Friday, December 2, 2011

Share Price Alert: Mainfreight Ltd 3

Mainfreight Ltd [MFT.NZX] had a great 2012 first half result announced at the beginning of November and since then the share price has rallied from around $9.75 to close at $10.48 yesterday - a rise of just over 7%.

The share price has rallied from $7.25 12 months ago and touched an all-time high of $10.75 in August and at yesterday's closing price gives this stock a rise of well over 40% in a market that has been flatish.

The thing is, as good as the November result is and indications from management that things are looking good for the next quarter, the share price really has gotten away from the realities of the short to medium term prospects for the company.

While the company is doing well right now the European banking crises and the fallout from that cannot be discounted and new investors in Mainfreight, in my humble and not so humble opinion have not factored this in.

International trade is likely to be impacted from the Euro situation, how badly we don't know, but this will clearly have an impact on logistics operators like MFT and their recent acquisition of European logistics company Wim Bosman Group will probably be the hardest hit.

I must add that the company is the best run NZX listed company in New Zealand and has done well to manage through the last 3 years of economic turmoil but the share price is well over valued and will pull back at some stage.

I am contemplating selling my holding for a good 120% plus gain over 4 years and buying back at a latter stage.

Watch for a pull-back to below 6 bucks on an international trade slow-down.

Disc I own MFT shares in the Share Investor Portfolio

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Discuss MFT @ Share Investor Forum
Download Mainfreight Company Reports


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