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29th Sept: Trader Tim’s Penny Stock Post – #PROX #AFPO #BPC #ZZZ #ARC


Apologies – I’ve been missing in action the past couple of days. However, I’m back with an extra long instalment today. We have the significant RNS’s from this morning. And a quick recap on RNS releases requested by readers.

It’s been a difficult couple of days for penny stocks on the markets. I announced on Twitter that I had finally pulled out of African Potash. The buying volume of a few weeks ago was intriguing, but for me there is too much risk now. I was hoping for a quick bounce or some news. I got neither, so I got out of there. In truth, as mentioned before, it was an impulsive trade, which I shouldn’t have made. As a result, I have to take a £600 hit – however, it could have been worse. I’m not too bothered. I made a mistake and I paid a price for it. That sits with nicely with me.

The most dangerous thing that can happen to you is when you trade/invest impulsively and make a profit. Why is that bad? Well, it suggests you can just throw caution to the wind and still make a success of investing. 90% of the time, you’ll come unstuck and lose a lot of money. However, ti is possible to invest on a whim and make a tidy sum. It’s dangerous because it undercuts any system, discipline or caution you might have. Anyway, on to some stocks.

I appreciate its results season at the moment, so RNSs are being released thick and fast. As I can only cover a few, I will do my best to try and decipher those which are of interest. However, do get in touch there are some you’d like covered and I’ll try my best to accommodate.

Snoozebox ZZZ 0.555 -0.060 -9.76%

Market Cap: £1.82m
Price: 0.615p
Spread: 5%

Snoozebox released their unaudited results for for the six months ended 30 June 2016. The company have managed to make a little dent in last year’s losses – loss before tax reduced by £1 million to £2.1 million, central overhead expenditure reduced by £300,000 to £700,000. Net debt is now £3.2 million, rather than £5.4 million. Some progress, however, nowhere near enough to get this company back on track. In truth, I think it is too little to late.

This is the three-pronged strategy highlighted by in the Chairman’s review.

  • In the short term, establishing a more stable operating environment for the Group and seeking improved financial stability through renegotiating of its debt
  • In the short-to-medium term, achieving net operating cash flows sufficient to cover central overheads and service the Group’s debt
  • In the medium-to-long term, securing further growth in revenues and operating cash flows from a stable base

That “medium-to-long term” plan for growth seems a long, long away at the moment.

Arcontech ARC 50.00 -2.50 -4.76%

Market Cap: £6.5m
Price: 52p
Spread: 8%

I was asked to run through Arcontech’s latest release. Not a huge amount here, they released an extended agreement with a client, which is approximately £95,000 in value. This comes from additional software licences.

Beyond that brief announcement, I think the stock looks good. The share price has strong momentum. A business with a good track record of growing revenue and profits, which is a rarity on AIM. Roughly £1.6 million in the bank, so all good there. Really nice cashflow for a business under £10 million Market Cap. All together, this is a good little company.

Bahamas Petroleum BPC 1.32 -0.07 -5.04%

Market Cap: £17.1m
Price: 1.39p
Spread: 18.5%

The spread would be enough to scare me off on this one.

I was asked to look at Bahama’s Petroleum by a reader – the had an announcement out recently. The company have done well to cut costs and progress new legislations. However, the crux of the issue is the “farm out” discussions. Everything else is secondary to this. No farm out means no drilling. No drilling means no progress.

I see the board have elected to increase its fee deferral from 1 April 2016 to 50% of contracted entitlements and 90% for CEO, so for those investors that value a board that has skin in the game, this might appeal. The value of this company is in complete limbo until the farm out agreement is sorted – that should read, if it is sorted. No doubt the shares will fly if it does, but at this stage it is nothing more than a punt.

Proxama PROX 1.17 -0.01 -0.64%

Market Cap: £20.65m
Price: 1.2p
Spread: 8.5%

On to today’s news, Proxama announced its half year results for the six months ended 30th June 2016.

This is a company I hold stock in.

Naturally, the company is not yet turning a profit. The company are still in the early stages of developing their product and putting it into market. You wouldn’t invest in this company solely on the financials. You’ll need to have some belief in the product. However, the company increased revenue by 26%, which shows there is an appetite out there among clients. That said, the company confirm that “they are on track to breakeven by the end of 2017”.

The calibre of the brands and businesses we are now working with on a day to day basis are a reflection of the future potential of our business … the early revenues from advertising and data are promising and we are focused on looking to maximise the opportunity for Proxama, John Kennedy

Digital Payments Division Sale

The company announced on 24 June 2016 the planned sale of the Digital Payments Division. Discussions with buyer are still taking place. However, the company does that these discussions are not in a period of exclusivity and there are encouraging conversations with other potential buyers. The Board expect that the Strategic Review will complete by the end of 2016

Proximity Marketing

This is the company’s new division. The Company has a campaign pipeline containing some of the most recognisable brand names in the world. The company were recently one of two companies included to be certified by Google to deliver Physical Web user experiences for consumers. The ability to target ads to people based on physical location. Physical location will presumably increase the likelihood to purchase significantly given the recipient’s proximity to the shop, store or outlet.

The company’s partnership network extends to most of the major OOH media players, across London bars and pubs, cinemas, regional trains, buses, taxis, airports and bars around the 20 English Premier League football grounds. The network currently has around 4,000 beacons, which is estimated to have an estimated reach of over 1 billion. Proxama are one of the first movers in this space and have significant networks built up to support this.

The success of proximity marketing will depend more on brands, agencies and technology. We already see Google investing heavily in the Physical Location infrastructure, which Proxama is a party to. Apple’s new iPhone 7 relies more heavily on bluetooth for the use of a number of the phone’s function. Proximity market is current delivered via bluetooth, so adoption of this technology is important.

The advertising strand, I know a little about, working for a media agency myself. Brands and media buyers are craving more specific advertising, more reliable advertising methods. The ability to measure purchase rate is basically impossible with traditional advertising. You can not measure purchase rate of campaign distributed across the country on remote sites or TVs. All advertising is about purchasing. Physical allows brands to get a much better, more accurate read on how their campaign influences purchase. Recent deals with Royal Bank of Canada, GLACÉAU smartwater (a division of Coca Cola), Skyscanner suggest that there is a healthy level of demand for the technology.

A second area of revenue for the company is data. Data is king in the modern world. You look at the really big stocks over in the US today – they are the big tech firms that have been able to leverage data. Literally, the 5 biggest market cap companies in US are: Apple, Alphabet (Google), Microsoft, Amazon and Facebook. Much of this data now feeds into the advertising ecosystem and is used for targeting. Of course, I am not suggest Proxama will go on to become a tech behemoth like Facebook, but my point is simply don’t underestimate the value of data. The data Proxama will be able to collect and sell to Data Management Platforms will be extremely valuable to brands, agencies and trading desks. No other companies have this data.

Anyway, I’ve run out of time here. I hope to get through some more, but unfortunately couldn’t.

All the best – until next time!

If there are companies that you want me to cover in coming days or have significant news due imminently then let me know. My aim is to deliver value to readers, so I want to ensure I’m doing this as much as I can.

The post 29th Sept: Trader Tim’s Penny Stock Post – #PROX #AFPO #BPC #ZZZ #ARC appeared first on Trader Tim.

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29th Sept: Trader Tim’s Penny Stock Post – #PROX #AFPO #BPC #ZZZ #ARC


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