Contact Energy Ltd [CEN.NZ] was a Stock of the Week pick back in November and I picked it then because the share price was heading below 6 bucks, similarly in June 2009, and there seems to be some resistance to the stock price falling too far past the $5.50 mark and that is why I have included it again.
The stock has retrenched below $6 5 times over the last 12 months and has always retraced back above that mark. As high as just over $6.50 on one occasion. I have a gut feeling though that the $5.50 low is going to be tested. Too much negativity based on bad news to come surrounding the company.
This time the stock has been sold off due to bad news coming this reporting season and was given added downwards impetus when management announced a price increase for customers yesterday. Usually a reason for stocks like this to rally in the past but negative for Contact given the impact of the last price rise to consumers and the poor way in which it was executed.
A great stock for you short termers out there and a good opportunity for those of you looking for a good company on the cheap for a long-term proposition.
Management of this company is poor but even a monkey running this company can make money.
I repeat, it could go lower than its current $5.66, with a low over the last 12 months of $5.47.
Buy on further weakness if this stock has been on your watchlist.
Contact @ Share Investor Blog
Stock of the Week - Reprise: Contact Energy Ltd
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Stock of the Week: Contact Energy
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