Long vs Short: Sky City Entertainment

In this second of the Long vs Short series I am once again going to take look at the chart comparisons for a stock from the Share Investor Portfolio and compare the 10 year return (above) to the turmoil of the last year with a 1 year return chart (bottom of post).

In this series I want to show the merits of investing, using charts, for the long-term vs short term gains or losses. I will use the longest available data to me for the long-term view and will compare against the NZX50.

The second stock in the series will be Sky City Entertainment [SKC.NZ] which I have held for 6 years, the longest of any stock of the 17 that I currently own.

My Portfolio
Symbol	Price	Value	Earned
SKC.NZ	$2.94	$102900	$30800
You own 35000 [SKC.NZ] shares purchased at $2.06 [$72100] *

As I said above I have held Sky City for 6 years and my current return (see small chart above)* is around 42%. Not good considering it is 6 years but when you look at the current market situation not bad.

If however you had held Sky City for the full ten years(see large chart at top) your return would have been a staggering 350%.

Taking a look at the short term outlook for the last year your loss would have been almost 35%.

As in the first Long vs Short installment the long-term portfolio wins again.







Long vs Short series

Mainfreight Ltd
The Warehouse Group


Sky City @ Share Investor

2008 Sky City profit analysis
Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
Sky City outlines a clear future plan
As recession bites Sky City bites back
Sky City Assets: Buy, sell and hold
Why did you buy that stock? [Sky City Entertainment]
Sky City Share Volumes set tongues wagging
Sky City half year exceptional on cost cutting
NZX Press release: Sky City profit to HY end Dec 2007
Sky City Cinemas no Blockbuster
Sky City Entertainment share price drop
New Broom set to sweep
Sky City Management: Blind, deaf and numb
Sky City sale could be off
Opposition to takeover
Premium for control
Sky City receives takeover bid
Sky City Casino Full Year Profit to June 30 2007
Setting the record straight
Sky City CEO resigns
Sky City Casino: Under performing
Sky City Casino 2007 HY Profit(analysis)
Sky City Casino 2007 HY Profit

Share Investor Forum-Discuss this topic


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Sky City Financial Data

• Summary
• Charts
• Dividends
• News
• Announcements
• Price History
• Related Securities

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c Share Investor 2008

Long-term gain, short term pain

The 3 month chart for Sky City Entertainments stock price doesn't tell the full story.
As a long-term investment it has managed to hold up well during one of history's
greatest market downturns.


OK readers, this piece isn't about Sky City it is about the benefits of investing for the long-term.

My critics-and I have quite a few because not everyone has the same approach to investing- would say holding onto shares long-term is a losers game and while every share in my portfolio is currently losing money, except for Fisher and Paykel Healthcare, ASB Preference shares and Sky City Entertainment [SKC.NZ]- Fisher and Paykel was added to and ASB Prefs have only been in the portfolio for a short term, Sky City was the first share in the portfolio and has been the base since its inception in 2002.

I would silence my critics simply by saying my Sky City holding has still remained positive during one of histories great market downturns and that is simply because it has been in my portfolio for a reasonable time.

Granted, the stockmarket has further to fall but Sky City has been the bedrock of the Share Investor Portfolio and will continue to provide a safety net in the current market turmoil.

My other losing stocks will recover-a couple may fail entirely-and looking at the long-term again (and I would contend that you must) they will provide a good return for my hard earned shekels.

Keep in mind if you are brave enough (some would say stupid but not me)to buy stocks in the next few months that your stocks may fall further in prices but as long as you have done your research and picked a solid company you will come out the winner in the long-run.


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c Share Investor 2008

A tale of three rising stocks

The market really seems to have forgotten the bad economic news, credit liquidity and recession in New Zealand over the last week or so.

No stocks more so than Sky City Entertainment [SKC] and Telecom NZ [TEL] and Fisher and Paykel Healthcare [FPH].

Sky City was up around 25% from its lows in the first week of July, Telecom has risen a similar percentage and Fisher more than 35% off its lows.

