Stock of the Week: Ryman Healthcare Ltd

Ryman Healthcare [RYM.NZ] is a stock up there with Fisher & Paykel Healthcare [FPH.NZ] in terms of possible long term gains.

In my opinion it will grow revenue and profit for many years to come.

The reasons I have included it in this week's Stock of the Week are its long term prospects and the fact that I still think it is cheap stock at current prices.

The elder care sector that Ryman competes in has been growing for the company at a rate of 20% per annum for the last 10 years and shows little sign of abating. In fact current growth rates could look quite modest in comparison to future growth.

Demographics show that in the future the elder population that will need such care that companies like Ryman provide will increase by around 150% over the next 20 years or so.

The stock has been cheaper over the year at a 52 week low of NZ$1.14 but at a $1.97 close yesterday and an all-time high of Over $2.70 at its peak, considering its potential growth this still makes Ryman a good long term stock.

Buy on any weakness if this stock is for you.

Good luck!

Disclosure: I own RYM and FPH shares


Stock of the Week Series

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c Share Investor 2009

Stock of Week: Restaurant Brands Ltd

This weeks Stock of the Week, Restaurant Brands Ltd [RBD.NZ], as I pointed out last week, is a tale of two stocks.

It takes a bit of a leap of faith by current shareholders not to sell and for new shareholders wishing to buy - current fortunes of the company now being at a high and the share price starting to reflect that.

All is not lost though!

This company has rallied from penny dreadful status many times before and has managed to reward shareholders who got in at the early stages and there is probably more upside to come.

From a 52 week low of 58c to the current 52 week high of NZ$1.42 the share price looks likely to rally closer to the 2 dollar mark as it has done before so there is room for a good short term gain if you think the company profit is unsustainable or room for a good long term return if you think the company is on track for more of the same -this would defy company history however.

The dividend has just been raised for the latest results to 4.5 c to give this stock a gross return of slightly over 7.5%, not bad when term investments are getting 4%.

Good luck!


Stock of the Week Series

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Stock of the Week: NZ Refining Ltd

The New Zealand Refining Ltd [NZR.NZ] company has had a tough-ish year -PDF docs available via download. Refining margins and oil prices have been down and there is some uncertainty over where prices are headed in the future but long term the company remains a good investment.

With a share price rolling between 52 week low of NZ$4.51 and high of $7.65 and a closing price of $4.86 today, there is a good opportunity for investors with some cash to get in on the cheap.

The company share price took a big hit back in August when it announced at its 2009 HY profit result it wasn't paying a dividend and its share price dropped over $2 in a week or so. It also halted production in September and announced that a loss was going to be a strong possibility in the second half of the year.

The dividend yield has previously been an outstanding one with well over 10% gross returns and one could expect a resumption to those once the second half is completed.

The bad news isn't going to last and I will be putting on my watchlist to see any further share price weakness.

Good Luck!


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Stock of the Week Series

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Stock of the Week: Mainfreight Ltd

In this Stock of the Week I am going to look at Mainfreight Ltd [MFT.NZ] a particular favourite of mine because of its superior management and outstanding results over a long period.

While the stock has been substantially cheaper over the last year (see chart above) and it has been at a high of over 8 bucks over the last 2 years, it is still around 40% off that high and that is my overriding reason for including it in this series.

I bought some more in July at $4.20 after watching it plumb the depths of $3.25 months earlier.

At close of market today the stock was up to $5.13 but has been trading under 5 dollars for the last few months.

The stock is still undervalued in my opinion. Its recent profit announcement wasn't a good one but good management has so far kept the deleterious effects of the global logistics slowdown to a minimum.

Long term the company has grown considerably and once the global recession is over this growth should continue as it has done historically.

Until then prospective investors should see the low share price as an opportunity to make their move.

Please keep in mind the stock can be quite volatile because of relatively low turnover and could of course get cheaper from here.

Once again, good luck!

Disclosure: I own MFT shares in the Share Investor Portfolio

Stock of the Week Series

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Mainfreight @ Share Investor

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c Share Investor 2009

Stock of the Week: Methven Ltd

This edition of Stock of the Week focuses on little known company (unless of course if you are already a shareholder) Methven Ltd [MVN.NZ].

Methven is an up and coming star in the bathroom products/kitchenware area as far as delivering water to the consumer via their various faucet related products (it has been around for for 125 years) and it has recently had an overriding push to market high end to higher quality mass market products, rather than high volume lower quality mass market garbage from China or elsewhere and that is the main reason why I chose this stock.

Management are clearly on the ball too with their emphasis on the quality end of the mass market where higher margins are made, with a good niche to carve out, especially for a smaller Kiwi player that simply cannot compete on scale.

They haven't done spectacularly well over the last 12 months because of the building downturn, but with aspirations to become a global brand and the willingness to apply money to research new and innovative products, as well as pursuing growth by careful acquisitions Methven should be able to achieve their goals.

Growth will return once we start building again and in the meantime the company is focused on trimming unnecessary costs, to alleviate the temporary dip in profit.

As you can see from the chart above the share price has plumbed the depths to around 65c 4-5 months ago but that is off a 52 week high of NZ$1.74 and an all-time high of $2.80 near the end of 2008.

