The 3rd Trade in our £1,000 to £100,000 in 50 Trades or Less Experiment…

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The 3rd Trade in our £1,000 to £100,000 in 50 Trades or Less Experiment…

The content of this blog (or content associated with it) is not intended as investment advice. I have an interest in the companies I write about below. Please do you own research.

In July of last year, along with my mates Pete & Steve, I embarked on a little experiment, entitled, £1,000 to £100,000 in 50 Trades or Less

The premise is to make 10% (or more) on each trade, rolling over each gain onto the next investment.

We completed our 2nd successful trade on December 11th, 2016.

It went off the boil but due to several people asking me if we’re still doing it, we’ve decided to give ourselves a bit of a kick. Therefore we’ve started our 3rd trade.

Here’s a reminder of the first 2 trades….

1st Trade: easyJet (EZJ)
Bought at: 999p
Sold at: 1120p
Target Gain: 10%
Actual Gain: 12%
Stake: £1000
Gain: £120
Total Amount going onto Trade 2: £1,120

sky_logo
2nd Trade: Sky (SKY)
Bought at: 865p
Sold at: 1022.50p
Target Gain: 10%
Actual Gain: 18%
If you add on the 2.2% final dividend, which we reinvested, then this would make the gain just over 20%.
Stake: £1120
Gain: £224

Total Amount going onto Trade 3: £1344

3rd Trade: BT (BT.A)
Bought at: 306p
Current Share Price: 311.5p
Target: 337p
Stake: £1344
Target Gain: £134.40p
Total Amount (hopefully) going onto Trade 4: £1,478.4

Why BT?

BT have experienced one of their worst years ever.

This has included an accounting fraud in their Italian operations, which could cost them £530m and an Ofcom investigation, which resulted in a record £42m fine and c.£300m compensation.

This may seem like a bit of a risky time to invest in BT BUT you have to consider whether this is already priced into the shares.

At the start of 2016 BT were 500p a share and now they are 311p a share. Profit before tax for the year to 31st March 2017 was 19% lower than the previous year and yet the shares have been down just over 40%.

I believe when a big company has one of their worst years ever, they have to do something drastic about it and BT are.

They’ve unveiled a restructuring plan to cut 4,000 jobs, mostly in the UK, as it looks to cut down on managerial and back-office roles to provide, what Mr Patterson called “firepower” to cope with a tougher market.

Gavin Patterson, Chief Executive, commenting on the results, said:
“Learning from the challenges of this year will make BT a stronger company for the future. However, we’ve also made good progress in a number of areas. Our integration of EE is going well, our UK consumer, SME and corporate businesses are performing strongly, and we’ve made significant progress in improving customer experience across the group.

Our agreement with Ofcom on Openreach governance brings to an end a period of uncertainty. And securing exclusive rights to top-flight European football until 2021 puts our consumer businesses in a strong position.

We’ve undertaken a strategic review of Global Services. Technology trends mean that we are now less dependent on owning physical local network assets around the world, creating the opportunity to reposition Global Services as a more focused digital business. We are therefore restructuring our Global Services organisation to enable this strategic refocusing.

We’re also accelerating and expanding our cost transformation programmes, most significantly in our central Group Functions, in Technology, Service and Operations, as well as in several other lines of business. This will help offset market and regulatory pressures and create the capacity for future investment.

We aspire to be the UK’s digital champion. To achieve this, we’re ready to invest in the UK’s digital infrastructure, in continued improvements in our customer service, and in new technologies to further enhance customer experience. To that end, Openreach has today announced that it’s consulting with customers and industry stakeholders on the business case that could support better rural broadband and a large scale Fibre-to-the-premises rollout across the UK.”

On The Chart

(click to enlarge)

There seems to be a good support level at 300p, which it has test twice and bounced back from. The relative strength index has also been oversold twice but is building and is currently at 51, which is very positive as far as momentum is concerned.

There is some resistance at 315 – 317p but if it clears this then the share price should hit our 337p target.

To add BT (BT.A) to your Vox Markets Watchlist click here

The content of this podcast (or content associated with it) is not intended as investment advice and people featured may hold positions in the companies they talk about. Please do you own research.

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The content of this podcast (or content associated with it) is not intended as investment advice and people featured may hold positions in the companies they talk about. Please do you own research.