Weekly Update: Volatility Persists Despite Trade Agreements

The fact that one major trading partner after another is reaching agreements with the United States has not yet restored calm to the financial markets. Both in the UK and abroad, this summer’s earnings season continues to be followed by sharp share price movements. Expensive stocks combined with ongoing uncertainty are keeping investors alert.

In many ways, this summer resembles the earnings season earlier this year. Back then, market nervousness was mainly driven by concerns over Donald Trump’s policy direction, and his influence remains noticeable. That said, investors now appear somewhat more used to his unconventional style. Despite the threat of import tariffs for countries without a deal, the market reaction has been relatively mild.

The biggest moves are not coming from geopolitics, but from the fact that many stocks are priced for perfection. Valuations imply flawless execution and leave almost no room for disappointment. Even minor earnings misses can lead to steep declines, such as the nearly 15 percent drop in London Stock Exchange Group over the past two weeks.

On the upside, there have also been clear winners. Our pick Rolls-Royce gained nearly 10 percent last week, and tech giants like Meta and Microsoft added hundreds of billions in market value after reporting strong results.

The divergence is striking. Several other stocks in our portfolio have also reported quarterly results, making this a more detailed update than usual.

Rolls-Royce: Still Climbing

Rolls-Royce has significantly raised its full-year 2025 profit guidance. Operating profit rose by 51 percent in the first half to £1.7 billion, with the operating margin increasing to 19.1 percent. Free cash flow is now projected at £3.1 billion for the year, £200 million higher than previously expected. This improvement is largely driven by stronger performance in the jet engine division, particularly the Trent series.

The company has succeeded in substantially extending the time on wing, meaning the number of operational hours engines run before requiring major maintenance. For the Trent 1000, a newly certified turbine blade now more than doubles that operating time. This is expected to lead to an improvement of over 80 percent by 2027, which is a positive development, as Rolls-Royce earns revenue per flying hour.

Other divisions also performed well. Power Systems benefited from growing demand in the data centre market and increased interest from government clients. Meanwhile, Rolls-Royce holds a strategic asset with the UK’s SMR programme for small modular nuclear reactors. The company has been approved to build three units and is already seeing interest from the Czech Republic and potentially the United States.

The market responded positively, with the share price rising 11 percent on the day of the announcement. Since CEO Tufan Erginbilgic launched his transformation strategy in 2023, the stock has increased by more than 400 percent. We have been invested since the beginning and are now looking at a gain of over 1000 percent. Still, we believe Rolls-Royce has further to fly.

Rolls Royce share price performance over the past year. Source: DeGiro.

Grab Holdings: Profitable, Growing, and Undervalued

Grab, the Southeast Asian platform for mobility and delivery services, has reached a major milestone: profitability. In Q2 2025, the company reported a net profit of $20 million, compared to a loss of $68 million in the same period last year. This result exceeded analyst expectations. Revenue rose by 23 percent to $819 million, with growth across both the on-demand segment and financial services.

Adjusted EBITDA increased by 69 percent to $109 million. This performance was driven by higher revenue, improved margins, and tight cost control. A key contributor appears to be the success of the GrabUnlimited loyalty programme, with subscribers spending more and ordering more frequently.

The market is starting to take notice. The share price rose 10.9 percent over the past quarter and now stands at $5.29, still below the average price target of $5.91. The company has clear growth drivers, including digitalisation, rising consumer spending, and strategic investments in AI and autonomous vehicles. Its full-year EBITDA guidance remains unchanged at $460 to $480 million.

We see Grab as an exponential story still in its early stages. Profitability is often the inflection point investors wait for, and that moment has now arrived.

Grab Holdings share price performance over the past year. Source: DeGiro.

Brunel: Cyclical but Undervalued

Brunel reported a 12 percent drop in revenue for the second quarter, down to €303 million. On an organic basis, revenue declined by 7 percent, a slight improvement compared to Q1. Gross profit fell by 20 percent to €52 million, and underlying operating profit was nearly cut in half. These are not attractive figures, but they are not unexpected given the current state of the labour market.

That said, the company has not remained passive. Management is implementing additional cost measures expected to deliver €10 million in annual structural savings. These actions position Brunel for recovery when conditions improve.

We are holding our position. Demand for technical professionals is cyclical, but the long-term trend remains strong. Once the market turns, Brunel is well positioned to scale up quickly and benefit from the rebound.

Brunel share price performance over the past year. Source: DeGiro.

Centrica: Strong Cash Flow and Attractive Dividend

Centrica delivered solid results for the first half of 2025, despite headwinds such as mild weather and pricing pressure. Adjusted EBITDA came in at £900 million, with free cash flow close to £250 million. The net cash position remained strong at £2.5 billion. Earnings per share rose to 7 pence.

