2023 Stock Tips: How did we get on in May?

It remains a tricky market to generate short and long term gains, but there are still some good stock opportunities if you do enough digging. Investors should not be disheartened by the fact that some extremely cheap companies can drop even further in price.

Sources we speak to in the broking community tell us that volumes are very low at the moment and many investors are not in the market (unless they can be lured in by the artificial intelligence hype to push NVIDIA stock up to yet more unrealistic levels).

We were pleased to see our entry back into Bitcoin for our trading portfolio was already up 18% by the end of May. Our gold position was also up over 5% and short crude oil was up 21% as the realities of the global economy trumped the dreams of OPEC+ in the course of May.

Arbuthnot Banking Group plc

We actually bought shares in a bank in May. We’re still cautious on the banking sector more generally and it went against the grain to buy stock in a bank at a time when the wider banking sector was being beaten up on both sides of the Atlantic. We like Arbuthnot Banking Group LON:ARBB because it is a little bit different: its operational model recognises what we consider to be important changes happening in the world of business banking, especially in the UK.  Also, the fundamentals look very strong on this one, and the bank’s management of its reserves is very conservative. In many ways, it looks like what banks were meant to be back in the day. Give it a look.

Silver

We also doubled down on precious metals, adding silver to our long trading positions in May. We are long-term silver fans and like the fact that it trades in a tighter market than gold, with more industrial demand coming to fruiting for the metal due to the expansion of solar power (silver is used in panels). We think there is more chance of a silver squeeze occurring than in gold this year, as gold is more efficiently priced. Proportional gains could be much higher in the long silver market and we don’t want to miss out when they happen.

Paragon Banking Group

What, another banking stock? Why yes, Paragon Banking Group LON:PAG is a FTSE 250 stock which provides mortgages, savings accounts and business finance and is very well placed to profit from higher interest rates. We liked the results Paragon put out, with a 95% gain in pre-tax statutory profits. Capital ratios increased as did underlying earnings per share. Paragon does have exposure to the UK mortgage market, which is not that healthy at the moment, but we like the way it has changed its funding sources model. We are holding Paragon Banking Group for the time being in our short term portfolio as we wait to see how the UK interest rate picture plays out.

Perimeter Medical Imaging AI Inc 

We had lunch with the CEO of Perimeter Medical Imaging [OTC:PYNKF] [TSXV: PINK], which is backed by Social Capital founder Chamath Palihapitiya, and were very impressed with this Canadian-listed company’s medical technology offering. It leverages cutting edge AI technology plus real-time advanced imaging tools to help doctors to evaluate the results of breast cancer surgery while the patient is still on the operating table. Currently post-operative evaluations take a week or more, and the failure rate is way too high (some numbers cited in independent studies indicate it is 25%+). The new technology lets surgeons look at their work while the patient is still under sedation. It is in trial with a small number of US hospitals right now, but could represent a major game changer for breast cancer surgery.

CDW

CDW NASDAQ:CDW missed analysts’ targets due to what its CEO called “intensifying economic uncertainty” which led in turn to some selling, pushing the shares down to levels that made CDW look more attractive in terms of valuation. CDW stock is well off its 52 week highs, but its fundamental metrics tell a different story from its stock price. We bought the stock at $174 with a target of at least $210. Freedom Finance Europe called CDW “a quality defensive asset in the IT sector” and we’d agree with that prognosis. We currently have a 10% trailing stop loss on the shares.

Sold in May: Croda LON:CRDA

So how are our picks getting on?

Tactical trading portfolio

These are shorter term equity and commodity trades which we can see playing out within one to three months. We will sometimes keep these on longer if the trade is still quite range bound but we are anticipating further upside. These trades have the tightest risk parameters.

*Prices as of close of play on 31st May 2023

Longer term buy and hold portfolio

These are positions where we see a longer term growth scenario, usually in the small to mid cap space, but sometimes larger companies. We will typically be keeping these stocks on the list for at least six months and often longer. Consequently our risk tolerance is higher for these positions than for the trading list.

*Prices as of close of play on 31st May 2023

Venture portfolio

These are companies which we see as having long term and considerable growth prospects. Due to their size and the nature of the business they are in, we feel that our normal risk management constraints should not be applied to these stocks.

*Prices as of close of play on 31st May 2023