Today I am looking at the investment case for three London-listed stock losers.
Digger declines again
Energy and metals giant Vedanta Resources (LSE: VED) suffered another steep fall in edgy Tuesday trading, the business last seen dealing 9% lower from the prior close, as the commodities sector washed out once again.
Although Vedanta can take heart from zinc prices rising to multi-month highs around $1,770 per tonne today — the galvanising metal is by some distance the firm’s largest market — worsening fundamental balances across other markets like copper, aluminium, iron ore and oil threatens to keep earnings on the back foot.
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Vedanta saw earnings slump 51%, to $493.6m, between October and December, thanks to the enduring pressure across commodity markets. The City expects the London firm to clock up a second successive loss in the year to March 2016, and I do not foresee a recovery any time soon, given stuttering resources demand and rising production levels across many sectors.
A troubled tech play
Science and tech developers Allied Minds (LSE: ALM) also took a hefty whack in Tuesday’s session following its latest trading statement and was trading 5% lower on the day at the time of writing.
Allied Minds advised that revenues had collapsed 58% during 2015, falling to $3.2m, a result that was put down to sales weakness at its RF Biocidics (RF) subsidiary. The company noted that the unit “now requires certification for each individual installation and is subsequently delaying revenue.”
However, Allied Minds was quick to point out the progress it had made on the R&D side in 2015, having invested $102.8m across its subsidiaries. The business also added 90 research institutions to its partner network last year, taking the total to 160, while new collaborations with Bristol-Myers Squibb, Intel, AMD and Google have also been greeted with much fanfare.
The Neil Woodford-backed firm is not expected to swing into the black any time soon, however, and the number crunchers have pencilled in a fourth successive annual loss for 2016. And given the early stage of much of Allied Minds’ technologies, I believe those expecting a bottom-line uptick any time soon may end up disappointed.
Mobile specialists move down
Mobile marketing play InternetQ (LSE: INTQ) completed the set in Tuesday business following its own trading statement — the business was last seen dealing 2.8% lower from the previous close.
At face value InternetQ’s update couldn’t be considered half bad. Revenues advanced by around 15% during 2015, to some €150m, the company advised, with sales at its B2B mobile marketing arm contributing almost three-quarters of this amount.
Investor appetite for InternetQ has surged in recent days, following a takeover attempt by a consortium led by chief executive Panagiotis Dimitropoulos. Discussions are still at an early stage and the group is yet to make a formal offer.
InternetQ’s shares took a whack last year after the self-proclaimed ‘Sheriff Of AIM’ Tom Winnifrith launched an attack on the firm’s stated profit figures, debt levels, operating costs and cash generation. But with the City forecasting a 31% earnings leap in 2016 — resulting in a mega-low P/E rating of 1.7 times — many investors may consider the tech play worth a look at current prices.