These are encouraging figures for shareholders. The interim dividend was increased by 22 percent to 1.83 pence per share, and the company is halfway through its £2 billion share buyback programme. For the full year, Centrica aims to pay a dividend of 5.5 pence per share, which equates to a dividend yield of approximately 3.3 percent at the current share price.

Operational performance was mixed. British Gas Energy delivered strong results in the SME segment, while Centrica Energy and gas storage subsidiary Rough came under pressure. The unseasonably warm weather had a negative impact of around £50 million.

Still, the company remains focused on long-term value creation. Its stake in the Sizewell C nuclear project highlights this strategic commitment. We continue to view the stock as a buy, particularly given its defensive profile, which makes it well suited to the current uncertain market environment.

Centrica share price performance over the past year. Source: DeGiro.

Playtech: Strong B2B Momentum, Poised for More

Playtech continues to perform well. At the AGM in May, management delivered a strong trading update, and that momentum appears to be continuing into the second half of 2025. Adjusted EBITDA for the first half is expected to reach at least €90 million. The B2B division remains the primary growth driver, supported by a surprisingly strong contribution from Caliente Interactive, helped by favourable sports results. Caliente even paid its first dividend under the new strategic agreement, a sign that the partnership is now generating real financial returns.

Looking ahead, Playtech is investing heavily in the United States and Brazil. These are promising growth markets, although not without risks, particularly around regulatory volatility in Latin America. Still, management remains optimistic. The strategic focus is clear: reduce reliance on consumer markets and shift toward more stable B2B revenue streams.

Full H1 results are due on 11 September. We expect confirmation of the current positive trend and see potential for revaluation, especially as peers like Sweden’s Evolution are now seeing recovery in both Asia and the North American gaming market.

Playtech share price performance over the past year. Source: DeGiro.

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Let’s be honest — it does look good when you’re trading “shares under ten” and you’ve got Rolls-Royce in your portfolio. Despite the prestigious name, this stock fully qualifies as a true penny stock. Shares Under Ten is adding 2,000 shares to the portfolio at the current price of around 97 pence. 5-Year Share Price Performance – Rolls-Royce Holdings plc. Company Profile The Rolls-Royce brand is, of course, best known for its luxury cars — but many may not realise that the automotive business has long been owned by BMW. Rolls-Royce Holdings plc, founded in 1884 and headquartered in London, operates independently and focuses on engineering and power systems. The company is structured into four divisions: Civil Aerospace, Power Systems, Defence, and New Markets. The Civil Aerospace division designs, manufactures, and services engines for large commercial aircraft, regional jets, and business aviation. The Power Systems division develops and sells integrated power and propulsion solutions for marine, defence, and selected industrial sectors. The Defence division supplies engines for military transport aircraft, patrol aircraft, and naval propulsion. The New Markets division focuses on small modular reactors (SMRs) and new electric energy solutions, as well as maintenance, repair, and overhaul (MRO) services. The New Markets division is expected to play a key role in the global energy transition. Rolls-Royce is working to accelerate the launch of a new generation of mini nuclear reactors, a development fast-tracked by the ongoing energy crisis. While these SMRs aren’t expected to be operational before the early 2030s, management is eager to speed up the process, especially as Western nations seek to reduce dependence on Russian fossil fuels following the invasion of Ukraine. However, engineers within the company have expressed frustration with the slow pace of regulatory approval in the UK, arguing that the government’s process for reviewing reactor safety is unnecessarily burdensome. Rolls-Royce aims to build SMRs that generate around 470 megawatts of power — just one-seventh the output of a large-scale nuclear plant, but at roughly one-twelfth the cost. The UK government has stated that the company’s technology is entirely new and must therefore undergo thorough scrutiny. Rolls-Royce engineers, however, point out that the technology is based on decades of experience in nuclear-powered submarines, a proven and extensively tested field. Rolls-Royce cannot be acquired without government approval. The UK government holds a so-called “golden share,” which grants it special veto rights. This share does not offer profit participation or capital rights, but allows government representatives to attend general meetings and block specific strategic moves — such as takeover bids — that could affect national interests. Financials The UK’s most well-known engineering firm was hit hard by the COVID-19 pandemic, as airlines pay Rolls-Royce based on the number of flight hours logged by its engines. Given these extraordinary circumstances, FY2020 and FY2021 are not considered reliable indicators of the company’s underlying performance. In 2021, Rolls-Royce reported £414 million in underlying operating profit, a sharp turnaround from a loss the previous year. Growth in the Power Systems and Defence divisions contributed significantly to this financial improvement. However, the company also reported a free cash outflow of £1.5 billion from continuing operations in the same year. CEO Warren East commented on the results: “We have improved our financial performance, met our short-term commitments, secured new business, and made important strategic progress during the year. While challenges remain, we are increasingly confident about the future and the significant commercial opportunities presented by the energy transition.” Rolls-Royce’s credit profile has improved since the onset of the pandemic, and its exposure to the Russia-Ukraine conflict remains limited. As a result, Moody’s upgraded the company’s outlook from negative to stable. Pros Strong visibility and predictability of earnings Stable margins in the Defence division New CEO Warren East is aiming to bring fresh momentum to the company Cons Loss of market share in the business jet segment Disappointing cash flow development High R&D costs for new engine programmes Conclusion We are not particularly enthusiastic about this stock. While management certainly shows no lack of ambition, those good intentions have yet to translate into improved results. The company appears to be spread too thin across too many markets — and it’s simply not possible to be best-in-class everywhere. A more focused approach would likely serve Rolls-Royce well. Divesting non-core activities and doubling down on key strengths could strengthen both performance and investor confidence. The business jet division, for example, already faced structural challenges before the energy crisis, and its outlook remains weak. A sale of this unit might be a sensible move — especially if a solid price can still be secured. Back in August 2021, management announced it was open to selling assets such as ITP Aero, the turbine blade manufacturer, in an effort to raise at least £2 billion. Strategic asset sales like these may be necessary to unlock value and refocus the company. Third-Party Analyst Ratings for Rolls-Royce. Globally, twenty analysts currently cover Rolls-Royce Holdings, and the consensus view is that the stock could gain around 28% over the next 12 to 18 months. At Shares Under Ten, we believe the share price has likely found a bottom, and we’re taking this opportunity to add the stock to our portfolio. Naturally, we’ll be monitoring developments closely. A takeover seems highly unlikely under current circumstances. Rolls-Royce plays a vital role in the UK defence sector, and the government holds a golden share that gives it veto power over any unwanted acquisition. In addition, ceding control over Rolls-Royce’s expertise in modular nuclear reactors would run counter to the UK’s long-term energy policy. Former Prime Minister Boris Johnson has been a strong advocate for nuclear energy and clearly sees the company’s know-how as a strategic national asset — especially amid the current energy crisis.Takeover rumours have surfaced before. Rolls-Royce was the subject of M&A speculation both in 2015 and again in 2020. However, following a series of profit warnings in 2015, the stock price fell by around 75%, and its recovery

