Stock of the Week - Reprise 2 : Contact Energy Ltd

Contact Energy Ltd [CEN.NZ] was a Stock of the Week pick back in November and I picked it then because the share price was heading below 6 bucks, similarly in June 2009, and there seems to be some resistance to the stock price falling too far past the $5.50 mark and that is why I have included it again.

The stock has retrenched below $6 5 times over the last 12 months and has always retraced back above that mark. As high as just over $6.50 on one occasion. I have a gut feeling though that the $5.50 low is going to be tested. Too much negativity based on bad news to come surrounding the company.

This time the stock has been sold off due to bad news coming this reporting season and was given added downwards impetus when management announced a price increase for customers yesterday. Usually a reason for stocks like this to rally in the past but negative for Contact given the impact of the last price rise to consumers and the poor way in which it was executed.

A great stock for you short termers out there and a good opportunity for those of you looking for a good company on the cheap for a long-term proposition.

Management of this company is poor but even a monkey running this company can make money.

I repeat, it could go lower than its current $5.66, with a low over the last 12 months of $5.47.

Buy on further weakness if this stock has been on your watchlist.


Contact @ Share Investor Blog

Stock of the Week - Reprise: Contact Energy Ltd
Not so fast Davy Boy
Still Watching Contact Energy
Beam me up Davy
Stock of the Week: Contact Energy
MarketWatch: Contact Energy - June 2009
MarketWatch: Contact Energy - Jan 2009
Contact Energy looks bright during dark times
Share Investor's 2009 Stock Picks
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Small Investor Goes to Market: A Beginner's Guide to Picking Stocks by Jim Gard
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Stock of the Week - Reprise: Contact Energy Ltd

Contact Energy Ltd [CEN.NZ] was a Stock of the Week pick back in June and I picked it then because the share price was heading below 6 bucks and there seems to be some resistance to the stock price falling too far past the $5.50 mark and that is why I have included it again.

The stock has retrenched below $6 4 times this year and has always retraced back above that mark. As high as just over $6.50 on one occasion.

A good stock for you short termers out there and a good opportunity for those of you looking for a good company on the cheap for a long-term proposition.

I must repeat though that management of this company is poor but even a monkey running this company can make money.

Could go lower than its current $5.84, with a low this year of $5.47.

Buy on further weakness if this stock has been on your watchlist.


Contact @ Share Investor Blog

Not so fast Davy Boy
Still Watching Contact Energy
Beam me up Davy
Stock of the Week: Contact Energy
MarketWatch: Contact Energy - June 2009
MarketWatch: Contact Energy - Jan 2009
Contact Energy looks bright during dark times
Share Investor's 2009 Stock Picks
Follow the Monopoly Board

Discuss this stock at Share Investor Forum - Register free


Stock of the Week Series

Restaurant Brands
NZ Refining
Ryman Healthcare
Mainfreight Ltd
Fisher & Paykel Healthcare
Xero Ltd
Auckland International Airport
Sky City Entertainment Group
Burger Fuel Worldwide
Michael Hill International
Contact Energy Ltd
The Warehouse Group
Fisher & Paykel Appliances

Related Amazon Reading


Small Investor Goes to Market: A Beginner's Guide to Picking Stocks by Jim Gard
Buy new: $14.95 / Used from: $0.01
Usually ships in 24 hours

c Share Investor 2009

Stock of the Week: Contact Energy Ltd

In this Stock of the Week I am going to look at the electricity generator and retailer Contact Energy Ltd [CEN.NZ]

The company has had short-term profit speed bumps, with another profit downgrade out today, but long-term the company will continue to grow its profit.

A part of a quadopoly, its generation assets alone should put it in anyone's bottom draw. Its attractiveness in today's turbulent stockmarket background made it one of my picks back at the end of last year and the solid nature of its profit, during an economic downturn and in better times should make it the backbone of anyone's portfolio.

There is another good reason to own the stock, especially if you have a short financial attention span. Origin Energy, Contact's majority owner, is likely to make another play at getting control of the whole company. Origin would have to pay close to double today's market capitalisation.

Beware though, there are drawbacks to owning shares in the company-the management, inside Contact and those that hold the purse strings at big daddy Origin are awful managers of this asset.

Yes a monkey could run an electricity company and that is exactly what you get with these guys but they will always make money under good and poor management.

Good luck!

Disclosure - looking at buying


Stock of the Week Series

The Warehouse Group
Fisher & Paykel Appliances

Contact @ Share Investor Blog

MarketWatch: Contact Energy - June 2009
MarketWatch: Contact Energy - Jan 2009
Contact Energy looks bright during dark times
Share Investor's 2009 Stock Picks
Follow the Monopoly Board

Discuss this topic @ Share Investor Forum - Register free

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: $8.95
Usually ships in 24 hours


c Share Investor 2009