Yahoo Finance Stockranks Upgrades & Downgrades: 23 December: GBO; CRM
Globo
Globo has been a controversial stock for quite some time now. The market fell in love with it in 2013 and the company nearly tripled in value, rising from 23.5p (October 2012) to 87.5p (October 2013). Even Jim Slater's son, Mark invested in the company. However, between 2010 and 2013, operating cash flows were consistently below earnings.
If cash is king, why did investors chase this company towards such dizzy heights? Were investors chasing a story? In 2013, Globo signed a contract with one of the biggest electronics distributors in the US, Ingram Micro. Globo also appeared to have excellent fundamentals. On 6 October,it qualified for 6 GuruScreens, had a PEG ratio of 0.5 and profit margins of 42% (see here).
Nevertheless, the share price jumped off a cliff in October 2013 and Globo now trades at 38.78p - less than half the value of its peak price.
Earnings have not grown over the last twelve months, but the Globo has under performed the market by 32% this year. This helps to explain why the company now has such a low PE ratio (6.6) and Globo's overall ValueRank is 84. The company also has a QualityRank of 69 - within the top third of the market. Globo has indeed been climbing the StockRanks, rising above 80 this week, up from 75 in November.
Carrs Milling Industries
I remember eying up Carrs Milling Industries back in July 2013. I thought about buying when the stock was trading at around £12.50. It now trades at £17.35 - up 39% over 17 months while the market has been flat. But guess what. I didn't buy, so I didn't make a penny.
The company now has a StockRank of 82. On November 1st it was 86. On October 1st it was 91, so the company's trend is obviously heading downwards. Why? Lower wheat prices have hit sales. Revenues have indeed fallen from £468m (2013) to £429 (2014). Earnings growth is also starting to slow. EPS grew by 12% in 2011 and 39% in 2012, but fell by nearly 1% in 2013 and only grew by 2% in 2014.
Brokers also becoming less optimistic about the company. Since December 2013, EPS estimates have fallen from £1.40 to £1.35. There was also major typo in the company's final results. On the 10th November, the management team released a statement saying that "Retail sales grew by 0.5%, not 2.7% as detailed in the Chairman's Statement or 2.1% as detailed in the Chief Executive's Review." Hmm.
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