Value Play: Steel & Tube Ltd

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

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