Wednesday, January 12, 2011

Share Price Alert: Xero Ltd

If, like me, you were away from your computer and the markets over the last month (see 12 month chart above) or so you might have come back and noticed this little anomaly with the Xero Ltd [XRO.NZX] stock price.

Since the beginning of December when the stock was trading at around 2 bucks the stock has piled on around a dollar to close trading yesterday at $2.91.

A whopping rise of more than 40%!

This is on slightly higher than normal trading volume.

The stock was trading at around $1.50 in late October just before a large investor took a big stake in the company so the significance of the holiday rise is compounded. When looking back just two months the stock has risen by almost 100%.

Little material has changed since a more promising result in November excepting a directorship being taken up by former KiwiBank head CEO, Sam Knowles announced on December 2010.

The rise in share price was questioned by the NZX on December 31 but apparently nothing untoward was disclosed or found.

It is my view though that the share price has overtaken the medium term prospects for the company and a rise of 40% over a few weeks doesn't justify what may be seen by some as overwhelming positive news.

Look for a pullback in share price should the hype not match concrete company results.

Proceed with caution if you are considering buying now.

Xero Ltd @ Share Investor

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c Share Investor 2011

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