Ocado gets a cash injection, EasyJet goes plane shopping, and bullish results from DS Smith, Gear4Music and Telecom Plus

“Despite the company still searching for sustainable profit, investors have been quick to back Ocado’s latest cash call. A share placing at 795p is a near-10% discount to last night’s closing price and 62% below the level at which the stock traded last September,” says Russ Mould, Investment Director at AJ Bell.

“Ocado remains a jam tomorrow story, with the company having greased its baking trays by means of winning numerous contracts with third party grocery sellers. The next stage is to fill these trays with the right ingredients to support their online grocery operations, and that’s where all the extra money is needed alongside making improvements to its systems.

“While there remains excitement about the online grocery space, Ocado can’t keep burning through cash indefinitely. At some point soon it will have to start generating profits and making money, as that’s been the missing component with its story so far.

“A chaotic time at UK airports may have prompted EasyJet to make plans to cancel more flights throughout the summer, yet that hasn’t dampened its appetite to be a much bigger player longer term. It is buying another 56 planes and converting 18 existing orders to different types of aircraft.

“These planes will replace older aircraft and will be more fuel efficient, which is important as airlines are under increasing pressure to further cut costs. They will also enable more bums on seats. There is strategic logic to the deal, but EasyJet must first obtain approval from shareholders who might be feeling angry at how its share price performance has been weak this year.

“Packaging group DS Smith has been flexing its muscles with customers, showing that it has pricing power. It has offset price inflation by charging customers more for its cardboard boxes, while also paying for new manufacturing operations by selling mature, non-core assets. It’s no wonder the market has given its latest set of results the thumbs-up.

Gear4Music and Telecom Plus have both reported results ahead of expectations, bringing some joy to investors who have endured very choppy market conditions this year.

“Musical instruments and equipment seller Gear4Music remains bullish about the outlook, believing that various initiatives and cost management efforts will help to offset a weaker consumer outlook. Telecom Plus has been hoovering up customers and improving retention figures thanks to competitive rates.”

These articles are for information purposes only and are not a personal recommendation or advice.


The daily market update is written by Russ Mould, AJ Bell’s Investment Director and his team. The article highlights the movement in the main index, winners and losers on the day and any macro-economic announcements.