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08/14/2025

Update

Weekly Update: Nuclear Energy and Earnings Season Fireworks

Earnings season has begun. What immediately stands out: companies are reporting surprisingly strong results, despite a world full of uncertainty. Currency risks, geopolitical tensions, and the looming import tariffs set for August 1st create a volatile backdrop. But for those who stay focused, the main story is one of profit growth, resilience, and new opportunities. At SUT, we remain active, alert, and optimistic. And now that earnings season is gaining momentum, we’re seeing our patience pay off. The same trend is visible in the United States, where the season kicks off slightly earlier with half-year results. So far, 12% of the S&P 500 companies have reported their quarterly results – and over 80% have beaten expectations, according to an analysis by CNBC. Behind the scenes, we’re already working on the next addition to our portfolio. We’ve identified a company with an impressive order book and solid outlook. Thanks to this strong foundation, we expect the stock to be less vulnerable to market uncertainty and price fluctuations. You’ll receive our in-depth analysis soon. Rolls-Royce: Above 1,000 Pence – But Far From Finished Our early standout is no longer officially a ‘share under ten’ – but that says nothing about its long-term potential. This week, Rolls-Royce broke through the 1,000 pence mark, a psychologically important milestone. But this is only the beginning. The demand for reliable, carbon-free energy continues to grow – and that’s exactly where Rolls-Royce fits in, with its small modular reactors (SMRs). These advanced nuclear solutions are expected to begin delivery by 2030. On July 31st, the company will report its quarterly results. That will give us deeper insight into new orders, profit margins, and future production capacity. Rolls Royce share price performance over the past year. Source: DeGiro. Brunel: A Laggard with Potential The analysts at Kepler Cheuvreux are paying attention: they’ve initiated coverage of Brunel with a Buy rating and a €12 price target. We fully support that view. Brunel’s share price has noticeably lagged behind peers like Randstad and Adecco in recent months. Yet the fundamentals remain strong, the order book continues to grow, and the global labor market remains tight. We believe the market will soon correct this underperformance. In our view, Brunel is a strong recovery candidate for the weeks ahead. Brunel share price performance over the past year. Source: DeGiro. Centrica: £1.3 Billion for Nuclear Power and Cash Flow Centrica plc is strengthening its position in the European energy market with a strategic £1.3 billion investment in the Sizewell C nuclear project. In return, the company secures a 15% stake in this future energy giant. The deal offers regulated returns of over 10%, protected against inflation — exactly the kind of stability investors seek in times of interest rate uncertainty and volatile commodity prices. The project also aligns perfectly with Centrica’s long-term strategy: predictable cash flows, a meaningful contribution to climate goals, and enhanced energy security for the UK. On July 24th, the company will report its half-year results. We remain confidently on board. Centrica share price performance over the past year. Source: DeGiro.

