Some readers may be worried that I had lost my marbles yesterday when I wrote up an AIM listed Gold miner of all things.
Don't worry normal service is resumed today, so if you didn't like the quality and value of yesterdays post here is one featuring a high quality AIM stock which has great momentum, but as a result doesn't come cheap.
So I bring you EMIS, a stock that I introduced you to early last year when its share price was looking a lot sicker at around 600p than it is today at over 900p. You can read the original update at the highlighted link above and subsequent updates here in the categories menu or at the side of the blog on PC's or if you scroll to the bottom of the page on tablets and phones.
Today they have had an AGM statement and I noticed the price was quite volatile yesterday with a spike to 1000p so may be there was some activity ahead of this. In this the Chairman says that trading is in line with the Board's expectations. They also reiterated previous comments about the Group having strong revenue visibility and a robust order book and contract pipeline, which gives the Board considerable confidence in further sustained growth. In addition they flagged a fifth contract under something called the London and Southern Framework and extensive tendering in Child Community & Mental Health (CCMH) and Secondary & Specialist Care and that they confidently expects to secure further contracts in the near future.
So it all sounds pretty positive and I emphasised the considerable confidence part as this seems like director speak for we think we'll easily hit the current forecasts. Consequently I wouldn't be surprised to see further earnings and dividend upgrades in due course on this one to continue the nice upwards trend we have seen on this so far this year.
This is just as well though because with the shares now over 900 pence they are certainly not looking cheap. Based on current forecasts they are trading on 20x with a 2.26% Net Yield and sport an earnings yield of 5%. So for me it is getting close to my selling discipline 2% & 20x rule of thumb (see the link for older posts relating to this). With the shares making new 12 month highs recently and closing in on all time highs it is very tempting to say thank you and discharge this one from my portfolio as it is now has now fully recovered and has a healthy looking share price and rating to go with it.
However, I'm aware of momentum research and as Ed Croft at Stockopedia keeps saying these momentum indicators like 12 months highs etc. tend to lead to outperfromance because of investors behavioural bias / mistakes by using this a signal to sell when in fact it is a sign that better times / news are being discounted by the market.
Given the earnings upgrades and the positive sounding director speak and contract wins plus the yield still being just over 2%, although my natural inclination is to sell and move on, I think I'll keep this one for a bit longer although cognisant that I am now running it as a quality momentum play without much value support (CIS Value Score = 28 & Stockopedia Value Rank = 25).