Hobson: Why Shares Fall When Results are Good

THE WEEK: Morningstar columnist Rodney Hobson analyses the extreme share price reactions to trading updated from four companies this week

Rodney Hobson 22 September, 2017 | 11:18AM
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Screwfix is owned by Kingfisher

We seem to be living in very nervous times. How else can you explain the extreme reactions – both up and down – we have had lately from trading updates that in some cases are comparatively innocuous? When you see a wild initial swing, do consider if this presents a buying or selling opportunity, depending on which way the shares have swung.

Case 1: Ocado (OCDO)

The delivery company has gone nowhere fast since being spun off from Waitrose and as far as I’m concerned it has no attractions as an investment. It has taken 15 years to get into profit and offers little hope of ever delivering a dividend. Buying the shares is a remarkable act of faith; although I’m a long term investor I’m not prepared to wait for Ocado to come right.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Capita PLC54.71 GBX3.61
Kingfisher PLC345.00 GBX-1.03Rating
Mitchells & Butlers PLC258.60 GBX-2.42
Ocado Group PLC1,686.50 GBX-3.27Rating

About Author

Rodney Hobson

Rodney Hobson  is a columnist for Morningstar.co.uk and author of several investing books, including The Dividend Investor and How to Build a Share Portfolio.

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