Category Archives: $RMG

$RMG(Royal Mail) – down from 600 to 400 – is time to to buy?

Last tweeted this name back in October where above 550 the stock looked expensive. 2CentView sold it’s entire (small position) at 585.

With stock down 30% from it’s high, an article in today’s FT, according to Credit Suisse, the current consensus forecasts are 15% too high.

2CentView FV = 425

with 15% adjustment to consensus earnings, FV=390

So average is around 408 – so stock fairly priced here around 400.

2CentView strategy for low growth high dividend yield names, is to look for at least 15% upside to FV with carry of above 3% – so trade on $RMG is:

Buy around 350 (issue price was 330). Take profit target = 400, 5% carry. Stop 315.

Just because Royal mail is now a PLC it does not mean unions cannot try to prevent the company making the staff cuts if required to grow the business – but the the business does have potential if Parcel Farce can be fixed.