The 6 month chart (see above) of Steel & Tube Ltd [STU.NZ] is one ugly looking sheila but beneath the veneer of the surface turmoil beats a company with a solid long-term background dating back to the mid 1950s and in combination with the low share price this girl starts to look attractive (see picture below for comparison)
I have a very small holding of 400 shares that I have longed to add to and at a closing price yesterday of $2.15 it is definitely on my radar. I bought 400 at around $4.75 (a mistake yes) when I had some left over cash from another share purchase 3 or 4 years ago so you can see why I am getting excited now.
The company is highly cyclical and at the moment is close to or at the bottom of that cycle and its share price reflects that.
Restaurant Brands Ltd [RBD.NZ] for example is another highly cyclical company at or near its peak in terms of profits and sales and its share price is currently mirroring it fortunes.
STUs half year profit to 31 December 2009 was a shocker, down around 85% on revenue down by 30% but management say the company shows signs of improving. Of course I am very negative that things will improve anytime soon but this stock is looking cheap even during the current deep recession we are experiencing.
Things of course could get worse economy-wise and the share price will probably reflect that so be patient and you could get this stock for under 2 bucks.
It is on my watchlist to add around 1600 to take my holding to 2000.
Steel & Tube @ Share Investor
Long Term View: Steel & Tube Ltd
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Discuss STU @ Share Investor Forum
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In this series of posts I am going to be looking at stocks listed on the NZX in relation to their returns to shareholders over the life of their listing -what shareholders would now see in their back pockets if they had invested in the company IPO. The calculation of returns includes dividends and tax credits.
Steel & Tube Ltd [STU.NZ] has been a spectacular investment for those who have been shareholders since its listing in September 1967 and even better for its founders who established the company in 1953. We will start at an adjusted $1.00 share price and will use financial data from 1987 to make our comparison. (Figures for 1967-1987 are not easily obtainable so annual and overall returns are likely to be higher)
With $4.73c in net dividends (excluding the NZX listed period 1967-1987. No data can be easily found for dividends) and 30% more in tax credits (see chart above) plus a 1:1 bonus share issue in 1997 gives STU a slightly more than 829% return (see chart below for the share price percentage gain against the average of all NZX indexes - does not include dividends and tax credits in its calculation) over the nearly 23 year listing of STU (again, the period between 1967 and 1987 is excluded because no share price or dividend details are available so the return will be higher than stated here for this period), gives an approximate annual net return of just over 36%.
This is approximately a 470% better return when compared to the average of all NZX indexes.
Disc I own STU shares in the Share Investor Portfolio
Long Term View Series
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Steel & Tube @ Share Investor
OneSteel makes cheeky bid for minority shareholders
NZX's Top 10 Dividend Returns
Discuss STU @ Share Investor Forum
Download STU Company Reports
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The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
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