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07/23/2025

Premium

Weekly Update: Trump Sparks Tariff Tensions, UK Inflation Surprises to the Upside

At Sharesunderten.com (SUT), we’re pleased with our recent acquisitions. So far, it looks like we’ve hit another home run with our position in Grab. You can read all the details in our current portfolio overview. In the meantime, we continue to scour the globe for new opportunities — stocks trading under ten pounds, but with the potential to quadruple or even increase tenfold. Our mission? Catching the Next Ten-Bagger — finding the next stock that can deliver a tenfold return. At Sharesunderten.com, we don’t follow the crowd. We hunt where no one else is looking. We seek undervalued stocks trading below ten euros, with the strength to become tomorrow’s surprises. Over the weekend, global trade tensions flared up once again when Donald Trump announced that, starting August 1st, the United States will impose a 30% import tariff on all goods from the European Union and Mexico. In an official letter to EU Commission President Ursula von der Leyen and the Mexican government, Trump cited the EU’s trade surplus with the US, calling the economic relationship “non-reciprocal” and even suggesting the deficit poses a threat to US national security. Von der Leyen responded sharply: such tariffs would hurt consumers, businesses, and patients on both sides of the Atlantic. At the same time, she emphasized that efforts toward a trade agreement before August 1st are ongoing, but warned that the EU stands ready to implement proportional countermeasures if necessary. Surprisingly, the market reaction was muted. Global equity markets showed only mild movements, suggesting that investors either doubt the feasibility of Trump’s plans or have already priced it in as part of his election rhetoric. In the UK, attention shifted on Wednesday to inflation figures (CPI y/y), which unexpectedly rose to 3.6% in June, up from 3.4% the previous month — the highest level since January 2024. The increase was largely driven by higher food prices. This unexpected development puts pressure on the Bank of England. While the central bank has previously stated that the recent inflation spike is temporary, the combination of a cooling economy and persistent price pressures presents a difficult dilemma: cut rates now, or wait? Services sector inflation remained stubbornly high at 4.7%, a key indicator for the Bank of England. At the same time, rate cuts are expected — possibly as soon as the August 7th policy meeting. Financial markets are currently pricing in a quarter-point cut, with the possibility of further easing toward the end of the year. Portfolio Grab Holdings gains momentum with wave of buy ratings Buy ratings are piling up for Southeast Asian platform company Grab Holdings. Analysts at HSBC Global Research expect the company to raise its 2025 EBITDA guidance with the upcoming second-quarter results. According to the bank, the outlook across all segments is robust — especially in the on-demand division, which includes Grab’s ride-hailing and delivery services. HSBC projects a compound annual growth rate (CAGR) of 14% in gross merchandise value (GMV) over the 2024–2027 period, supported by a broader service offering and increasing user activity. More importantly, margins are expected to improve, driven by operating leverage, a growing share of premium services, and rising advertising revenues. For adjusted EBITDA, HSBC forecasts an impressive 55% CAGR through 2027, with its 2025 estimate at $503 million — more than 5% above Grab’s own projection. The analysts reaffirm their buy rating and maintain a price target of $5.70. With strong top-line growth and improving margins, Grab remains one of the most compelling growth stories under ten pounds. The upcoming earnings release may serve as the next key catalyst. Grab Holdings price over the past 12 months. Source: DeGiro. Centrica: Price targets cut, but buyback program offers support Centrica remains on investors’ radar, even as several analysts have recently revised their price targets downward. These downward adjustments primarily reflect a cooling energy market and concerns about margin pressure in both the consumer and wholesale segments. Still, the company is actively executing a share buyback program. While the market response has been muted in the short term, this capital allocation strategy supports earnings per share over time, as the number of outstanding shares declines. The buyback can also be seen as a signal of management confidence, helping to provide a floor for the share price. Despite the cautious sentiment, we continue to monitor this stock closely. Centrica share price over the past 12 months. Source: DeGiro.

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07/17/2025

4.3/5