Wednesday, March 9, 2011

Share Price Alert: Mainfreight Ltd 2

News that Mainfreight Ltd [MFT.NZX] has bought European logistics company Wim Bosman Group has, in logistical terms, sent the price of mainfreight shares into destinations previously uncharted.

The share price almost hit the magical 9 buck mark, topping in intra trading today at $8.95 but finishing up 23c or 2.3% to close at an all-time high of $8.82.

The stock has risen almost 9% in two days since the news and by more than 10% over the last week.

MFT shares have risen by around 14% in 2011 and are off 52 week 2010 lows of $5.85.

The thing is, as good as the acquisition is for mainfreight, and I believe it is a good move, the share price really has gotten away from the realities of the short term benefit for the company.

Long term the share price clearly should increase based on how well the new addition fits into the company and how much profit it makes but short term the market really has overreacted like Charlie Sheen in a room full of cocaine, hookers and the creator of Two and a Half Men.

If you are looking for the short term the share price must be close to a short term peak and long term best be patient, there are more tough times ahead that could hobble the stock in this good company.

Buy on weakness below 8 bucks.

Share Price Alert

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c Share Investor 2011