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Bonmarche but bouncing back

Bonmarche
Is there any hope for high street fashion chains?

The 'Bombed Out' virtual portfolio is to investing what homoeopathy is to conventional medicine.

This week we exited two more stocks at a loss (as per usual), leaving us only enough cash to allow one new stock into the portfolio.

That means the virtual portfolio, which started out with £10,000 in cash on 7 March, now has just three constituents.

It started with 10 dog stocks that appeared to have turned the corner. 

It turned out that the dog stocks were not turning the corner at all, but were chasing their own tails, as dogs are wont to do.

Still, we've learned some valuable lessons and they include what should have been obvious: if you are going to trade frequently in small quantities, do not do it with stocks that have wide bid/offer spreads.

READ Bombed out but bouncing back- a virtual portfolio of recovery stocks

We've tweaked the original wildly unsuccessful stock screen, restricting transactions to a minimum of £1,000 a time and prioritising stocks with low bid/offer spreads and it has staunched the blood loss a bit.

Fitbug Holdings and Graphene Nanochem leave by the back door

This week we said farewell to Fitbug Holdings Plc (LON:FITB) and Graphene NanoChem plc (LON:GRPH).

The former was up 6.2% over the last week, but somehow we contrived to lose money on it – almost exactly £100 on a £1,191 investment.

The loss on Graphene was more severe; we invested £1,190 in it (including a £15 share dealing fee) and sold out for £870 (after subtracting the share dealing fee).

The shares shed 20% this week and it looks like the afterglow of its March 3 contract win has well and truly faded.

Nanotechnology remains an intriguing prospect, but maybe this stock is more of a long-term play rather than a trading opportunity.

We've got just £1,965 in cash to reinvest, so where's it going to go?

Plenty of candidates for inclusion in the virtual portfolio no one wants to be in

The candidates this week were many and included Bonmarche Holdings PLC, Brave Bison Group PLC, City of London Group plc, Digital Barriers PLC, Grafenia Plc, Inspirit Energy Holdings PLC, Intercede Group PLC, InterQuest Group PLC, London Capital Group Holdings plc, Physiomics Plc, Proteome Sciences plc and South African Property Opportunities Plc.

The urge to do some fundamental analysis on that ragbag collection is strong, but I shall resist the urge and opt for the usual tie-breaker, which is the stock with the narrowest spread.

Step forward Bonmarche Holdings, which has a bid/offer spread of 94-98p.

The fashion retailer issued a trading update last week that was not entirely terrible.

It expects pre-tax profit before exceptional items to be slightly above the mid-point of its guidance range of £5.0mln to £7.0mln.

The shares have lost more than a third of their value over the last year but looking at the five day, 10 day, one month, three month and six month intervals, the share price is showing a gain on each.

So, it is bouncing back but the travails of the high street fashion retailer are well known.

Fortunately, the market valuation reflects this, with the stock trading on just 10.3 times forecast earnings per share,

A dividend yield of 7.6% might give some comfort were it not of the sort of level that screams “here comes a dividend cut”.

To be fair, the three brokers that follow the stock seem to think the company will hold the divi when results for the year to end of March are released.

But silly me, there I go doing a bit of fundamental analysis again.

Momentum, that's the thing.

I didn't get where I am today without momentum.

Scores on the doors

Company

No. of shares

Total cost

Average price paid

Current bid price

Current value

Profit/ loss £

Profit/ loss %

Braemar Shipping Services

 

618

£1,807

292.43p

300p

£1,854

£47

2.6%

Bonmarche

1,990

£1,965

09.75p

94p

£1,871

-£95

-4.8

Corero Network

616,200

£1,190

7.34p

7.75p

£1,256

-£66

-5.6%

 

  • Cash: £0.04
  • Total value of original £10k portfolio: £4,980
  • Profit/loss on closed trades: -£5,036
  • Unrealised profit on current holdings: £18
  • Total profit/loss: -£5,020
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