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July Newsletter

Company Profile, Common mistakes in investing and inside Investify.

Company Profile: Pacific Edge Limited

Source: Investify financial insights dashboard (as at 27/07/21)

Business Summary

Pacific Edge Ltd. engages in the discovery and commercialization of diagnostic and prognostic technology for the early detection and monitoring of cancer. It operates in the Commercial and Research segments. The Commercial segment involves the sales, marketing, laboratory, and support to run the commercial businesses worldwide. The Research segment engages in the research and development of diagnostic and prognostic products for human cancer. The company was founded on February 27, 2001, and is headquartered in Dunedin, New Zealand.

Investment Merits

- For FY21 the company increased total revenue (101%), cash receipts from customer (52%) and net cash and other current assets (56%). Net loss reduced by 25%

- The company was included in S&P/NZX 50 index and as a result will gain interest from institutional investors and fund managers increasing liquidity and demand for the stock

- Prospective future benefits from commercial arrangements such as Centre for Medicare and Medicaid Services and Kaiser Permanente

- Raised additional growth capital of $22 million though share placement providing the support for the company with strong cash flow for future growth

- 2 Analysts following the stock is recommending a 12-month target price of $1.50 which has upside potential compared to the current price

Investment Risks

- Most of the future earnings are dependent on the uptake in the US market. Any regulatory changes or economic downturn in the US will affect the company

- There is no future dividend prospect in short term as the company invests heavily for growth restricting shareholders only to gains from share price increase

- The company is yet to be profitable resulting in negative Return on Equity for shareholders

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Common mistakes made by beginner investors

For someone starting out with investing in the stock market, it is not uncommon to make mistakes, but when dealing with money, mistakes with investing can have serious consequences. However, the good news is that if you start early, you will generally have more timeframe and flexibility to take on risks and recover the losses you have made. It is important that a beginner investor understand the common mistakes made by many and learn how to avoid them to increase the chances of success while investing in the share market.

Key points to remember:

- If you are convinced about a good investment idea after doing your research, you should immediately act on it. Markets move quickly and if you contemplate too long, you put yourself in a riskier territory

- Missing out on a good idea can lead investors to two very bad scenarios. If the investment you thought was good is going upwards, you will jump into it at a higher price level as you do not want to miss out on the opportunity anymore. This may result in buying something at a price which is no longer rational, and the returns may be not as expected initially. Otherwise, you may come up with your own rationalisation without thorough research and end up buying shares of similar companies which may not be as promising as your original investment option

- Do not speculate. Speculating is equivalent to gambling and instead of speculating and gambling, an investor should look to invest in companies that suits their risk profile. Beginner investors should consider building a portfolio of small to medium cap stocks which have higher growth potential. The biggest risk from speculation is that it may lead to such a big loss that it will put you off from investing for a long period of time.

- Another mistake that beginner investors make is taking on debt to invest in the stock market. It is not advisable that you use debt leverage to invest. Always keep aside some savings and then use a portion of your disposable income to invest in assets that you prefer

- One of the most important factors in forming investment decisions is asking yourself “why”. If an asset is trading at half of an investor’s perceived value, there is a reason, and it is the investor’s responsibility to find it. That is why research is important before investing in anything.

Inside Investify..

It is exciting to see our user numbers grow every day and in July, the momentum continues from previous months. We have been working on some key partnerships which will provide Investify with added resources to create better insights so that our users continue their journey to become better informed investors.

A big THANK YOU to all of you who provided us with some useful feedback which helped us to get started on new features and suggested changes. We are very close to rolling them out which will help our user community to test different strategies about investing in the stock market. Please keep following us on social media or through newsletter and we will announce the new additions as soon as we have tested the results.

Any feedback on Investify is always welcome and very much appreciated, so please feel free to tell us what you think about us through the form below. All feedback providers will get extended FREE trial of the platform as a small token of appreciation from our side for helping us out.

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