This edition of Stock of the Week focuses on little known company (unless of course if you are already a shareholder) Methven Ltd [MVN.NZ].
Methven is an up and coming star in the bathroom products/kitchenware area as far as delivering water to the consumer via their various faucet related products (it has been around for for 125 years) and it has recently had an overriding push to market high end to higher quality mass market products, rather than high volume lower quality mass market garbage from China or elsewhere and that is the main reason why I chose this stock.
Management are clearly on the ball too with their emphasis on the quality end of the mass market where higher margins are made, with a good niche to carve out, especially for a smaller Kiwi player that simply cannot compete on scale.
They haven't done spectacularly well over the last 12 months because of the building downturn, but with aspirations to become a global brand and the willingness to apply money to research new and innovative products, as well as pursuing growth by careful acquisitions Methven should be able to achieve their goals.
Growth will return once we start building again and in the meantime the company is focused on trimming unnecessary costs, to alleviate the temporary dip in profit.
As you can see from the chart above the share price has plumbed the depths to around 65c 4-5 months ago but that is off a 52 week high of NZ$1.74 and an all-time high of $2.80 near the end of 2008.
The dividend yield of just over 12% gross is also a very attractive feature of this stock and apparently will still look quite handsome even with the small profit drop.
Buy on weakness, there should be some stock price drops as the year plods on with the lower profit forecast.
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Methven Ltd @ Share Investor
Long Term View: Methven Ltd
Stock of the Week: Methven Ltd
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c Share Investor 2010
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