I think this rhymes with

the company its written about – Volex.

Volex is a listed company on the LSE and on Friday its share price fell 36.5% to 89pence.

I spent an hour looking at the company to see if it might be worth picking up on the cheap. Here is an extract from The Guardian:

Open quote:

Investec analyst Chris Dyett said:

 

Volex has been confronted by an unexpected cut in volume projections from its largest customer and this is expected to have a significant operationally-geared impact on profits. The impact on earnings – a 30% reduction in our adjusted earnings per share to 31.8c for 2013 – is fairly dramatic. However, the company is very robustly financed and remains likely to finish the year still with less than $5m of net debt. As a result of this downgrade, we lower our target price to 240p from 320p and move from buy to hold.

Close quote.

Now, called me stupid if you will, but if the share price is currently 89p and your target is 240p why would you have a rating of ‘hold’? It ought to be a screaming ‘buy’. But it was already a ‘buy’ with a target of 320p so that suggests to me that this analyst has been somewhat wide of the mark with his past analysis. Its too late to say ‘sell’ after a 36.5% fall and he doesn’t have the b*lls to say ‘buy’ so he switches to hold i.e. do nothing. I am staggered.

As far as I can tell Volex issued a profits warning (sorry, trading update) in September too so it is becoming habit-forming. The old adage says profit warnings go in threes so I’ll sit tight for now. But maybe after a third one the analyst in question would decide its time to do something but whether it will be buy or sell I haven’t a clue. I did buy Thomas Cook Group shares recently which are up a mere 50% in the last 2 weeks. The bad news is I only bought a small amount.

I’m sticking to Verditer Flycatchers for the time being.

 

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4 thoughts on “I think this rhymes with

  1. I’ll agree with what ever you say. I know nothing about stocks and that is “not up my alley.” That is a vey old saying and I’m not sure if it is an american or Texas expression or maybe sort of universal. But, not even one bird to post that could be pulled from a recess of your files?

  2. All my money goes into cameras and boats. After losing big in the dotcom bust, then the Enron scandal, and now treading water mortgage, I don’t think I trust the experts at all.

    • Fred, I manage my own pension and make all the decisions. I do my own research. I simply don’t trust the ‘experts’ either. I read widely but use a few core blogs to guide me on market data and technical stuff. I don’t have a boat but the money still seems to go pretty fast.

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