Monday, July 13, 2009

Still Watching Contact Energy

Contact Energy Ltd [CEN.NZ] is a stock I used to own just before 9-11, in fact I moronically dumped it on that day due to my inexperience in the stockmarket at the time.

I bought in at NZ$3.10 at the IPO and picked more up at $2.66. I had 5000 at one stage for the princely sum of around $12000.00 bucks (you can smell the regret in this reminisce cant you?)

Meanwhile back in the present I think you can still get a relative bargain by buying this company. The share price has dropped around 7% since I last wrote about the company on June 8.

Contact had a 30% drop in half year profit to 31 December 2008, added NZ$550 million in debt through a public bond issue and expects its full year profit for the year ended 30 June 2009 to be down around 30% as well.

This doesn't make good reading but Contact has performed better than most during this recession. Contact's lower profit was to do with higher water levels in dams bringing down their wholesale energy prices. It wasn't recession related at all apart from the shutdown of some of Comalco, a large power user and profit is unlikely to get much worse than this.

That is one reason why I continue to watch this stock closely, its recession proof nature.

One other good reason to buy, if you were looking at this stock over the last year, is that its stock price is near its 52 week low of $5.47, closing at $5.63 last Friday and you cant get a better reason than that.

The company is a good long term bet and even a good short to medium term money maker for those of you with a short attention span. I say this because the share price seems to get good support at current price levels and the company always has the sword of takeover from its Aussie majority owner parent Origin Energy Ltd [ORG.AU] hanging over it.

Keep it on your watchlist too if you have been thinking of adding it to your portfolio.

I am getting my buy finger ready.

Contact @ Share Investor Blog

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Related Amazon Reading

Politicized Economies: Monarchy, Monopoly, and Mercantilism (Texas a & M University Economics Series)
Politicized Economies: Monarchy, Monopoly, and Mercantilism (Texas a & M University Economics Series) by Robert B. Ekelund
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