Freetrade diary #9 – September

Previous article – Blocking Out ‘The Noise’

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It’s been another interesting month and I haven’t even bought anything.

Pets at Home

At the start of this month PETS stood at around 295p a share. After last weeks sharp rise, it’s not around £1 more at roughly 391p a share. 

This is my biggest rise in any one share, and with this brings my overall standing with this stock up to 50% in the green.

This is a stock I’m in for the very long haul and am pretty confident this could rise further, so I’ll be holding this for the time being and hopefully seeing it rise even more.

Why has this risen so sharply recently? 

PETS announced their pre-tax profits would be ahead of expectations with sales momentum slowly returning following the lockdown. Of course, PETS were one of few retail stores that were allowed to remain open, albeit with their grooming section closing, and managed to off-set store sale losses with online sales growth.

PETS is also incredibly flexible as a business, and with the return of their grooming business is well placed to offer customers a shopping ‘experience’ rather than just the old fashioned retail methods that have seen many businesses on the high street struggle and even disappear.

They offer the full gambit of pet ownership needs. Food, toys and medicine are what you’d expect from a pet store, but customers are increasingly heading there for their best friends to receive a pampering as well as your standard veterinary trips. Getting foot traffic in their stores, even if the original intention is a quick nip to the vets for a check-up, means more opportunity to up-sell what they’re offering in their stores.

To sum up, PETS stated on Thursday that, “Although Covid-19 continues to create a number of material uncertainties around the trading environment, including the risk of a second lockdown, based on trading year to date, and as a consequence of the sustained strength in performance we have seen, we now expect full-year underlying pre-tax profit to be ahead of current market expectations”.

Thursday alone saw the share price rise over 25%. If we can avoid a total lockdown again, PETS looks well placed to build on this momentum and continue to be the ‘go-to’ for many pet owner’s needs.

Sold Tesco

As part of my de-boring…ing of my Freetrade portfolio, I’ve sold my full Tesco holding.

Tesco has served me well, and were one of the only shining lights when we first entered lockdown. But now I’m looking to use the small profit I made to work in other areas.

They’re a decent, steady holding to have as Britain’s largest supermarket chain, but their rise in revenue over lockdown also came with a rise in staffing and other costs as the company brought on more people to help with demand. How this will effect their numbers once everything returns to normal, we shall wait and see.

Ultimately, I sold in the green. Albeit less green than it would have been had I sold a month or so ago, but green nonetheless. Another learning curve that this will only ever be my ‘play’ portfolio, and to hold long-term and not bother with timing too much is the better approach for me.

What Next?

With the additional cash sat in my account from the sale I’ll be looking at options to invest this into existing or new opportunities over the next month.

This will more likely be added to existing holdings as I’d like to increase my stake in Nvidia and Sony as well as Visa and Mastercard.

However, I’m eyeing a number of new stocks that this cash could be put towards.

Avast are ever-present on my watchlist and have been for some time. AMD likewise.

Cloudflare are also one I’d like to look into more. They’ve made quite the impression since March rising from $16 to $40.

Offering a host of website infrastructure and Cloud security services, this primarily B2B offering supports and protects the assets and online presence that other businesses rely on to generate and maintain revenue and continue serving their own customer base.

This is a service, no matter the state of the economy, that businesses cannot afford to give up. This, in turn, gives companies like Clouflare a decent revenue moat.

They’re currently not profitable, which isn’t uncommon for newly IPO’d companies, but one big positive is that they carry no debt. They also have a solid cash-burn rate that should allow them to maintain their business for a good while yet and have a massive client base already including the likes of Shopify, Sony Music and HubSpot.

This is very likely going to be my next venture, and certainly fits into what I’m trying to do more with this portfolio.

I’m also looking to offload Diageo at some point, or at least reduce my holdings in them. I’m unsure how to go about this currently, whether to pound cost into them to reduce my losses, or hold. Who knows, that’s something to look into another day.

That’s it for this month. I hope everyone reading this has a great October, and I’ll report back on halloween (yep, next month is halloween already!!!).

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