It pains me to see Torotrak (LSE: TRK) shares down so badly, with a fall of 82% since their recent peak in April 2014, and down a lot further since the heady days of 2011 when hopes for the firm’s technology were high — just those few years ago the shares were fetching more than 60p apiece, while today you can get them for only 4.9p.
The company develops variable transmission systems for vehicles, emissions reduction and fuel efficiency technology, which would be a significant energy saver in these critical times of global warming — and it’s an example of the great British engineering tradition. The problem is, it’s been a very long road between drawing board and commercial success, and the company has been burning cash for years — and it’s needed a £12.4m share placing already this year.
Foecasts suggest Torotrak could be very close to break-even by the year ending March 2017, and there’s surely a possibility of profit the year after — but as recovery situations go, this one still looks too risky to me.
The world of fashion is a very risky one too, as French Connection Group (LSE: FCCN) shareholders know to their cost. The high-street chain has seen its share price lose two-thirds of its value since May 2014, to just 30.5p today, after the company recorded further ongoing losses at its interim stage this year — in fact, the shares fell 8% on results day itself as disappointment grew in line with the firm’s increasing losses.
The question is, with the firm restructuring and trying to reshape itself as a smaller but fitter business, could this be time to buy in the hope of a share price recovery? Well, French Connection has no debt — in fact, it was sitting on net cash of £23.2m at the halfway stage. So it doesn’t seem to be in any danger of going under in the near term. Investing in loss-makers in the hope of recovery is not my style, but if it is yours then you might be well advised to wait and see how Christmas trading goes this year.
Ruspetro (LSE: RPO) has suffered from the double-whammy of being a loss-making oil explorer at a time when oil prices have been plunging, and operating in Russia when that country’s international status is being steadily downgraded to pariah levels. The result has been a 90% fall in the share price in a little over two years, to just 4.3p today.
At the interim stage we heard that average daily production had risen by 16% to 3,914 bopd, though revenues fell from $27.8m to $24m in the period due to the oil slump. It sounds like the company has sufficient funding in place to be reasonably safe in the short term, and if an oil price recovery comes along in time it could be a nice recovery prospect — but for me, there really are some considerably less risky oil explorers out there if that’s what floats your boat.