Mello 2025

First of all, I hope to see many of you at Mello London, which starts on Tuesday.

As most of you know I am also writing for Paul on his Substack here and it’s not too late to use his code for 50% off Mello tickets, “PaulSub50”, here.

I will be there for both days and hope to catch up with lots of interesting companies and subscribers.

UPGRADES

Welcome to this month’s “Upgrades” update.

It works for me in this format, but I welcome suggestions for any improvements which may make it better for everyone else, so let me know in the comments below…

INTRODUCTION

Broker upgrades, to Earnings Per Share (EPS), are something I check for pretty much every morning.

Upgrades typically come in the day, or a few days, after an “ahead” or favourable statement by a company. Quite often, thanks to Research Tree, I get to have an idea of the affect these statements will have on EPS forecasts on the day. However, not all companies provide us Private Investors with such information, so it’s usually a case of waiting to see the impact reflected in the Stockopedia forecasts. I always consider it useful to watch out for those updated forecasts on Stockopedia.

I have a simple Stockopedia screen that identifies all companies that have had a Y1 EPS upgrade greater than 5% in the past month. From this screen, I export the data into Excel and manipulate it so it looks like this.

Companies in my universe (as with “Bowls”), included in the above screen, are those with a Market Cap greater than £50m and less than £1.5bn. I exclude those in the “Residential & Commercial REITs”, “Collective Instruments” or “Holding Companies” Industry groups – Just my personal choice which leaves me with around 500 “Companies In My Universe”.

Here I can quickly identify…

• Companies with a Y1 EPS upgrade greater than 5% in the past month (Dark Green)

• Companies where Y2 EPS has also been upgraded in the past month (Dark Green), it’s good to see both years upgraded is it not!

• The relative performance (strength) of the Share Price in the past month, Dark Green highlights those where that performance is less than the Y1 EPS upgrade (percentage)

• The forecast growth from the Y1 EPS forecast to the Y2 EPS forecast, Dark Green highlights those where there is growth, it’s good to see growth is it not!

• The forecast PER’s for Y1 and Y2

• The Y2 PEG, which is Not Applicable (n/a) if there is no growth forecast (from Y1 EPS to Y2 EPS), Dark Red if it’s greater than 1 (no real value*), Green if between less than 1 and greater than 0.75 (some value*), Dark Green if between 0.75 and 0.25 (THE SWEET SPOT FOR VALUE*), Green if less than 0.25 (could be great value but probably indicates something is not quite right*)

* Observations based on my interpretation of PEG, which you may or may not agree with, and which is of course not applicable to all shares.

IMPORTANT NOTE – Some of the above EPS have been manually converted from their reporting currency to Sterling, so please check these where appropriate.

So, it would be nice to identify, would it not…

• Companies with a Y1 EPS upgrade greater than 5% in the past month (Dark Green)

• Companies where Y2 EPS has also been upgraded in the past month (Dark Green)

• Companies where the relative performance (strength) of the Share Price in the past month has not yet caught up with the new forecasts (Dark Green)

• Companies where growth is forecast from Y1 EPS to Y2 EPS (Dark Green)

• Companies with a Y2 PEG in the “SWEET SPOT”, between 0.25 and 0.75 (Dark Green)

Well, that’s what this speadsheet gives me…

GREY

IDHC, very hard to value as it’s subject to Egyptian currency fluctuations.

GREEN

This month two companies meet all criteria (shaded Green).

Avingtrans (AVG) “Designs, manufactures and supplies critical components, modules, systems and associated services to the energy, medical and industrial sectors" and I covered it recently on Paul’s Substack on 28-May-25 here. We concluded with “Tough to value, Harwood stock, sum-of-the-parts 495p”, AMBER.

Vertu (VTU) is interesting, it’s valued below NTAV and operating in tough market conditions, but it’s on a PER of 10 with a 3%+ yield, EPS are forecast to grow 4% and then 27%!

AMBER

Three companies are shaded Amber (they meet all of the criteria except one).

Two of the companies are mining related, Capital (CAPD) and Pan African Resorurces (PAF). As most of you know by now, not an area I typically invest in. The former (CAPD) looks about reasonably priced to me, with the latter (PAF) looking quite good value on a PER of 4.5 and a yield of 6%+. As always, not for me, but for those that invest in this sector, may well be worth a further look.

The other is Likewise (LIKE) “a UK--based floor coverings distributor”. Actually looks decent value here and may be in the process of stealing Headlam’s (HEAD) lunch, maybe?

SUMMARY

I may hold all, some, none, of the stocks mentioned in this article.

No investment advice intended, for information only, Do Your Own Research.

Do please give feedback on this so I can make it more useful to as many of you as possible going into the new year.

Hope to see you many of you at Mello, Paul’s code “PaulSub50”, gives you 50% off!

Until next time!

Jon