Telecom is a weird one, there is no material reason for its share price increase, perhaps the coming profit announcement,to be made Friday morning 8 Aug 2008(NZ time), got the overseas buyers scooping up shares for the dividend. Analysts expect around NZ$700 million for the full year 2008, but its 2009 profit of sub-$600 million will not excite the punters. Its long term outlook is not good.

Telecom NZ Chart.


Fisher and Paykel Healthcare started rising before the market as a whole did when the kiwi/US dollar cross started going in the company's favour. Every cent in decline against the US dollar means around NZ$ 2.5 million straight to the bottom line. The increase in share price is quite understandable then.



Fisher & Paykel Healthcare
Chart.

I actually intended to write this post just about Sky City Entertainment but got sidetracked as I often do. So here goes.

The rise in this stock started before the general market improvement as well. From a low of NZ$2.90 just four weeks ago to close at $3.62 today.

This stocks prospects haven't improved materially due to any known factors apart from the Aussie cross with the Kiwi dollar improving their Australian Casino returns back to their New Zealand currency base.

The new CEO Nigel Morrison, has a reputation for cutting corporate fat and he has done some already. Strikes last weekend from the Auckland Casino floor staff because of a 4% wage rise offer didn't move management to make a higher counter one to get them back.

A 25% rise might indicate a good profit result to the year ended June 30 2008, due Monday 25 August 2008 (NZ time). This sort of movement in price before such announcements is common with this stock on good news.

Insiders should be ashamed.

I think SKC has been oversold though, like many other listed NZX stocks have.

Having said that I still fail to understand the collective amnesia that seems to envelop the stockmarket when they forget the reasons why they sold over the last few months and are now buying stocks as their share prices go in an upwards trajectory, on higher volumes traded.

Go figure.

Disclosure I own FPH & SKC shares.


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Why did you buy that stock? [Sky City Entertainment]
Sky City Share Volumes set tongues wagging
Sky City half year exceptional on cost cutting
NZX Press release: Sky City profit to HY end Dec 2007
Sky City Cinemas no Blockbuster
Sky City Entertainment share price drop
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Sky City Management: Blind, deaf and numb
Sky City sale could be off
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Sky City CEO resigns
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Sky City Casino 2007 HY Profit


Telecom New Zealand

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2008 SKC Interim Result 2008 Interim Report 2008 Interim Result Presentation Media Release NZX Announcement Financial Statements Result Briefing Webcast

2007 SKC Annual Result 2007 Annual Report 2007 Annual Result Presentation Media Release NZX Announcement Financial Statements Result Briefing Webcast

c Share Investor 2008

Sky City outlines a clear future plan

Today's newsletter to Sky City Entertainment [SKC.NZ] shareholders got me a little excited for the company and its future direction, and that hasn't happened for a few years.

The content of the newsletter outlined the direction that CEO Nigel Morrison wanted the company was to proceed towards, how it was going to get there, and a time frame to stick to.

The language was clear, to the point, and had none of the "management speak" of past shareholder communication.

It reminds me somewhat of the management at Mainfreight Ltd [MFT.NZ] and their no nonsense approach to ramming their point home.

Now whether management achieve their stated goals is another question, but previous management were truly awful communicators; to their shareholders,within the company and definitely to their customers and the market.

A clear way of communication in business often translates into positive results. Uncomplicated communication gives a clear direction for employees and can translate into a more productive and happier workforce and hopefully a better bottom line.

Morrison has also made practical moves towards the stated company goal, new management have been hired to grow individual casino businesses and a focus on organic growth is emphasised throughout the shareholder communication.

The direction the company is headed is most directly apparent in the outlook for 2009.

"Our shareholders have made it clear to us that they want us to focus on maximising the performance of the assets we operate. This is what we will be doing. as we have said previously, we expect to achieve this within an 18-month time frame. We will retain tight control over capital and not expend capital unless we are very confident of healthy returns for shareholders".

Lets hope the follow through shows some concrete results in the following 18 months.


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c Share Investor 2008

As recession bites Sky City bites back

I have had a correspondent through email over several months asking me about whether he should sell his Sky City Entertainment Group Ltd [SKC.NZX] shares. In March he asked the following question.

I'm a big fan of your blog, checking it most days for updates (particularly after a tough day on the sharemarket).

