I have to admit Goodman Fielder Ltd [GFF.NZX]is not one of my better investments. It has returned roughly zilch in the 5 years I have held it.
Never mind, this piece isnt about my poor investment choices but about timing your purchase at the right price.
An opportunity to buy has arisen today after a profit warning marking down FY 2011 profit to a range between $140 - 150 million. The share price has retreated today by 13c or just above 8% to close at $1.44 today. It reached an intra day low of $1.40 and this is the 52 week low. A high of 2 bucks back in November 2010 shows how much value the company has lost in just 6 months.
Profit has been impacted by higher commodity prices and unfavourable exchange rates - a common theme for this company for the last few years - and management have seen fit to move prices for their brands higher to recover those increased costs but too late to recover for the full year outlook.
Consumer pressure on price is going to make it hard going for the company to recover these costs as long as the current recession bites and consumers are tending to settle for non brand goods instead of buying some of the pricier brands that GFF offers.
All is not lost though, these Goodman brands are some of the best in the business, are staples on the family table and will continue to be sold and increase in sales when the economy returns to some sort of "normality".
The current share price returns a gross dividend of slightly over 9%, which is clearly a very attractive income given term investment rates of less than half this.
I am picking more softness in this share though and if you have been looking to buy this stock anyway patience is going to get this stock into your portfolio for less than the current share price.
Share Price Alert Series
Telecom New Zealand Ltd 2
Ryman Healthcare Ltd
Charlies Group Ltd
Fletcher Building Ltd 2
Contact Energy Ltd
Steel & Tube Ltd
Telecom New Zealand Ltd
New Zealand Stock Exchange Ltd
Mainfreight Ltd 2
The Warehouse Group Ltd
Pumpkin Patch Ltd
Hallenstein Glasson Holdings Ltd 2
Fletcher Building Ltd
Restaurant Brands Ltd
Goodman Fielder Ltd
Pumpkin Patch Ltd
Hallenstein Glasson Holdings Ltd
NZ Refining Ltd
Goodman Fielder @ Share Investor
Long Term View: Goodman Fielder Ltd
Goodman Fielder turning on the DRIP
Goodman Fielder to improve bottom line in 2009
Why did you buy that stock? Goodman Fielder
Goodman Fielder hit by high commodity prices
Goodman Fielder a Hedge against an economic slump
Goodman Fielder pie gets bigger
Discuss GFF @ Share Investor Forum
Download GFF company Reports
Recommended Amazon Reading
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
Buy new: $14.95 / Used from: $7.50
Usually ships in 24 hours
Buy The Intelligent Investor & more @ Fishpond.co.nz
c Share Investor 2011
How To Get Your Story Straight And Crisp--An Interview With 'Geek Entrepreneur' Karthik Rajan - Career blogger Karthik Rajan has learned to increase the power of his business narratives by honing the "crispiness" of the stories he tells.
1 hour ago