2014 – The Great Irish Share Valuation Project (Part I)

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Abbey plc, Aminex, Andor Technology, Connemara Mining Company, DCC, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, portfolio performance, Smurfit Kappa Group, TGISVP, The Great Irish Share Valuation Project, UDG Healthcare, US Oil & Gas

Thanks, I’ve received some great feedback & encouragement from readers in the past couple of weeks…so why not, let’s rock this TGISVP bitch all over again! Despite the exclusive focus on Irish stocks, I’m also hoping to see a lot of international readers checking in (& commenting) on these posts. For two good reasons, I hope:

i) Regardless of my individual price targets, many readers have highlighted their appreciation of the wide variety of valuation techniques & perspectives I’ve employed here across a broad spectrum of companies. I’ll try to place even more emphasis on the valuation process this year, so hopefully this project will prove interesting to a far wider readership.

ii) I mean, have you noticed the Irish market – it’s bloody on fire! The ISEQ was up +17.1% in 2012, and nearly doubled that return in 2013 (+33.6%) – um, like wow! And to top it all, my TGISVP portfolios actually out-performed the index, across the board in 2012 & on average in 2013. Uhoh, I think I’m scaring the value investors away…

However, it’s worth remembering I’ve been bullish on Irish stocks for a couple of years now – but a lot of investors really only started to pay attention last year. And much of the overseas interest to date, for example, has been primarily focused on (distressed) property & loans – rather than equities. So, arguably, we may only be reaching a point now where sentiment & interest in the Irish market’s fully blossoming. It’s also worth highlighting the rather unique economic & fiscal abyss the market’s rallying out of – in fact, the ISEQ remains 55% below its May-2007 highs.

Now, I hasten to add – I’m not actually making a specific ISEQ call here. I usually don’t think about indices in that manner (& often find the main indices too expensive anyway). I prefer to get comfortable with the current macro backdrop – as opposed to making macro predictions. [A fool’s game – noting current growth forecasts, and historical error ranges, all those highly-paid forecasters are really telling you is that developed market growth may be positive…or, um, negative!] Presuming a market passes enough macro hurdles, I’ll usually ignore the index & simply focus on stock-picking. Exactly as I’ll be doing here – though it will surely prove tempting to draw some overall market conclusion(s) near the end of the valuation stage (of this project).

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2013 – The Great Irish Share Valuation Project (Part III)

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Aer Lingus, Andor Technology, Botswana Diamonds, Clontarf Energy, Escher Group Holdings, Irish shares, Irish value investing, Merrion Pharmaceuticals, Ryanair Holdings, San Leon Energy, TGISVP, The Great Irish Share Valuation Project, US Oil & Gas, USOP

Continued from here. Right, here’s the next batch of TGISVP stocks!

Company:   Ryanair Holdings

Prior Post:   Here

Ticker:   RYA:ID

Price:   EUR 5.689

Last year, I was still mildly bullish on Ryanair, but also in the process of selling down an RYA position I held. Since then, the share’s out-performed my target price by just over 20%… But I don’t feel much regret: a) while RYA’s more defensive than most, airline stocks are inherently volatile – I demanded, quite rightly, a wide margin of safety to compensate, b) a year’s passed, I’m sure my current target will be that much higher, and c) I was generally pretty happy with the re-investment of any proceeds last year!

There’s little new to observe here – Ryanair remains a bloody awesome earnings machine! Current operating margin has been squeezed slightly by fuel costs, but at 14.2% it still deserves a 1.33 Price/Sales ratio. A positive debt adjustment is also appropriate, considering RYA’s currently sporting 10 times interest coverage & has a history of share buybacks & a special dividend in the past year. YTD earnings growth is at +12.5%, while last FY earnings growth was running at 25%+. Considering the potential for earnings volatility here, a 15 P/E is still pretty much the maximum I’m comfortable with (based on an estimated EUR 0.3875 EPS run-rate).

The Great Irish Share Valuation Project IX

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2P Reserves, Alkermes, Amarin, Anadarko, Andor Technology, Botswana Diamonds, Circle Oil, Clontarf Energy, Connemara Mining, Cooley Distillery, Cove Energy, Dragon Oil, Escher Group, Galantas Gold, Interior Services Group, iShares MSCI Ireland ETF, Jazz Pharmaceuticals, Jim Beam, John Teeling, Kentz, Minco, Ovoca Gold, Petrel Resources, PTT, Royal Dutch Shell, Siteserv, TGISVP, Tullow Oil, USPS, Worldspreads, Xstrata, Xtierra

Continued from here.

As I’ve mentioned, we’ve another 20 odd non-ISEQ listed Irish stocks to work through still. I should first note I’ve eliminated Alkermes (ALKS:US) and Amarin (AMRN:US) (and Jazz Pharmaceuticals (JAZZ:US) never even made the cut*). Clearly, an Ireland HQ is particularly attractive for pharma companies! Any reader care to enlighten us further..? I wasn’t fooled by this shell game, but they had some Irish directors/management/locations, so I planned to include them in TGISVP. Now I look again, their Irish ‘representation‘ is pretty small, and sure to get even smaller… So they’re out – unless someone wants to email and persuade me otherwise!?

I’ve also revised valuations for Worldspreads (WSPR:LN) and Siteserv (SSV:LN) – in fact, they kind of swap places in the rankings! I was briefly commenting here on both companies, and their respective scandals, and it got a little out of control..! I had to upgrade to a separate article. Note I’m keeping a file of all original share prices and valuations, which I’ll use for any performance/evaluation exercises at a later date. Right, let’s see if we find anything interesting in this batch: