WE took a modest gamble on the future of the euro on Wednesday, snapping up a notional holding in Edinburgh-registered waste treatment firm Shanks for our 2015 portfolio.
The group now earns the bulk of its profits in euros, and shares have come under pressure after the pound’s recent rally in global foreign exchange markets on hopes of a ‘softer’ deal on Brexit.
But we believe the price fall has now been overdone and sellers have failed to factor in the efficiency gains in the pipeline after the group’s transformational acquisition of a major Dutch competitor, as well as a recent rise in the price of much of Shanks recycled commodities output.
Brokers at Credit Suisse believe shares are undervalued by as much as 30 per cent at current prices and any increase in the value of the euro would be an added bonus.
We have set a stop-loss target 10 per cent below the current price, at which we advise our followers to consider selling on any setback.
The decision to dip into our substantial cash reserves comes despite a disappointing showing by recent share tips such as SSE, CYBG, Whitbread, Breedon and Avon Rubber which are all trading at below our notional purchase prices.
Most of the falls are less than 1.0 per cent and we have high hopes the investments will swing back into profit by the start of 2017 on any traditional Christmas rally in the stock market.
Most of our share tips did little last week with the total value of four portfolios showing only a fractional change on our mid-week review. Dundee-registered fabrics and fibres group Low & Bonar was an exception with prices marked down 5.0 per cent as a result of profit taking after last month’s trading update. Plastic packaging group RPC also fell back following an increase in the oil price.
The setback saw the 2016 list shed 1.6 per cent of its total value although the effect was cancelled out by gains in the other portfolios with Smiths Group, Lloyds Banking and Bloomsbury pushing higher.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here