I just have a quick question regarding SKC. I hold some shares, which make up about 2/5ths of my (rather small) portfolio - as of late, they seem to be doing nothing but falling. Now, I am not one to sell on a whim, but I have been asking myself recently, is SKC something I should stick with?

I bought in at $4.30 and, after the 7 cent drop today, have lost a fair amount of money. Where do you see this stock going in the short to medium term? How about the long term? I've read the newspaper articles, including the ones on your page, that were posted today, but I'm not sure what to make of the situation.

I suppose selling when the price is so low is not really an option, but would love to know what you think as you are also a holder of SKC shares.

My answer was:

Now I don't really recommend what others should be doing with their
shares or investments but I will tell you what I am going to do with
my SKC shares and why and maybe that will give you an idea.

The rider is that your circumstances will be different to mine: the
dollar amount you are talking about will be different, your investment
term might be longer or shorter, you may have held the shares longer
or shorter than me, etc ,etc.

You will have to decide based on those and other conditions.

I have held my 35000 shares for around 6 years and hold them at a cost
of just over 2 bucks a share.

I don't check share prices daily but it sounds like the SP is around
$NZ 3.70 odd as of today. That is the lowest price they have ever been
since 2002 but at one stage mine were worth $70000.00 more at their
high point of around $5.70.

My investment term for shares is a minimum of 10 years, so I'm not
particularly worried about their current share price. Every share is
getting battered.

The current uncertainties re the credit crunch are a concern to me and
I believe shares could drop another 20% easily, so be prepared for
your shares to drop below 3 bucks.

In the long run though, SKC shows some promise.

The new head seems aggressive in his desire to improve business
without buying more businesses and he has the track record in other
casinos to back up his big mouth.

Some fat has been trimmed from operating costs and I believe the
company is ready to bounce back.

The company does have a largish debt burden but has very cheap credit
funding secured for many years.

The only cloud on the horizon is government legislation.

It is a great cash business, a monopoly in most of its markets and a
great hedge in uncertain economic times.

I have no intention of selling, but if you need the money the shares
are not going to improve in value until the credit crunch has blown
over and that is going to take many months to come.

I hope that has been helpful.


In subsequent emails my correspondent continued to fret over the plunging price of his Sky City holding.

I answered that the company will do OK in a recession, with the implication being that other companies will suffer.

Retailing stocks in New Zealand have been especially hard hit. I have held several retail stocks for some years but given plunging stock prices have bought some new retail stocks, as well as other sectors, into the Share Investor Portfolio.

The general point made to my correspondent was that you shouldn't sell your shares unless you really needed to or if there was something significantly wrong with the company you invested in.

The Sky City example makes a good general point. Stocks and investments are losing value currently. There are good reasons why that is the case. A probable global recession brought on by the Sub Prime credit crunch and high oil, interest and food costs will have impacts on company profits. That will not last forever though, so unless you need the money selling is not a good idea.

You invested in a business and businesses have good and bad times. Get used to it.

Investors who sold Sky City over its share price rort will probably be kicking themselves. The capital value of the company has nearly halved since February but the profit guidance made in that month was re affirmed yesterday.

"There's a lot of concern that in this environment there are a lot of companies contemplating earnings downgrades and we wanted to confirm that we weren't," SkyCity chief executive Nigel Morrison said.

Proving that Mr Market has gone overboard in marking this company down.

Sky City isn't recession proof though. Expect it to struggle slightly in the 1 July to 31 Dec half.

Other stocks listed on the NZX have also been oversold in my opinion.

My correspondent didn't sell his Sky City shares shares.

Disc: I own SKC shares in the Share Investor Portfolio


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Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
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Sky City Entertainment Group Ltd: Presentation to Macquarie Group
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Failed Sky City bid for Christchurch Casino good news for Shareholders
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Sky City Convention Centre Expansion a Money loser
Sky City Entertainment Group Ltd: Download full Company analysis
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Sky City Assets: Buy, sell and hold
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c Share Investor 2008

Sky City Assets: Buy, sell and hold

News out today that Sky City Entertainment[SKC.NZ] has sold a share in a the Christchurch Crowne Plaza Hotel and in turn received a larger stake in the Christchurch Casino that it owns with Skyline Enterprizes and cash in hand leaves this shareholder a happy man.

