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I’m on the hunt for an inexpensive FTSE inventory in Might, ideally a once-popular one which’s beaten-down however may stage an epic comeback. I may run a inventory screener on my analysis platform, in fact, however first I turned to ChatGPT for its view.
I requested the AI assistant for 3 shares from throughout the FTSE 350 and FTSE AIM All-Share indexes. Right here’s what it got here up with.
Excessive threat, excessive reward
The primary share the bot spat out was Aston Martin Lagonda (LSE: AML) from the FTSE 250. This positively counts as a fallen angel, on condition that Aston Martin’s share worth is down 51% over one yr and 82% throughout 5!
In its brief funding thesis, ChatGPT stated the corporate has confronted challenges, together with provide chain disruptions, excessive debt ranges, and declining gross sales in key markets like China. That is all true, though I might add persistent losses to the combo too.
Nonetheless, it stated “current developments reminiscent of a £125m capital injection led by Government Chairman Lawrence Stroll, the launch of recent fashions just like the DB12 and Valiant, and a strategic deal with value optimisation and electrification below new CEO Adrian Hallmark recommend potential for a turnaround.”
Once more although, the capital injection is critical as a result of Aston is dropping cash yearly. Price optimisation ought to assist right here, however how a lot continues to be unsure. In Q1, the agency’s working loss was £67.3m, widening from £58.7m the yr earlier than, whereas internet debt was £1.27bn.
The brand new fashions are value noting, with constructive opinions from petrolheads, though the backdrop of weak shopper spending and a attainable international financial downturn looms massive. As does the spectre of Trump’s tariffs.
What about electrification below the brand new CEO? Nicely, he has kicked that pricey can down the street, with Aston’s first absolutely electrical mannequin not anticipated till “the latter a part of this decade”. So ChatGPT appears a bit behind the occasions with that one.
To be truthful, the inventory is value flagging up for its turnaround potential. The model is highly effective, the merchandise are nice, and there’s a well-respected CEO on the job. However this one is much too dangerous for me.
The opposite two
The others picked by the chatty AI bot have been extra fascinating to me as a result of I don’t observe them too intently. They have been Serica Power, which it described as an “undervalued money machine“, and “boring however stunning” Sigmaroc. Each are AIM-listed shares.
I’m going to rule out development supplies agency Sigmaroc as a result of it doesn’t actually classify as a fallen angel in my guide. After rising 137% since late 2022, the inventory is now down simply 21% from a 2021 peak. I needed the angel to have fallen 50%+.
North Sea oil agency Serica Power matches the invoice, because it’s down 71% in lower than three years. I additionally just like the sound of an undervalued money machine, particularly when it’s sporting a juicy 14.7% dividend yield (which ChatGPT unusually failed to say).
Nonetheless, one other factor it didn’t point out was that Serica is at the moment in discussions concerning a possible merger with fellow oil agency EnQuest. Given this, it’s unlikely to be undervalued any longer.
Sadly then, it appears like I’ll have to return to fundamentals with the inventory screener in spite of everything.
