Thursday, June 9, 2011

Share Price Alert: Goodman Fielder Ltd 3

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 isn't about my poor investment choices but about timing your purchase at the right price.

An opportunity to buy has arisen again since a profit warning in April and a prior share price alert for this stock at $1.44. The share price has retreated since then by 18c or just below 15% to close at $1.26 yesterday. 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 9 months.

The share price was last at these levels back in March 2009.

Profit has been impaired 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.

The appointment of a new CEO on June 1 with a very generous and restrictive remuneration package and a lacklustre business history hasn't helped either.

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 11%, 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 it into your portfolio for less than the current share price.


Share Price Alert Series

Hallenstein Glasson Holdings Ltd
Telecom New Zealand Ltd 4
Telecom New Zealand Ltd 3
Port of Tauranga Ltd
Freightways Ltd 3
Goodman Fielder Ltd 2
Freightways Ltd 2
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
Mainfreight Ltd
Tourism Holdings
Goodman Fielder Ltd
Pumpkin Patch Ltd
Hallenstein Glasson Holdings Ltd
NZ Refining Ltd
Freightways Ltd
Xero Ltd


Goodman Fielder @ Share Investor

Share Price Alert: Goodman Fielder Ltd 2
Share Price Alert: Goodman Fielder Ltd
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

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c Share Investor 2011