It adds to the news yesterday that the casino company will develop a "luxury resort" on the Little Mindal land it owns in front of the Darwin Casino.

The larger stake in the CHCH Casino takes the Sky City holding from 41% to a 46% holding.

The hotel was sold for $61.5 million, so one might presume that the Sky City share of the booty was $30.75 million. There was no breakdown of how much the extra 5% stake in the South Island Casino cost and therefore how much cash was left to disperse to debt pay downs or even a dividend to shareholders.

Shareholders in Sky City are entitled to know what the 5% cost.

The cash left over is more likely to be going towards subsidising Sky City Cinemas, a division that was on the block for a year but failed to sell as of last Friday because the buyer "failed to get financing", according to the Sky City Press release.

Any credible buyer interested in the cinema would only have to fork out about NZ$60 million and they would have known that was around the asking price when Sky City wrote down the assets of the division last year.

It is more likely that the deal fell through because the assets wouldn't have even got near the $60 million price tag rather than blaming the credit crunch for failing to sell a loss making business.

I'm naturally annoyed at management for not disposing with the cinemas, even for less than the asking price. It is going to be a continuing drain on capital expenditure and is never going to make any sort of decent return on assets or capital.

Cinemas as a business are on a par with the airline industry when it comes to losing money and track records for both show a history of company collapses, huge expense for owners and continued disappointment.

Nigel Morrison needs a boot in the head for that one.

Sky City @ Share Investor

Sky City Entertainment 2009 Interim Profit Review
Sky City Entertainment 2009 Interim Result Preamble
2008 Sky City profit analysis
Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
Sky City outlines a clear future plan
As recession bites Sky City bites back
Sky City Assets: Buy, sell and hold
Why did you buy that stock? [Sky City Entertainment]
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Sky City half year exceptional on cost cutting
NZX Press release: Sky City profit to HY end Dec 2007
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Sky City sale could be off
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c Share Investor 2008

Why did you buy that stock ? [Sky City Entertainment]

I'm going to kick off a series of articles about what drew me to the 15 stocks that I hold in my portfolio.

While it is interesting to know what different investors hold in their stock portfolio, it is clearly more intriguing as to why they made the decision to buy an individual stock in the first place.

Let me begin with the largest stock holding in my top draw, the often much maligned Sky City Entertainment[SKC.NZ] the Casino, Hotel and Cinema operator.

I have held this company since buying in 2002 and it has cost me just under $2 a share when the very generous dividend is accounted for.

Why did you buy that stock?

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Why did you buy that stock? [The Warehouse Group]
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Discuss this stock @ Shareinvestor.net.nz

The main reason I purchased is the monopoly position that it holds in all the markets it operates in. The constant cash flow that this sort of business provides, even during tough economic conditions, is another quality that attracted my hard earned cash.

Initially, before I plunked my shekels down, I visited a couple of the company's casinos, talked to some middle management and harassed employees on the shop floor to see what sort of business it was.

Naturally there was both good and bad feedback but mostly it was positive stuff.

I made a few more visits to the company's main gaming floor in Auckland, New Zealand and after reading the prerequisite company financials, was convinced to put about NZ$135,000.00 on the table.

I came to the conclusion from my interactions with Sky City, that it was a pretty easy business to understand, a principle that Warren Buffett uses to gauge a possible company purchase, and there wasn't too much that management could do wrong with such a basic business. I was wrong about that, but that is another story for another time-a Buffett principle that escaped me at the time, look carefully at management when buying!

Would I still purchase Sky City today?

A good question stockmarket investors should all ask of ourselves about stocks in our portfolios.

While there is much that has gone wrong with the management of this company, some very bad decisions have clearly been made, cash is still flowing into the tills, the company rides out downturns in the economy well, and profit is there, albeit slowed considerably, I would indeed purchase at anything below 2 bucks.

