Tuesday, February 8, 2011

Share Price Alert: Mainfreight Ltd

Mainfreight Ltd [MFT.NZX] is a stock you should be looking out for if you are a short termer and thinking of bailing.

It has added around $1.40 per share or 20% in a mere 3 months to close at $8.39 yesterday. Just a few cents short of an all-time high set last week. This is appears to be on the strength of a good 2011 1st half year where trading results were significantly higher than the previous comparable half.

Of course this increase was made on a particularly bad 2010 half year so we must take this into account when looking at the spectacular rise in the MFT share price.

My only conclusions for the rise are two-fold.

1: Investors have rediscovered the quality management of the company, especially the way they have managed the business over the last 3 very tough years.

2: The market is expecting a good rise in profit for the 3rd quarter, with the announcement coming out late Feb.

Either way though the momentum in share price built up over the last year where the swing has been from around $5.75 to present levels looks difficult to sustain given the absence of further positive news.

Look for a pull-back in share price if MFT disappoints the market in any way and consider locking in profits now if you are a short to medium term investor.

If you are a long-term investor you should wait for a pull back to enter this stock.

Disc I own MFT shares in the Share Investor Portfolio

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c Share Investor 2011