On 5th May 2021 Stockfox issued a BUY alert for Briscoe Group (NZ: BGP) to subscribers.
Our analyst team had identified that Covid-related lockdowns weren’t having as significant an impact on sales as many people had been expecting. That was because it was experiencing rapid growth in online sales, which helped counter the impact of having its retail stores closed.
In addition, because its major retail arm, Briscoes, specialises in household items, the company was expected to benefit from increased spending by consumers on their homes since they were spending so much time at home and were unable to travel. This expectation was based on international trends that we anticipated would be repeated in New Zealand.
On a fundamental basis, according to our 9 Key Criteria, of which any investment has to meet a majority, Briscoes Group ranked a relatively attractive 6/9. This indicated the company was in a sound financial position.
On a valuation basis, the shares were trading on a forecast price:earnings multiple that was considerably lower than its multi-year historical average, while its anticipated dividend yield was higher. These indicated the shares were undervalued.
On a technical basis, we noted Briscoe Group’s share price had reached a 52 week low point of $3.90 in October 2020 and had since risen by more than 10%. This indicated a change in investor sentiment that could lead to further price gains over time.
The price at the time we sent out our tip was $5.64.
On the 6th of August, the company announced its half year sales and profit result. This was better than many investors expected and the share price rose rapidly in response.
As one of Stockfox’s trading philosophies is to “cut losses early and let your profits run”, we continued to hold on to Briscoe Group while its shares were trending up.
On 15th September the shares hit a yearly intraday high of $7.26, before closing at $7.24. However, the next day the price began to weaken. Our analyst team believed the shares had become overvalued and that some investors were beginning to take profits.
To guard against any further possible declines in the share price, we put out a TAKE PROFITS alert on 16th September 2021 at $7.23, allowing those Stockfox subscribers who followed both tips to make a gross profit of 20.49% in just 19 weeks.
As the graph shows, Briscoe Group shares have subsequently declined further, demonstrating how Stockfox’s ability to time entry and exit points can add significant value to investors.