Attendees: Geoff Floyd, Alan Martin, Dave Johnston, Andrew Watkins, Don Parker, Wez Davey and Andy Davies
Apologies: Richard Albon, Les Watson, Robin Rynhart
The minutes were reviewed in advance and agreed to represent the meeting.
Did not do this in the meeting. Here is a review of the actions as should have taken place:
3.1 (GF) To contact the tax office and take necessary steps to register the club.
3.2 (GF) Complete forms to register RIC with Proshare.
3.3 (GF) To open an account with Charles Schwab
3.4 (All) Email round useful web sites and information.
3.5 (All) To set up standing orders starting on the 1 August.
Action 2.4 (All): Review the areas identified and make recommendations of companies to watch.
|
Don |
Bio-technology |
See reports later in the minutes.
Presented table below.
|
Company |
P/E |
PEG |
PSR |
Debt/ Equity |
Profit growth |
Revenue growth |
Comment |
|
Target |
Growth rate |
1 |
<1 |
Small |
High |
High |
|
|
Mitel |
10.5 |
- |
0.87 |
110% |
2yr ave 35% |
50% |
Good ratios except debt/equity which make things worse if things go wrong. Good PSR as below 1. |
|
GEC |
22.5 |
3.2 |
2.6 |
70% |
2yr ave 7% |
5% |
It all depends on whether GEC can grow. If not P/E too high. |
|
BT |
29.0 |
2.0 |
4.1 |
90% |
15% |
8% |
Company valued because of its stable income. Otherwise ratios are poor |
|
C&W |
24.5 |
4.2 |
2.6 |
280% |
6% |
13% |
Very high debt. P/E much higher than growth |
|
Fibernet |
13.4 |
85% |
50% |
Large loss last year. P/E = 80 if 25% profit. |
|||
|
Pace |
50 |
8.0 |
130% |
0% |
Made a loss in 1998. Back to profit in 1999. |
||
|
VideoLogic |
60.2 |
8.0 |
11% |
-4% |
Potential for high growth but will be difficult to match P/E |
||
|
Artisan |
50 |
0.32 |
7.6 |
7% |
157% |
100% |
Making a loss in 1999 hence low share price. |
|
ARM |
337 |
14.5 |
25% |
-21% |
60% |
Share price recently collapsed. Still very high P/E. Very low earnings per share. |
P/E - Share price / earning per share
PEG - P/E / earnings growth
PSR - market capitalisation / revenue
Mitel seems to be the best value with a P/E of 10.5. ARM is particularly over valued with P/E of 337 despite a recent collapse in their share price.
This sector is difficult to analyse as we have little back ground knowledge to judge a companies strategy. Decided to drop this sector for the moment unless we find a source of market information.
Oil and gas companies are a good investment if the share price is right. At the moment most of companies in this sector are trading close to the top of their share price range for the last 12 months. Therefore decided to give this sector a miss for the moment.
BP reckons that the oil price will return to $14 from its present high of $20.
No new information over last months report.
Utilities offer a steady income but little growth. Scottish power are considering a purchase in the USA.
Europe may be a good choice as they had shown good growth over the long term and an just coming out of a recession.
UK growth is flat. Real ale is losing ground.
Zetec are developing fuel cells for electric cars.
Bank share prices are dropping. There is concern about US interest rates and Gordon Browns new restrictions.
It was decided to divide into two teams and to concentrate on the following market sectors:
|
Telecomms and Internet providers |
Unix team |
Andy D, Andrew W, Wez, Don, Robin |
|
Electronics and Semiconductors |
Windows team |
Geoff, Alan, Dave, Richard |
Les may choose to be an honouree member of the windows team to balance the numbers.
A recommendation to be made on potential share purchases from both teams by next month.
Next Meeting : 14 September 1999