Thursday, July 21, 2011

Share Price Alert: Ecoya Ltd

When we last visited fragrance/candle maker and marketer Ecoya Ltd [ECO.NZX] back in November 2010 its shares were trading at 75c each and the company had yet to make a profit.

Nothing much has changed since then in regards to making a profit but the company is now trading at 95c after reaching an all-time low of 65c back in early 2011.

This is almost completely related to the inclusion of Trademe founder Sam Morgan appearing as a substantial investor with a 2.45% stake on the Ecoya share register.

Now I have been wrong twice in terms of growth companies like this that don't make money panning out for investors, beverage maker and marketer Charlies Group Ltd [CHA.NZX] and the former listed baby of Geoff Ross, the vodka maker 42 Below, so what do I know.

42 Below had never made money at time of its sale to Barcardi and Charlies had made a small return since it was sold last month.

Investors would have to question whether this company is or will be in the league of the two examples above but Sam Morgan knows more about business and investing than me so you might want to follow the money rather than my fat mouth.

Having said that I cant see how the inclusion of Mr Morgan on the ECO register justifies the 27% increase in share price in 8 months, especially considering the lack of black ink on the books or the prospect of black ink any time soon.

If you are interested in investing in Ecoya, you might want to wait for a pull-back in share price rather than buying at the current premium, especially given the dire economic macro situation and the associated poor retail environment - it has got to be impacting on sales growth for the company.

Be patient and don't let the candle burn you at both ends.

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Ecoya Ltd @ Share Investor

Chart of the Day: Ecoya Ltd
Ecoya Ltd: Trilogy Purchase Dumps on small shareholders
Share Investor Q & A: Ecoya's Geoff Ross
Share Investor Q & A: Questions for Ecoya's Geoff Ross
Ecoya 2010 Full Year Profit: More of the same to come?
Ecoya IPO lights only one end of the candle
Ecoya IPO: A Closer Look
Ecoya Prospectus Requires free registration

Discuss ECO @ Share Investor Forum
Download ECO Company Reports


Every Bastard Says No: The 42 Below Story

Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @


c Share Investor 2011

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