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Read on to see an article posted on the OMG blog on 1 August 2016:

Political game playing

Reviews

AGL – 68.75p – Cashed-up to pass further cancer diagnostic milestones

KWS – 321p – Content services added

CML – 337.5p – On course

OPTI – 78p – Slimming growth

SBS – 17.25p – Bid launched

 

The FTSE 100 was a cigarette paper lower at 6,724 while the FTSE 250 improved 1.6% and AIM All Share increased 1.9%.

Smoke was blown as UK GDP for the three months pre-Brexit improved faster than expected at 0.6%, with Manufacturing and Services doing well.

Cold water is poured on this flame. As after a month of Brexit an EFF report on the confidence in Manufacturing showed a slump and a Gfk report on Consumer Confidence reported that in July it fell to its lowest level in 26 years.

The US economy grew less than expected while Consumer sentiment was adversely effected by UK’s Brexit. Interest Rates remained unchanged although there was a ‘spoofing’ statement that rates were still poised to rise.

Buy Now - £54/year

This Week……………..

To be a fly on the wall at Wednesday’s ECB non-monetary policy meeting would generate enough material for a follow-up book for Machiavelli’s, The Prince. Presently our European ’partners’ have to be patient during the truce before Section 50 is evoked.

The BOE are unlikely to decrease Interest rates at Thursday’s meeting or until around the Autumn Statement. As the 11% fall in sterling is stoking inflation accelerating the issue at this stage would not be wise which the Governor Carney’ speech may expand on.

IF there is a fall in US payroll on Friday then the economic policy stalemates could lead to increased political rhetoric.

Ignore the Headlines, read the subtext and maybe accumulate on weakness

 

Angle (LSE: AGL)

  1. 75p (65p/69p)

Mkt Cap: £51.5m

Next Results: Interims January

The finals showed increased losses to £5.2m. Milestones achieved included first sales to the research use market and the recruitment of patients for the detection of ovarian cancer which has a £300m clinical application. The test is also used for breast and prostate cancer and offer major growth potential. Liquid biopsy is expected to revolutionize cancer care.

Net cash is  £10m after a fund raise at 64.5p in May. The Parsortix system captures the tumour (potential cancer) cells from the patients’ blood for analysis. Presently doctors have to cut out a solid biopsy (lump of flesh) to send off for analysis.  Just using the blood is a lot less intrusive, quicker and clearly less ‘painful’ for the patient. The key areas targeted for early commercialisation are research labs sales and ovarian cancer treatment. Clinical evaluation is underway at 3 leading US cancer centres and this should leading to FDA approval for use for breast cancer. It will then be more straightforward to get approvals for other cancers. The evidence supporting Parsortix efficacy is growing which moves Angle nearer to revenue. The first revenues from sales to research labs are starting to flow through.

Trading Strategy

Milestones are being passed as Angle seek to become a leading player in the emerging liquid biopsy market. Traders could wait for further milestones as this builds in a bonanza opportunity over the next couple of years.

Last Omg! Price 66.5p

Buy Now - £54/year

Keywords Studios (LSE: KWS)

321p (317p/325p)

Mkt Cap £173m

Next Results: Interims, September

Keywords Studios (LSE:KWS) has acquired Canada-based concept art services provider Volta Creation Inc for C$5.25m in cash and shares. This takes Keywords into a new section of the games creation services market and provides further cross-selling opportunities. Volta is a profitable business and a variable cost base because of its use of freelance artists.

The acquisition led to an upgrade in the 2017 earnings forecast from €0.211 a share to €0.22 a share.

The share price has more than doubled since the original recommendation. The prospective 2016 multiple of 22, falling to 17 in 2017, looks a full valuation but further acquisitions are likely to reduce the multiple.

Trading strategy

The consolidation strategy continues to work and there should be more gains to come.

OMG recommendation: 151p/155p

 

CML Microsystems (LSE: CML)

  1. 5p (335p/340p)

Mkt Cap £54.3m

Next Results: Interims, November

CML Microsystems (LSE: CML) is broadly maintaining its gross margins and trading is in line with expectations. New products in wireless and storage controllers are increasing sales.

Cash continues to flow into the business although the net cash position has been reduced by the completion of the $11m Sicomm acquisition at the end of July.

Trading strategy

CML is well-placed to grow.

Original recommendation: 320p/325p

 

Optibiotix Health (LSE: OPTI)

78p (77p/79p)

Mkt Cap £60m

Next Results: interims August 2016

OptiBiotix (LSE:OPTI) is taking a majority stake in a new joint venture with the Healthy Weight Loss company following the successful trial of its Slimbiome ingredients in a range of shakes and snakes sold online. The products have been sold under the GoFigure brand and OPtiBiotix will have a 51% stake in the business.

Sales have been better than expected and the products are set to be sold in some high street stores with more outlets likely to follow. This shows the commercial potential of the product.

This is separate from the deal with SlimFast, where the ingredients will supplement the existing product.

Seneca Partners has trimmed its stake to just below 5%. The shares have been trading in a narrow range for most of this year with Finance Yorkshire also trimming its stake last month. This and other profit taking appears to be holding back the share price. There is plenty of cash in the bank and the cash burn of approximately £75,000-£85,000 each month means that there is no need to issue more shares at the moment.

Trading strategy

More growth to come.

Original recommendation: 77p/79p

Buy Now - £54/year

Source BioScience (LSE: SBS)

  1. 25p (17.25p/18p)

Mkt Cap £61.5m

Next Results: Interims, September

Continental Investment Partners and Harwood Capital have launched their 18p a share cash bid for Source BioScience (LSE: SBS) that values the laboratory and DNA services company at £62.9m. There is also an unlisted securities alternative where investors’ can accept a unit in the bid vehicle, Sherwood, comprising one share and one PIK loan note for each Source share.

Harwood and Continental are interested in 30.9% of the Source share capital and additional acceptances take the acceptance level to 52.6%.

The plan is to give Source additional financial backing so that it can take advantage of its opportunities.

Trading strategy

It is a shame the business is being taken private but accepting the cash offer provides a 50% gain in two years.

Original recommendation: 12p

Buy Now - £54/year

Read more sample articles:

15 Sep – COG Could go Mad

15 Aug – Follow the Fundamental Momentum

2 Aug - Political game playing

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