The dividend yield of just over 12% gross is also a very attractive feature of this stock and apparently will still look quite handsome even with the small profit drop.

Buy on weakness, there should be some stock price drops as the year plods on with the lower profit forecast.

Good luck!


Stock of the Week Series

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Methven Ltd @ Share Investor

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Stock of the Week: Metlifecare Ltd

Metlifecare Ltd [MET.NZ] has been on my watchlist for yonks. I already own Ryman Healthcare Ltd [RYM.NZ] I love this sector and it is because of its very high historical revenue and profit growth and its similar future protects as the number of older people (especially those greedy economy sucking baby boomers) increases in very large numbers

Metlifecare has been somewhat of a poor cousin to Ryman over the last few years when it comes to its profit. It has had a couple of big asset writedowns over the last 2 years and that has lead to a punishing in its stock price.

A great opportunity.

That is why it makes my Stock of the Week this week (better late than never, I know it is the end of the week) that, and it will bounce back into profit when property prices recover.

The stock has hit a 52 week low of NZ$1.38 and a high of $4.60 but that is well off its all time high of nearly 9 bucks reached not that long ago (see chart above) so you can see the potential for a good long term and medium term gain even if today's closing share price is $2.06.

Buy on weakness, there should be some more for this stock come its profit reporting in November.

Good luck!


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Stock of the Week: Xero Ltd

For this week's Stock of the Week I want to throw caution to the wind and pick a stock in an industry I know nothing at all about except that it has an over propensity of nerds working in it and some of them are billionaires.

The company is Xero Ltd [XRO.NZ] and the industry that it competes in is computer software, in Xero's case online business accounting software, you can find out more about Xero at Kelvin Hartnell's excellent blog, he is a big fan and a happy shareholder.

Warren Buffett says he doesn't invest in companies and industries he doesn't understand and the same goes for me, but some of you out there reading this just might know what this company is about and can see the potential it might have in the future.

Xero has yet to make money, but is making inroads into its sector of competence, big boys like Quicken and MYOB are starting to notice their presence but the company has still yet to make some green stuff. It doesn't look likely it will soon either.

Like I said though, the potential is there to make some big money, if they really take off or lose the lot if the company ends in tears. This is a high risk investment, with any payoff being long-term.

It has some big backers in New Zealand, like Sam Morgan of TradeMe fame but its share price has taken a bit of an upwards trajectory over the last 4 months going from around 65c to its present $1.38 at close of market yesterday, so it makes the company a whole lot more unattractive at these prices.

If you know this industry though, this stock could be for you on weakness.

Good luck!


Stock of the Week Series

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Xero @ Share Investor

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c Share Investor 2009

Stock of the Week: Auckland International Airport

This Stock of the Week is a culmination of a number of additions to a stock in my portfolio that started from an original purchase of 1000 in 2006.

Auckland International Airport [AIA.NZ] makes up a bigger part of my portfolio this week as I almost doubled my holding to 5000 shares when I bought 2000 yesterday, at the 52 week low no less -that wont last, my purchases always dip after I buy in.

The share price closed at $1.53 today, close to the 52 week low of $1.51, still a bargain in my humble opinion and that is the main reason I picked it this week.

The share price reached a high above $3.60 less than 2 years ago and at less than half that price now it has a gross return of over 8% on offering, good considering returns on any other asset class these days.

The company is doing OK during the economic downturn, with a relatively stagnant profit and will perform to expectations once the economy recovers.

I like the company and bought more because of its monopoly status and the fact that several parties have taken large stakes in the prospect that the new National Government will be more relaxed to foreign ownership.

The Auckland Supercity's arrival in less than 2 years also puts the question of council ownership of airport shares up for grabs.

Above all the company is a good long term prospect for profit and therefore an increase in stock price.

Good luck!

Stock of the Week Series

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Stock of the Week: Sky City Entertainment Group

This Stock of the Week is all about self interest, no not really, well maybe, nah, you be the judge.

Sky City Entertainment Group [SKC.NZ] makes up a large part of my portfolio by far but my main reason for including it this week is that the stock price has fallen below the recent capital raising price of NZ$2.61.

The share price closed at $2.58 yesterday, close to the multi-year low of $2.54.

It could go lower and that is the hard thing to pick, just when to buy on weakness. As I have said before I am interested in buying more because I got my shareholding diluted in the capital raising.

The stock is currently paying a gross dividend of over 12%, subject to a 20% lower dividend payout come full year profit announcement late August but that represents good value considering profits are holding up well to last years figures -a rarity in profit results and company health over the last year of the current economic crises. They are also likely to perform well over the medium term.

As I said there could be some more downwards pressure on the SKC share price to come (I haven't seen anything material for the recent drop) so best if you are interested in buying take a close look at what is happening before you pounce.

I hold the stock at a cost of below $1.90 per share.

Good Luck!

Stock of the Week Series

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Restaurant Brands
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Ryman Healthcare
Mainfreight Ltd
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Contact Energy Ltd
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Fisher & Paykel Appliances


Sky City Entertainment Group @ Share Investor

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