New Zealand Refining Ltd [NZR.NZX] has continued to have a lacklustre financial performance since we last visited back in June of this year. Its half year profit for 2010 was down 26% on the 2009 result.
Since June though the stock has rallied in price from $3.10 - reaching a 52 week low of $2.90 in July - to close yesterday at $3.66 after reaching a high of $3.75 in early October.
NZR management have said themselves that the company remains under pressure from uncertain refining margins and a stagnant oil price, so the only possible reasons for the share price rise are the reinstatement of a dividend and a general improvement of NZX share prices.
The current dividend of 2c is historically low for the company and generally they have been paying a good 10% plus gross yield for most of the last decade.
If you can calculate that the global oil price is set to soar (it will but just when is another question) soon then the current share price is a good place to buy.
Clearly if you see the stagnant financial position continue because of a constant oil price at present levels then the NZR share price will come under pressure if profit does not improve.
Since the share price has increased by more than 15% since June it might be worthwhile selling if you are a short term holder.
Long term investors might seize the opportunity to buy on further weakness.
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