Sky City @ Share Investor

Sky City Entertainment 2009 Interim Result Review
Sky City Entertainment 2009 Interim Result Preamble
2008 Sky City profit analysis
Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
Sky City outlines a clear future plan
As recession bites Sky City bites back
Sky City Assets: Buy, sell and hold
Why did you buy that stock? [Sky City Entertainment]
Sky City Share Volumes set tongues wagging
Sky City half year exceptional on cost cutting
NZX Press release: Sky City profit to HY end Dec 2007
Sky City Cinemas no Blockbuster
Sky City Entertainment share price drop
New Broom set to sweep
Sky City Management: Blind, deaf and numb
Sky City sale could be off
Opposition to takeover
Premium for control
Sky City receives takeover bid
Sky City Casino Full Year Profit to June 30 2007
Setting the record straight
Sky City CEO resigns
Sky City Casino: Under performing
Sky City Casino 2007 HY Profit(analysis)
Sky City Casino 2007 HY Profit

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Sky City Financial Data

• Summary
• Charts
• Dividends
• News
• Announcements
• Price History
• Related Securities

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c Share Investor 2008

Sky City share volumes sets tongues wagging

Related Quote

All Detailed Quotes
Delayed 20 mins
Quote data provided by Reuters


Reuters story on SKC - NZ's Sky City CEO sees year of consolidation, then expansion (March 25, 2008)


With volume of Sky City Entertainment[SKC.NZ] shares traded on the NZX at over 8 million today and around 5 million yesterday one would have to ask why the large volumes changing hands? The average trading volume is just over 1.2 million shares.

Answer, I don't know for sure, but I'm going to speculate again.

Clearly the number one stab in the dark would be a share price so low it would have to be about 6 years ago that it traded at the present level of NZ$3.48 and it has got out the bargain hunters and institutions.

Number two punt is a mystery buyer getting a controlling stake-although talk of anyone kicking the tyres of the company is long gone, for now.

Three, Unitab as it was around 3 years ago, now Tattersalls[TTX.AX], from Australia topping up their 0.5% shareholding that they already have in the company.

Fourthly, and probably most likely, Commonwealth Bank[CBA.AX], who dumped Tattersalls stock on March 7 (PDF disclosure) and who is also a biggish player in SKC.

Just to hedge my bets, a combo of all four is also part of my playbook!

The coming year is going to be a tough one for Sky City, But new CEO Nigel Morrison has restructured and redefined a number of casinos in this part of the world. The giant Crown Casino in Melbourne but one of them.


Disclosure: I own SKC shares


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NZX Press release: Sky City profit to HY end Dec 2007
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c Share Investor 2008

STUFF.co.nz: Sky City under review

Sky City Entertainment has been busy in the first few weeks
of Nigel Morrison's time at the top. Business units are all
under review.


By GARETH VAUGHAN - The Dominion Post | Tuesday, 18 March 2008

News out About Sky City today

• SkyCity CEO sees cinema sale within 3 months - Stuff.co.nz
• Sky City reviews Adelaide plan - Bloomberg

SkyCity Entertainment Group's(SKC) new boss wants to double to $3 billion the annual value of bets placed by high-rolling Asian gamblers as he strives to turn around the casino operator's recent disappointing performance.

Nigel Morrison, who took SkyCity's helm as chief executive on March 3, says this is the best way to combat the volatile impact on SkyCity's earnings from wealthy overseas gamblers.

The house did well against SkyCity's primarily Asian overseas customers in the December half-year, with $12.6 million in operating earnings from them. This helped push up group net profit, before the $60 million write-down in the carrying value of SkyCity Cinemas, by 36 per cent to $61.3 million.

However, a winning streak by high rollers in the first half of last year led to a $2.9 million loss, helping slash group net profit 23 per cent to $45 million.

Mr Morrison said high-roller volatility stemmed from the fact that the $1.5 billion worth of total annual bets placed by international gamblers at SkyCity's casinos was not enough. SkyCity expects to win about 1.3 per cent of the $1.5 billion.

The challenge for SkyCity, therefore, was to double at least the value of annual high-roller bets: "We need to think outside the square about how we might do that," he said.

