (in today's money equivalent) - or even less.And so, even very minor shifts in the prevailing "consensus" market view - such as you get all the time with all stocks - become significantly magnified in SP movements. All quite logical, really (IMHO)...The thing I take greatest heart from is the major disconnect between the debt market's current view of the business (and its sustainability) and that of the equity market - as AA management has itself been pointing out. One of them MUST be wrong....Of course, it could be the debt market view!! But still, therein lies the opportunity...
soi
04 Jan 2018
Re: share price support and resistance l... Hi GamesIndeed.I still think the support levels will hold.Have added back long and bought shares.Maybe I am wrong.It`s a volatile share, didn`t really think it would be.ATBsoi
gamesinvestor
04 Jan 2018
Re: share price support and resistance level... soi -- what a difference 48 hours makes eh?Down at 163 already -- oh well it's in Neil Woodford's fund so it's bound to be OK innit?Games -- behave yourself , it's not his fault he picks all the best stocks is it lol !!
soi
03 Jan 2018
share price support and resistance levels. Good MorningI`d never taken any notice of this until Bill included it in his 2108 share picks, read first on iii LLOY.Glanced at financials/fundamentals then to charts and share price history.It appealed to me.I do invest for long term but the bulk of my activity is in short term tradingRealise many are not interested in TA ( Technical Analysis ), fair enough.I`ll just share my thoughts on Support and Resistance levels.Link to a fairly good site that explains the principles :[link] use these levels extensively.I feel there is price support at 158.7, then again at 149.5.Resistance levels I have 173/190/ 203.Yesterday it got past and held above the first resistance level ( a positive sign )Some TA practioners would then regard 190 as the next target.It is not an exact science and I`m not a purist.Could be totally wrong.I did enter a long position yesterday, first ever time of trading it and closed for modest profit intraday.So now out but looking to get back in to the long side.Fairly positive on this and plan to trade it a few times.It dos also seem to be a viable investment with potential, might buy a small share tranche but my main interest is in trading. Using a SB account( spreadbet ) hence no stamp duty or commission.I don`t concern myself with shorters or short positions ( I short myself at times but don`t make this a short) there are 4 outfits with notifiable short positions here .Short positions increased 3 fold from late July last year although in December, 2 funds reduced, 2 increased.The largest short position holder is a specialist very large hedge fund, they`ve loads of short positions open in various companies.. Maybe some are merely hedges against client holdings.GL to holders/investors and anyone trading it.soi
contrarianstyle
02 Jan 2018
why rising trend? does anyone know why we have been rallying since late November since £1.50?maybe shorters taking some off table.I started to build a position here once we held 1.50 a couple of times and looked extremely cheap. not sure about long term and whether to hold though
Bill1703
01 Jan 2018
My Top 10 Stock Picks for 2018 As foreshadowed on other relevant boards... 2018 trading from tomorrow, so time to repeat last year's "virtual portfolio" challenge. Same rules, as per the papers - equal weighted, valid for the whole year with no switching, full owning-up at year end! AACapitaConnect GroupGlaxoSmithKlineImperial BrandsITV Lloyds BankingMarks & SpencerStagecoachWPPI retain a bias toward UK exposure and 'Value' (the two closely related, obviously), with an expectation that the UK domestic outlook will clarify satisfactorily (if not wonderfully) this year. But it's no slam-dunk... and so hedged with a decent slug of overseas earnings and a general focus on "stock specific" stories - with LLOY the only real pure play on 'UK PLC' and associated sentiment. Ultimately, well aware that it's near-impossible to avoid losers as well as winners, I have asked the question - can I see 15% over 2018 (plus divis)? Without necessarily much help from the wider market. Four stocks stay in from 2017, with CPI, IMB, ITV and SGC still to justify their original inclusion and getting another chance (SGC was a close call). Bonmarche has done its job as "speculative" midcap retail play; VOD still looks fine to me but harder to see sufficient upside in either valuation or financial reporting; CARD and WTB were tougher choices, both still good for the long term IMHO but I see their respective attractions now more finely balanced against likely persisting near-term headwinds.I will doubtless be elaborating on the case for each of the "new" inclusions in the course of the year. FWIW stocks actively considered but failing to make the cut (as well as CARD and WTB): Braemar and SBRY (from my 2017 Top 10), then Aviva, BT, Debenhams, Gattaca, Merlin, Morrisons, Trinity Mirror.FYI I own 7 of the 10 stocks, with all of CPI (still!), WPP, GSK under active consideration (probably in that order). I'd be surprised if I didn't buy into at least one in the course of 2018.
