Mainfreight Ltd [MFT.NZX] has had a simply outstanding run in its share price over 2010 (see YTD chart above) and especially in the last month or so. The stock started 2010 at just over $5.55 and closed trading yesterday at $7.96. The last month has seen the stock rise from $7.25. (see one month chart below)It has come off a low of $3.25 in early 2009.
The stock is now back at levels that it was trading in early 2007 (see five year chart below) and few NZX stocks have managed to do that pre the October 2008 stockmarket crash.
I bought my initial shareholding at $7.96 and $8 4 years ago (clearly picked the wrong time there) and my most recent addition in 2009 for $4.20. To me it looks like the stock price has run away with itself.The company has largely recovered from the recession but we will have to see a couple of years of sustained growth before the expectations of the market match the share price.
Beware before you buy !
I see good long-term value based on the current share price, otherwise I wouldn't have bought it at its peak 3 - 4 years ago (there was also a very big dividend involved in my buying that stock as well) but you could well get it cheaper at some stage during 2011 as the market realises it might well have overreacted.
Quality companies like this though always rise to the top.
Disc I own MFT shares in the Share Investor Portfolio
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c Share Investor 2010
Hey Darren,
ReplyDeleteBeen following your blog for a few months and I've enjoyed it heaps. Keep it up.
I've been eyeing Mainfreight since it was around 7.4-7.5 and I've been wanting to buy it. Except it's been going up and up ever since and looking more and more expensive every time!
If it does drop sometime in 2011, what price do you think be good for entry?
This comment has been removed by the author.
ReplyDeleteHi Rafa, that is the 64 million dollar question.
ReplyDeleteIt depends on a number of things.
How long your investment horizon is.
Whether you think the company return to growth is sustainable.
Is the global logistics business set to grow overall or is the Global economy just waiting to implode?
As I said above I bought near its peak 3-4 years ago (I think it actually got to about $8.30 per share from memory)because I thought it was a good company and there was a huge dividend equating to about $1 if you included tax credits (from memory again).
This company is going to do very well long term because it is extremely well run by management who have hit realistic targets in the past and I think will in the future.
I am not sure whether the share price will pull back but I think 2011 could well be another tough year for them and I guess you might see that reflected in the share price.
Buy for the long term at a price you feel comfortable with.
I think the share is overpriced based on some of the uncertainty above, so be patient.
The holiday period often sees shares selling at levels well above and below typical selling days because of low volume.
Let me know how you go please.
An update on how I've gone Darren. Been about half a yr since my last post on MFT. It was about $7.80 at the time and now it's about $9.80!!!
ReplyDeleteHaven't bought any MFT so far, but the Wim Bosman takeover looks promising for the long term, so still keen to buy MFT at some stage. In the meantime, I have bought a chunk of RYM at an avg price of $2.50. So far, so good.
Ahh, probably a prudent move but you bought RYM at or near its all-time high. It is a great company but fully valued at the moment in my opinion.
ReplyDeleteI am currently looking closely at FPH:
http://shareinvestornz.blogspot.com/2011/06/im-buying-fisher-paykel-healthcare-ltd.html
It is fair value at the moment and I see some downside in the share price because of the weak US dollar.
Wait for a bad result for MFT before having a go. Every company has a bad one and when they do the share price should get a beating.