Still Watching Contact Energy

Contact Energy Ltd [CEN.NZ] is a stock I used to own just before 9-11, in fact I moronically dumped it on that day due to my inexperience in the stockmarket at the time.

I bought in at NZ$3.10 at the IPO and picked more up at $2.66. I had 5000 at one stage for the princely sum of around $12000.00 bucks (you can smell the regret in this reminisce cant you?)

Meanwhile back in the present I think you can still get a relative bargain by buying this company. The share price has dropped around 7% since I last wrote about the company on June 8.

Contact had a 30% drop in half year profit to 31 December 2008, added NZ$550 million in debt through a public bond issue and expects its full year profit for the year ended 30 June 2009 to be down around 30% as well.

This doesn't make good reading but Contact has performed better than most during this recession. Contact's lower profit was to do with higher water levels in dams bringing down their wholesale energy prices. It wasn't recession related at all apart from the shutdown of some of Comalco, a large power user and profit is unlikely to get much worse than this.

That is one reason why I continue to watch this stock closely, its recession proof nature.

One other good reason to buy, if you were looking at this stock over the last year, is that its stock price is near its 52 week low of $5.47, closing at $5.63 last Friday and you cant get a better reason than that.

The company is a good long term bet and even a good short to medium term money maker for those of you with a short attention span. I say this because the share price seems to get good support at current price levels and the company always has the sword of takeover from its Aussie majority owner parent Origin Energy Ltd [ORG.AU] hanging over it.

Keep it on your watchlist too if you have been thinking of adding it to your portfolio.

I am getting my buy finger ready.

Contact @ Share Investor Blog

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

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c Share Investor 2009

Stock of the Week: Fisher & Paykel Appliances Ltd

This is the beginning of a new a column. A regular outing, I will pick one stock that may have been in the news - good or bad-or one that simply takes my fancy and recommend that investors might like to take another look at it to see if it fits their investment profile.




The inaugural Stock of the Week pick is Fisher & Paykel Appliances [FPA.NZ]. Long given a good stiff verbal beating by my good self over many years the main reason why I am picking this stock for closer scrutiny is the ability for you short term investors out there for you to make a quick buck rather than the slow and sometimes painful ones that I make.

Yes, yes, yes you could have bought at NZ 37c a few weeks back but the company's future survival wasn't clear at that point.

The stock closed at 66c on Friday and is on a trading halt until this Wednesday 27 May.

It seems there is to be some material news out this Wednesday in regard to the success or otherwise of its capital raising process.

It seems likely that the news is going be that some kind of finance has been found to keep the company going, at least for the short to medium term, with a 200 million rights issue mooted by BusinessDay over the weekend, the main reason given by FPA management for putting a trading halt on today.

There is some life left in this beast yet, how much we cannot be too sure, but there is short to medium term money to be made if one gets in early on positive news after trading is lifted on Wednesday. The short-term money to be made will be on buying quickly on Wednesday and flicking shares off to those who want to participate in the rumoured capital raising (it could actually be a cornerstone shareholder instead of or as well as) or buying quickly and holding medium to longer term hoping that the company can trade its way out of its current financial, revenue and profit troubles.

It is worth a look at and I will be taking a cursory glance at it on the big day to see if I can gain any benefit from it, as I am not against a short term punt myself.

Good luck.


Stock of the Week Series

Reprise 2 : Contact Energy Ltd
Reprise: Contact Energy Ltd
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


Fisher & Paykel Appliances @ Share Investor

Fisher & Paykel downgrade continues fine tradition
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Fisher & Paykel: A Tale of Two Companies
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Buy The Intelligent Investor & more @ Fishpond.co.nz





c Share Investor 2009

Stocks on my Watchlist: Metlifecare Ltd

Once a darling of the NZX stockmarket, Metlifecare Ltd[MET.NZ], one of two listed retirement and elderly care village companies, the other being Ryman Healthcare [RYM.NZ], its share price now languishes at a NZ$ 4.36 close this last Friday 18 July and they announced a loss for the half year to December 31 2007 of $12.3 million.

The loss has been explained by management as a result of changes from the application of International Financial Reporting Standards (IFRS). Ryman on the other hand reported a significant increase in profit for the same period.

However, this must put in context with a market that is trying to do its best impression of a lead balloon being tossed from the Empire State Building.

So what would be so attractive to a prospective purchaser?

The fact that the sector of the economy that the MET participates in has had a history of good results and its long term future looks excellent because as we all know the elderly amongst us, save you and I, are living longer and will increasingly need and want the safety, care and security that a well managed retirement village will give them.

Of course long term success is no guarantee, but Metlifecare is a well managed company with a history of good planning, focused property development, for their individual villages and good returns for shareholders and as I have said operates in a growth industry.

Now there have been a couple of attempts over the last few years for a takeover of this company but bidders have been unsuccessful as there are several large shareholders and a couple of them declined to let the bidder have their way, Fisher Funds, the New Zealand fund manager but one of them.

The last bid for the MET was in excess of the closing price last Friday 18 July, which was well short of a stock price high of above 9 bucks Kiwi in 2007. This brings me to another reason why this company is on my radar.

In my humble opinion the current share price represents good value and aren't there heaps of them around at the moment! Net asset backing per share is $6.93, you do the math. Market conditions as they are today have cut the company's capital value by more than half, just like its listed competitor, Ryman Healthcare, which I already own.

So what, the property market, which by definition Metlifecare has exposure to, is in the doldrums. That simply ain't going to last and I wouldn't be surprised if the company isn't getting its tyres kicked by larger investors looking for good companies.

OK, I know Mr Market has got a bad case of the Wiggles right now and it is hard to "pick the market bottom", but if you are one of those guys who do the Rorschach chart predictions, do yourself a favour and stick this one on your slide rule.

I'm putting on my watchlist and looking for a weak day(yes another one) to buy.


Related Share Investor Reading

Why did you buy that stock? [Ryman Healthcare]
Time for retirement?





c Share Investor 2008

Goodman Fielder a hedge against an economic slump

Consumers still eat, even during economic downturns. Goodman Fielder is well
placed to weather the storm.



A stock likely to do well over an economic slump, a slump looking more likely than not, is the Australasian food giant Goodman Fielder (GFF).

With operations in Australia, New Zealand and throughout the Pacific Islands, Goodman has a business with food staples such as bread, milk, butter, flour, and highly branded packaged and processed foods for breakfast, lunch and dinner, and the snacks in between.



Wonder White, a strong
Australian brand.


Consumers are loyal to their brands and tend to stay true even when prices rise. Having said that there have been some large price increases of their products on the retail floor because of higher commodity prices, like wheat and sugar and increased labour, packaging and energy costs.

Unlike other companies, in less consumer essential businesses, Goodman Fielder has been able to pass on much of their increased business costs, so margins havent been affected on the downside too much.

Margins have been under pressure though and prospective buyers must be aware of this caveat.

Goodman does have competition, although Goodman does tend to dominate allot of food staples and brands: Vogels bread, Tararua, Kiwi, Edmonds, Meadowlea, Quality bakers, Irvines, anchor and a whole host of other recognised brands.

Goodman's share price has suffered of late, down to a low of NZ$ 1.78 last week from a high of $3.20 at the end of last year and finishing up 3c at $1.93 today.


Related Share Investor reading

Contact Energy looks bright during dark times
Goodman Fielder 2007 full year profit

Disclosure: I own GFF shares


C Share Investor 2008