The system has
had an interesting few weeks. Fletcher building
is back in range having dropped back from recent
strength, it is now back
within 20% of its 52 week low so is a
qualifier.
Force
has gone up a cent despite a string of potentially negative
news stories, this would suggest that the bad
news was already accounted
for in the low share price. Force certainly
is a good example of buying into
weakness, it remains to be seen how long we will
have to wait before selling
into strength.
Restaurant brands
are dipping back towards their low of 1.10 and should
definatly be bargain hunted at that price. They
have a good divident payout backed by good
cash flow and there is room for
growth.
Brierleys look
good, they have moved off their low of .32 and i have the
feeling the new management structure is starting
to produce the goods.
They look like the worst is
behind them and i wouldnt be suprised if we
start hearing good news from this company before
long.
I see some
on the group are looking at air nz as being at a bargain
price. The company fails to qualify under
this system as its earnings are
unlikely to grow in the near future. The p/e
is nice and low
but if earnings drop it wont be so
attractive
They are facing a 40% increase in fuel
costs,
more competition etc.
Admittedly they are falling to a nice low price however,
it will proobably fall even further in the short
term.
nick
Rule 1 p/e must be less than
10
Rule 2 eps must be expected to grow in next
forecast year
Rule 3 Gross dividend yield of
at least 8%
Rule 4 must be within 20% of 52 week
low compared with high
Rule 5 Sell when p/e over 12
This strategy is designed to select stocks at a time when they are
weak
and sell once they have recovered.
I have run this system over NZ stocks and only 3 company's at present
qualify
for selection. They are
price
p/e
eps gross
yield high low
1999 2000fc
Restaurant
b
1.15
8.5 14.7
16.4
11.5 156-110
Force
corp
0.41
7.8 5.05
6
14.5
1.03-41
Brierley
0.32
5.3 3.8
5.2
9.3
54-32
Fletcher
building was a strong qualifier but its price has now moved
off its 20% low compared with its 52 week
high. The system picked building when
it was around 2.00. Restaurant brands too
would of been picked out when it
hit 2.10 but it is still a comfortable qualifier
at 2.15.
There were a few that nearly qualified such as air new zealand, the
reason
they didn't was that earnings per share are not
expected to increase in the next forecast
period. Owens group has reached a low but
could still be falling, the yield has been cut
and is below 8% so that one didn't make
it.
nick
See IRG research reports
