Three small cap stocks set to bounce back

Three small cap stocks set to bounce back By Richard Gill There is an old stock market saying that profit warnings come in threes. For investors this implies that any company which first announces such a warning should be avoided for some time. In other words, never attempt to catch a falling knife. But like many such clichés it is often wrong. Profit warnings can occur for a whole host of different reasons, whether it be a one-off hit to trading, wider issues in the sector or more ingrained problems within a particular business. In the latter case that means bad news can take time to filter through, and yes an initial warning may be followed by several others. For example, Tesco had four profit warnings in 2015, and Rolls-Royce has announced five within the space of 20 months. But it is interesting to note that most profit warnings are actually a one time event. A study in 2009 by researchers Elayen and Pukthuanthong found that out of 3,667 profit warnings issued by US companies 65% were a one-off, with only 12% of companies issuing three or more warnings in a row. Another study, this time on UK companies, by James Montier, found that companies which issued profit warnings fell by 16.6% on average on the day of the announcement. However, if you bought a year after the warning was issued you could do very well indeed, with stocks in his sample group outperforming the market by 22.4% over the next year... Click HERE to read the full article The Master Investor Market Report The FTSE 100 closed the day at 6,986.40, a decrease of 34.07 points. The FTSE 250 fell 73.72 points to finish at 17,860.52. The FTSE All Share dropped 17.32 points to finish at 3,793.87. The FTSE AIM All Share ended the day at 825.38. Shares in FTSE 250 defense manufacturer Cobham (COB) plunged 13% to 139.70p after the  company cut its full year trading profit forecast to between £255 and £275 million after a disappointing third quarter. Management said that conditions had been challenging, with particularly weak demand in the SATCOM and Wireless business units while the Integrated Electronics division also struggled.  Check out our brand-new October issue! Click HERE to read. Online CFD specialist Plus500 (PLUS) saw its revenues drop during the third quarter of the year, but management said that the business remained on track to hit its full year targets. Revenues for the three months were 4% below the same period of 2015 despite a 33% increase in customer numbers. Shares in the company fell by 45.50p to 624.50p. Shares in AIM-listed data service provider Fusionex International (FXI) surged 15.71% to 202.50p after the company announced that EBITDA would be significantly ahead of current market expectations following the launch of its new product line in June. The current sales pipeline is strong and includes small and medium sized enterprises on top of the firm's existing blue chip clients. Tomorrow's news today BP (BP.) will publish third quarter results. Quote of the day "Nine-tenths of wisdom is being wise in time." - Theodore Roosevelt Latest Stories French Connection: Bear squeeze should lead to 50p plus By Zak Mir Shares of French Connection are back in the frame this week as a takeover situation develops. It is surprising that we have not seen the retailer as a red-hot contender on a regular basis… Click Here To Watch The Video National Grid has defensive appeal By Robert Stephens The prospect of a new US President, a US interest rate rise and Brexit mean that defensive stocks could become increasingly popular. That's why I'm optimistic about National Grid's future prospects… Click Here To Read The Full Story Burberry (BRBY): Technical target above 2,000p if M&A has legs By Zak Mir One of the big omissions in terms of the post-Referendum rally for the FTSE 100 has been the relative lack of decent M&A activity or even speculation to provide momentum... Click Here To Read The Full Story Jubilee Platinum (JLP): 4.5p target after the latest chromite news By Zak Mir Jubilee Platinum has been a private investor favourite for longer than most might have anticipated. However, it looks as though the waiting game may finally be over… Click Here To Read The Full Story How to invest like Philip Fisher By Filipe R Costa One of the biggest and most challenging questions Philip Fisher ever dared to ask a corporate manager was "What are you doing that your competitors aren't doing yet?" Whilst relatively crude, such a question is often disregarded by those involved in business… Click Here To Read The Full Story Join the movement on social media: Copyright 2016 Master Investor Ltd, All rights reserved. You are receiving this email because you opted in at our website. If a Daily Bulletin is too frequent, why not opt in to our once weekly mailing list for a round up of the week's news straight to your inbox. Once Weekly Round-Up Our mailing address is: Suite 88, 22 Notting Hill Gate, London W11 3JE Master Investor is a trading name of Master Investor Limited. 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