Should you buy this week’s flyers ARM Holdings plc, Stanley Gibbons Group plc and Fastjet plc?

Are ARM Holdings plc (LON:ARM), Stanley Gibbons Group plc (LON:SGI) and Fastjet plc (LON:FJET) shrewd buys today?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Shares of FTSE 100 tech giant ARM (LSE: ARM) closed last week at 1,189p but rocketed on Monday after the company announced a 1,700p cash offer from Japan’s SoftBank.

The intention is that the acquisition will be implemented via a court-sanctioned scheme of arrangement, and ARM’s directors are unanimously recommending that shareholders vote to approve the scheme, which should happen as soon as practicable in Q3.

With the shares trading at 1,675p, as I’m writing, there’s little upside for buyers today if the deal goes ahead: a mere 1.7% including the 3.78p interim dividend holders will receive on top of the 1,700p return.

Analysts are divided on the likelihood of a counter-bid coming in. I wouldn’t buy today on the hope of such a bid, but if I already held the shares I’d be inclined to hang on just in case another suitor emerges with a higher offer.

Out with the old, in with the new

Shares of Stanley Gibbons (LSE: SGI) dived on a profit warning last autumn, and completely cratered earlier this year when it emerged that things were so dire an emergency fundraising was required.

The troubled stamps and collectibles group, whose shares had traded at 300p not much more than a year earlier, raised £13m at just 10p a share. However, following a corporate and audit update, and a boardroom clearout, announced last Friday, the shares have stormed up to 14.37p this week.

The good news is that the company has already exceeded the targeted annualised operating cost savings of £5m it set out in March and management has identified further savings. Past accounting was clearly over-aggressive, and there will be restatements and writedowns reducing net asset value. However, these won’t impact the cash position, and together with the departure of the executives who oversaw the destruction of shareholder value, a line seems to have been drawn under the inglorious past.

I like Stanley Gibbons’ new strategy of “realigning the business around predictable revenue streams, such that the company does not have to rely upon material one-off high value sales or major auction consignments to achieve profitability.” However, I believe prudent investors would be wise to wait for the company’s results and some visibility on future earnings.

Wheels up, or wheels off?

Fastjet (LSE: FJET) is another small-cap whose shares have collapsed from pounds to pence. Profit at the African budget airline has failed to get off the ground, and amid boardroom turmoil, the company was hurtling towards the end of the cash runway.

However, the shares rocketed from 23p to as high as 41p yesterday, following the announcement of a £15m fundraising. And a bizarre fundraising it was too. The price was set at 50p (a whopping 116% premium), in order — the company told us — for a number of fund managers “to satisfy their internal ownership limits”. What does that mean? Well, you’ll get a good idea if you can imagine a ‘Dragon’ on Dragon’s Den being offered, say, a 30% share in a business for £100,000, and saying: “No, but I’ll give you £100,000 for a 15% share“!

Good news though the funding is for Fastjet, potential profitability is both far off and uncertain, so, as with Stanley Gibbons, I think this is another case of ‘wait and see’.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

G A Chester has no position in any shares mentioned. The Motley Fool UK has recommended ARM Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

Could the 9.8% M&G dividend yield get even bigger?

Christopher Ruane reckons that, although the M&G dividend yield is already close to a double-digit percentage, it could get better…

Read more »

Investing Articles

How much passive income could I earn by putting £380 a month into a Stocks and Shares ISA?

Christopher Ruane explains how he'd aim to turn a Stocks and Shares ISA into four-figure passive income streams each year.

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

2 passive income stocks I’m buying before an interest rate cut

With the market expecting interest rates to fall in August, time might be running out for investors looking to buy…

Read more »

Investing Articles

If I’d bought Rolls-Royce shares a year ago, here’s what I’d have now

Rolls-Royce shares have been the big FTSE 100 success story of the past 12 months and more. And there's still…

Read more »

Young female analyst working at her desk in the office
Investing Articles

If the Dow’s heading for 60,000 by 2030, can the FTSE 100 index hit 12,000?

Strategist Ed Yardeni predicts a 50% rise for America’s Dow Jones Industrial Average over six years. Can the FTSE 100…

Read more »

Investing Articles

Is the National Grid share price a once-in-a-decade opportunity?

The National Grid share price looks like a bargain. But there’s much more for investors to think about than a…

Read more »

Investing Articles

Here’s why the Rolls-Royce share price should keep gaining!

The Rolls-Royce share price is up 185% over the past 12 months, but there are a host of tailwinds that…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

Buying 1,852 shares in this ultra-high yield FTSE 100 income stock would give me £1k a year

Harvey Jones is keen to load up on this blue-chip income stock that pays the highest yield on the FTSE…

Read more »