Amateur investor advice and … two stocks to watch

By Jonathan Jackson. Published at Mar 26, 2021, in Features

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With the Deliveroo IPO on the horizon, a surge in the number of new investors jumping on the opportunity is a foregone conclusion, however it is essential for these investors to learn how the system works before engaging with it.

The following is a discussion with Maxim Manturov, Head of Investment Research at Freedom Finance Europe, detailing the ‘new investor’ journey.

Research builds investor confidence

When a beginner investor buys any stock, they should remember they are actually buying a small share of a company,” explains Maxim Manturov, Head of Investment Research at Freedom Finance Europe. “With huge media attention around the Deliveroo IPO, we can expect amateur investors to get involved in the action, but before they do it is important they do their due diligence. This means finding out what the company does, how it is doing financially, why there is a lot of media attention surrounding it and why its stock price may increase or decrease. In other words, before buying the stock, you should do a bit of your own research and not just rely on what everyone else is saying, which would also help you gain some investor confidence.”

Stay firm during price fluctuations

“Such confidence, in its turn, will help you stay firm during price fluctuations and volatility, which always occurs and often becomes a reason for your losses. Long story short, when you buy a stock, you must understand why you are buying it. The price may go up or down, but with enough reasoning behind your investment, you won't sell your asset and will wait for it to increase in price, which will bring you profits.”

Create an investment plan and develop a strategy

“In addition, you should create an investment plan and develop your own strategy for stock market trading. You may want to base your strategy upon minimising risks through diversification and limits by sector and stock type. You should also pay attention to the financial performance and choose a company with a good balance sheet, low debt burden, high margin, a sustainable average annual growth, as well as other positive financial indicators.”

For those who are looking at the small cap market – here's two to watch

Of course, the way people invest is a matter of “different strokes for different folks”.

For instance, if you want to know about investing in small cap stocks, you could subscribe to Next Investors. For general investing, you might just want to follow Warren Buffett’s advice.

Do you research, seek financial advice and then do what is best for yourself.

If you decide to go down the small cap path, here a couple that have made waves this week.

  1. Food Revolution Group (ASX: FOD)

FOD finished the week strongly after announcing its Juice Lab “Wellness Shots” range was this week accepted by Woolworths and Metcash/ IGA.

Woolworths has signed on the range with availability in May across both Woolworths and Woolworths Metro stores.

Metcash will see the range available in Foodland & Ritchies stores in April and allocation will be provided for all other IGA stores.

Meanwhile, sales in Coles stores exceeded expectations after 4 weeks of availability.

FOD is currently establishing itself as a player within the $650M Australian Health & Wellness market.

CEO Tony Rowlinson commented, “We are delighted as to the positive response to Juice Lab Wellness shots by our retail partners. Having FOD’s largest customer Woolworths onboard is a fantastic outcome. The initial consumer offtake in Coles has been excellent and the team has done a good job meeting the increased demand.

"With consumers globally seeking products that deliver against immunity and provide functional benefits due to COVID- 19, we are well positioned with our extended range of wellness beverages and carbonated beverages to be rolled out into the market.

"Getting the Juice Lab shots ranged, provides us with the catalyst to introduce extended Juice Lab offerings.”

FOD started the week at 3.7 cents, went as high as 4.3 cents and finished the week on 4 cents.

For more information on FOD read: FOD is an Emerging Turnaround Story in the Food and Beverage Sector

  1. Province Resources (ASX: PRL)

PRL started at 14 cents, finished at 15.5 cents, but was as high as 17.5 cents on Tuesday after it announced that it has appointed ERM as lead approvals consultant at its HyEnergy ZERO CARBON HYDROGENTM Project in the Gascoyne Region of Western Australia.

ERM helps companies to identify and manage their environmental, social, and cultural impacts and risks throughout the project lifecycle.

PRL has articulated its commitment to sound ESG administrative and operational practices, an issue that is increasingly at the forefront of the criteria for investor and corporate support.

As Finfeed reported this week, “there has been a groundswell of support for green hydrogen at all levels with the setting up of the $300 million Australian Government Advancing Hydrogen Fund complemented by the $70 million Australian Renewable Energy Agency and the $10 million Western Australia Renewable Hydrogen Strategy.”

Read: Province Resources Leads Australia into a Green Hydrogen Era

The best and worst performing sectors this week?

In another relatively flat week, Healthcare has been the stand out performer up over 5 per cent while Sonic Healthcare, CSL and Cochlear are all doing well. Utilities is up over 3 per cent while Consumer Discretionary and Consumer Staples are both up over 2 per cent. The worst performing sectors include Information Technology down over 1 per cent followed by Materials and Financials, which are both just in the green.

The best performers in the ASX/S&P top 100 stocks include Crown Resorts up over 20 per cent followed by Sonic Healthcare up over 9 per cent and Ampol up over 8 per cent. The worst performing stocks include Mineral Resources down over 7 per cent, while Worley, AMP and Appen are all down over 5 per cent.

What's next for the Australian share market?

As Wealth Within founder Dale Gillham points out “The Australian stock market has looked a little stronger this week, as it has closed higher on three of the last four days, although we need to watch where it closes today, as this is more important than what unfolded earlier in the week. A high close would be a positive sign that the market may be getting stronger and close to breaking up out of the sideways move it has been in over the last three months. That said, my opinion has been more bearish and I believe that probability suggests it should trade lower in the short term, although I am not discounting that it will rise. For me to change my mind, we need to see the All Ordinaries Index trade above 7,200 points.

“Right now, there are many good stocks that are setting themselves up for the next bull run. So regardless of whether the market does fall for a brief period, I am confident once this sideways move is broken, the Australian stock market will do well in the second half of 2021. I still believe that the Energy, Materials and Financial sectors will do well moving forward.”

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S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

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