Press "Enter" to skip to content

The misery of this one small stock suggests broader portfolio selection is needed

Worst of all, the expected loss means Pressure Technologies is violating covenants and is in talks with its bank. This column would expect a solution to be found and debt refinanced, but it’s time to move on and admit that we’ve made a mess of the stock – even if it means those who bought as response to our tip from August 2018.

The combination of misery that hit Pressure Technologies, and subsequent price gains, suggests that a broader portfolio review may be appropriate, especially as markets are likely to remain volatile from here on out.

The serial market laggards need to get out – if they haven’t done us any good in a market that is flat to bullish, what damage could stocks do in a bear market? Companies have to go out with the combination of net debt and operational gearing (where strong sales are required for profit): they can go wrong very quickly. Those who depend on smooth markets to realize value through asset sales need to get out: markets may not be useful.

This leads to a cull – and an unpleasant, unfortunate one – not just from Pressure Technologies, but from ITV, Strix, Essentra, Coats, TI Fluid Systems and IP Group.

Safety first feels like the best policy right now. Any market rally could be used to gracefully exit. To sell.

Questor says: sell


Share price at closing: 27.5p, 59.82, 121p, 210.5p, 52.1p, 123.2p, 60.8p

Russ Mold is an investment director at AJ Bell, the stockbroker

Read the last Questor column every Sunday, Tuesday, Wednesday, Thursday and Friday from 6 am.

Read Questor’s rules of investments before following our tips.




Spread the love