Mr Morrison, a 48-year-old Australian, quit a role as chief financial officer of Hong Kong and Macau Casino group Galaxy Entertainment to move to Auckland. He replaced Evan Davies, SkyCity's founding chief executive, who departed abruptly after 11 years with a $2 million payout last June. SkyCity director Elmar Toime held the fort as executive director in the interim.

Including the write-down on SkyCity Cinemas, SkyCity last month posted interim net profit of just $1.3 million. Mr Morrison said SkyCity was talking with two potential buyers of the cinema business and he hoped to have the protracted sale wrapped up within three months. SkyCity Cinemas produced operating earnings of just $2 million in the six months to December.

SkyCity, which owns casinos in Auckland, Hamilton, Darwin, Adelaide, 41 per cent of Christchurch Casino and 55 per cent of one of Queenstown's two casinos, would then be free to focus on improving the performance of those businesses.

Mr Morrison said his mandate from shareholders for the next 18 months was to get SkyCity's casinos "buzzing". The recent $40 million refurbishment of the flagship Auckland Casino's main gaming floor was a step toward this.

Auckland produced $107.7 million of $161.4 million group operating earnings in the December half, but this rose just 0.4 per cent as margins contracted. SkyCity would work on getting the lighting, music, food and service right at Auckland, now that the hard work on the "physical asset" was completed.

"I would hope that in six months we would have made a big impact into all those things."

Disclosure: I own SKC shares


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c Links Share Investor 2008

Sky City Entertainment share price drop

The share price of Sky City Entertainment has had its own run of bad luck over the last few days.

While the NZX as a whole has been very weak on low holiday volume today, the SKC share price was down 9c to finish on its days low of NZ$ 4.33 on 3 million plus shares, excellent turnover for this stock on any day.






This 5 day chart from Yahoo tells the grim story and is clearly an indicator of something material at play.

The clear winner is that nobody is going to buy the casino company. The market knows that the prospect of this has been tenuous at best anyway, however insiders might know this as a certainty and are dumping holdings.

The other possibility is that a sale has been made of their cinema division and the price is low or bids are low, or management haven't found a buyer and are left with a small white elephant.

Another dreary thought is that half year profit, to be announced around the 20th of February 2008, is going to be lower than forecast, first half 2008 ended 31 December 2007. The market would have to know if profit is going to be materially lower though.

Either way insiders are selling down and bad news looks to be on the cards.

Blackjack anyone?

Disclosure: I own SKC shares


Share Investor articles on Sky City:

New Broom at Sky City set to sweep
Sky City Management: Blind, deaf and numb
Sky City sale could be off
Opposition to takeover
Premium for control
Sky City receives takeover bid
Sky City Casino Full Year Profit to June 30 2007
Setting the record straight
Sky City CEO resigns
Sky City Casino: Underperforming
Sky City Casino 2007 HY Profit(analysis)
Sky City Casino 2007 HY Profit


C Share Investor 2007,2008

Share Investor's 2008 Stock Picks

As the price of gas to starts to reach for the stars, fixed mortgage interest rates look like they are ready to go double figures, a continuation of the 2007 finance company meltdown set to drag on, and Helen Clark and her merry bunch set to plunder taxpayer wallets again in 2008, this writer is still in a holiday frame of mind.

On that light note then id like to offer my completely unbiased opinion (yeah right) on what my picks are in 2008 for stocks to watch for.

Keep in mind that global stock markets this year are going to get a beating from the aforementioned and a probable recession in the US, and my picks are going to reflect the actual prospects of the companies and not the wider short term global influences mentioned.

My picks are long term, with a bare minimum of 5 years, and have an emphasis on companies with good long term prospects.

Without further ado and out clauses, here are my picks.

Like a lot of other stock pickers poking their heads above the parapet in 2008 I am going to put Fisher and Paykel Healthcare[FPH] at the top of my list.

Unlike its cousin Fisher and Paykel Appliances, FPH has good long term prospects and that is driven mainly by an R and D department that keeps coming up with cutting edge products with good margins that keep the revenues coming in.

Recent positive developments in the USA over increased health provider payments for FPH's sleep apnea products in-home mean this area is a driving force for profit and as new products are developed for the at home market profit looks set to rise.

