Just a quick update to the recent post on Alliance Pharma (APH) about the welcome news of their anti emetic drug being approvable.  At the time I thought it might be positive for earnings but not until next year and since I wrote that I saw reference to a broker saying it could be worth 10 to 15p onto the share price.

Since then the shares have moved up from the 90p they were at the time to around 100p having gone xd the final dividend of 0.888p on Thursday this week.  Having seen the shares double in under a year I think the re-rating has probably nearly run far enough as it is now trading on around 20x December 2019 earnings, although of course given the above these may at some point be upgraded if the launch goes well. The yield is also now well below my usual 2% threshold too at 1.5%.

Thus following my valuation discipline and ignoring all the suggestions of running your winners, I have reduced my own holdings this week post the XD for risk control and to rotate into a better value higher scoring stock. I note that the current CI Score would also mean it being sold for the CISP if it were being screened this week.

In addition on the chart the shares are overbought (although they could of course still get more overbought) and there is negative divergence on the RSI which normally pressages a correction. They are also very extended above their moving averages and have had a very large one month return. It is also well known that there is a tendency for mean reversion of big one month moves which is why price momentum indicators (including the one available in the CI Scores) tend to be based off of 12 month - 1 month performance to correct for this effect.  I also note the gap on the chart at 90p and I have noted in the past that these usually tend to get filled if you are patient. So I'll set myself an alert to perhaps revisit it as and when or if it should get back down there at some point.

Finally in case you are wondering I started a holding in Ramsdens Group (RFX) with the proceeds which is a high street currency provider, pawn broker and jewellery retailer. This is on around 11x with a 3.5%+ growing yield & a clean balance sheet and scores very well on the CI Scores and the Stockopedia Stock Ranks too. I do note however that recent support is closer to 180p and there's also a gap on the chart here at about 145p which might be a more interesting longer term entry point if you are patient and of course depending on how the shares have come to get back there if they should.

Bellway (BWY) - which has been in the CISP since inception just over three years ago has had a trading update today. While not explicitly stated by them this appears to be of the in line to slightly ahead type. Based on the volumes and increased number of homes they expect to complete and the indicated margins I estimate that they should come in ahead of existing forecasts by around 2%. So we may see some modest upgrades or a small beat of the full year numbers when they are announced.

Thus it seems steady as she goes for this 5 star housebuilder (as measured by the Home Builders’ Federation Customer Satisfaction survey) as they continue to deliver excellent growth on the back of firm pricing, albeit with signs of slowing and help from the Government's help to buy scheme.

The rating on the shares remains around 7 to 8x and they offer a well covered 4% yield too. The growth in the market and their earnings and dividends over the last three years has helped the shares to nearly double while the rating has remained largely unchanged. Thus demonstrating the power of compounding from what many would write off as a dull, cyclical business - which it is, or because they fear an imminent collapse in the housing market. In the short term this is probably not enough to get the market excited as they are off this morning first thing. However, as it continues to score well and they continue to deliver the houses, profits, earnings and dividends, it will remain in the portfolio until the music stops.

Quite a short statement as they updated back in May any way. It seems broadly in line with sales slightly better than forecast & the suggested Pre Tax Profit in line. So not a lot to get excited about in here although the dividend looks like it might be slightly better than forecast.

Given the rating has moved up to 17x or so and may go to over 20x if profits fall next year as suggested by the house broker then the fall in the shares this morning of about 4% is probably no great surprise.

Another post today as it is Thursday and there always seems to be a flood of announcements on a Thursday. This time full year results from Auto Trader Group (AUTO) another member of the CISP.

The numbers at the headline level seem to be slightly ahead of the consensus forecasts, while good cash flow generation saw their debt decline and the leverage ratio fall to 1.5x EBITDA which is acceptable. Aside from the debt that their previous VC owners landed them with it also means they have a threadbare balance sheet with negative NAV or shareholders funds in recent years. Despite this they have been able to return £148.4m to shareholders via share buy backs of £96.2m and dividends of £52.2m while the dividend this year was raised by 13.5% to 5.9p.

The outlook reads pretty positively highlighting the up selling to their commercial customers and the wide take up of their finance offering although this is tempered by the on going caution on the private listing side of things. Nevertheless they are flagging further rise in turnover and margins (which are already very high) and are confident of hitting their growth targets for the year which seems to suggest another year of double digit growth.

Thus the shares don't seem too fully valued on around 18x for the coming year especially when compared to other on line disrupters like Rightmove & Purplebricks. Indeed we saw Zoopla taken out recently, so I wouldn't be surprised if this one attracted a takeover at some point given their growth, profitability and market position. It still Scores well on the CIS so it remains in the portfolio for now.

Alliance Pharma (APH) - has today announced that Diclectin, a prescription treatment for nausea and vomiting of pregnancy has been given approvable status. This means that they should now be able to go ahead with marketing this in the UK & Europe as they had previously hoped. See their RNS for full details.

This should be good news ultimately and comes at a good time as to my mind the shares were starting to look a bit stretched in terms of their price and resultant valuation of 18 to 20x earnings and a sub 2% yield.

So it will be interesting to see how the share react to this and what, if any, updates we get to the effects of this on their earnings. I suspect this will only be beneficial for 2019 onwards as they have a December year end ans it is unlikely to be launched until the autumn and no doubt there will be up front costs associated with that.