The only negative is the weak US dollar, which is something quite frankly the company and analysts need to get over.

Pumpkin Patch Ltd[PPL]is on my buying list again for 2008. I have already picked up increased quantities of this 2007 beaten down stock and the short term punishment from slightly weaker global profit margins due to higher living costs means this stock will pick up when these pressures disappear.

Its strong global brand awareness and loyalty to that brand also helps during downturns.

Another retailer suffering from a mammoth stock slide in 2007, Hallenstein Glasson [HLG] is a pick for 2008.

A very well run company that shares the same reasons for its downturn with the likes of Pumpkin Patch and all other retailers.

Already retracing some of its 2007 slide, the stock price will be downwards volatile in the first part of the year and add some value as we come out to Christmas 2008.

Burger Fuel Worldwide[BFW] has heated up the Google box in 2007 and may gain interest as it expands in Australasia in 2008.

An indicator of what the share price will do will be sales figures from the Kings Cross Burger Fuel opened towards the end of 2007.

Indicators are that sales are good.

Like Pumpkin Patch, its strong brand awareness and loyalty will help it prosper long term. Although profit isn’t going to come in 2008.

I’m picking Burger Fuel as my wild card and recommend buying in the 20-30c range.

Mainfreight is another company that I have a shareholding in, and far be it from me to pick yet another already in the Share Investor Portfolio but I wouldn’t have picked it in the first place if it didn’t rate a mention in my 2008 picks.

Mainfreight[MFT]is a very well run company and perhaps more than any other listed on the NZX, management have set it up to succeed long term.

Everything has been set up with company long term sustainability and success in mind, and the pressures that Mainfreight will come under in 2008: increased fuel, wage, and interest rates, will be largely ameliorated because of careful forward planning.

The share price has been beaten down to around NZ$6.50 from a 2007 high of over 8 bucks, so the upside is obvious.

Other 2008 notables for me are:

Sky City Entertainment[SKC] if it isn’t sold it ain’t the end of the world and its new head that starts soon looks promising and has a track record of reorganizing casinos and making them tick.

Telecom New Zealand[TEL] if its new leader can change the whacked out culture of its workers and respond to its current and new customers in a preemptive instead of a reactive way then they have a good shot.

Serious money must be spent on infrastructure in 2008 to move Telecom’s technology into the 21^st century.

If Michael Hill International [MHI] can build on its 2007 success, with good indicators for sales in Canada and material efforts to expand into Mainland USA, then the after 10 for 1 split share price of just over NZ$1.10, looks set to hit record highs in 2008.

Rakon’s [RAK] share price was slaughtered from highs over 5 dollars in 2007 and there were a few teething and integration of new business problems that put the foot on the brakes.

Higher than usual Kiwi dollar crosses wiped some profit off the balance sheet but management should focus on the business first before worrying about things they cant control.

A great long term prospect.

Two US stocks that I'm picking for 2008 are Yum Brands [YUM]and Starbucks [SBUX] I like Yum because of its potential for expansion of its operations in China and India and Starbucks for the same reason.

Yum's KFC operation seems to be the star of the show, especially in China, as increasingly wealthy Chinese get the taste for western protein such as chicken and the number of possible units there would dwarf the US store count.

Starbucks had a rough year in 2007 but this former bull star has room left to run in 2008 as its stock price was given a good frothing due to its slowing sales and profit and Asian expansion could put some cream on the lattes as 2008 goes forward.

2008 is going to be a tough year for investors but with the right research and focus on how the business you are going to invest in works, you are going to set yourself up well in the long term.

Like any picks from people like myself, they must be taken with caution and may not be the right ones for you.

My picks come from my own research and I have backed them mostly by plunking down hard earned cash, with the exception of Burger Fuel, Rakon , Telecom and Hallenstein Glasson.

Burger Fuel and Hallensteins are on my radar to add to my portfolio in 2008.

Happy investing for 2008!

Disclosure: I own Sky City, Mainfreight, Michael Hill, Hallenstein Glasson, Pumpkin Patch and Fisher & Paykel Shares.

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c Share Investor 2008