Forum Archive Index - May 2001

["Geoff Brown" <brownz@xtra.co.nz>]

 

----- Original Message -----

From: Geoff Brown

To: sharechat@sharechat.co.nz Sent: Thursday, May 17, 2001 7:14 PM

Subject: forestry stocks

HIi,

 

here is a bit of info why I think forestry shares will move over next few months

 

geoffbro

Lumber futures in the U.S. are up about 80% in less than three months http://test.crbindex.com/crb/quotes_chart.asp?sym=us@LB.1 . U.S. housing is strong and the new Japanese PM has signalled a move towards more imports.

Below is my post from a month ago:

"After surprisingly long and steep declines
http://www.stockhouse.com.au/comp_info.asp?symbol=fea&table=ASX, forestry
stocks such as APL, FEA and GTP have been picking up recently on rising
volumes. Here are ten good reasons why.

(1) U.S. lumber futures have risen over 30% in the last six weeks
http://test.crbindex.com/crb/quotes_chart.asp?sym=us@LB.1 . Admittedly this
is the season for lumber to pick up as orders are taken for spring and
summer building, but the rise does look to be of some significance, coming
off ten year lows. Even more encouraging is that lumber tends to be a key
predictor months ahead of general market and economic strength as
http://www.tfc-charts.com/chart/LU/M suggests and as the commentator Richard
Russell is partial to discussing in his insightful commentaries on the DOW.

(2) Rebounding U.S. markets have some punters wondering if this is a bottom
http://futures.tradingcharts.com/wlf/ND/61 .

(3) Australian wine crops are harvested around now and this adds to the
attention that rural investments normally gain as investors scramble for tax
effective deductions in May / June. Forestry projects are a major player in
the tax effective projects scene.

(4) The Kyoto agreement has again been highlighted as the U.S. has recently
expressed reluctance to be a signatory. What is not widely realised is that
U.S. involvement is not required for the main agreement to be concluded and
effective. In the mean time, the controversy continues to highlight the
potentially very significant value of carbon credits
http://archives.f2.com.au/rlprod/members_rlsearcher?ac=viewDocument&rs=1&sy=
trs_gca&kw=carbon+credits&pb=asx&sf=all&dt=selectRange&dr=entire&so=date&la=
search&st=ca&ss=TRS&rc=20&rm=200&docID=gca010402_0126_8450&docType=C .

(5) A year ago, forestry investments were all the rage, but concerns about
the Ralph report inspired changes to 100% up front deductions of 13 months
of interest, the GST and the falls in most markets have seen forestry stocks
sold down heavily.

(6) Growth stocks are normally best picked up in the middle of a recession
when the outlook seems most bleak
http://biz.yahoo.com/smart/010409/200104091thelongview.html? It usually
takes months for officialdom to admit what the average punter has already
worked out about the state of the economy and articles such as
http://www.thewest.com.au/20010412/business/tw-business-home-sto5312.html
suggest we are in the thick of at least a "technical" recession now. If
ever a stock was a growth stock, forestry shares must surely qualify and
like SKE and others of similar size and misfortune, they have been picking
up lately. The A$ being near all time lows is also helping add value to the
exports that companies like APL, GTP and FEA continue to make
http://archives.f2.com.au/rlprod/members_rlsearcher?ac=viewDocument&rs=1&sy=
trs_gca&ax=FEA&pb=asx&sf=all&dt=selectRange&dr=entire&so=date&la=search&st=c
a&ss=TRS&rc=20&rm=200&docID=gca010330_0567_2944&docType=C .

(7) Most stocks have news which is causing concern and the pending legal
action in the case of FEA is no exception
http://archives.f2.com.au/rlprod/members_rlsearcher?ac=viewDocument&rs=1&sy=
trs_gca&ax=FEA&pb=asx&sf=all&dt=selectRange&dr=entire&so=date&la=search&st=c
a&ss=TRS&rc=20&rm=200&docID=gca010409_0243_7106&docType=C .

(8) GTP for one is projecting a very rapid growth in harvests for the
remainder of this decade
http://www.great-southern.com.au/timber_sales_body.html and "Shares"
magazine top growth stocks
http://www.sharesdaily.com.au/stories2/20010401/pdf/SH1.pdf has several
forestry shares prominently listed.

(9) APL, GTP and FEA have all been making strong efforts recently to
highlight the outstanding value they appear to now represent
http://archives.f2.com.au/rlprod/members_rlsearcher?ac=viewDocument&rs=1&sy=
trs_gca&ax=GTP&pb=asx&sf=all&dt=selectRange&dr=entire&so=date&la=search&st=c
a&ss=TRS&rc=20&rm=200&docID=gca010405_0130_4100&docType=C . When companies
are selling well below asset valuation (especially FEA), earning good income
(which is usually accounted for only in the second half of each financial
year) and have excellent growth prospects, the stocks begin to look more
than interesting.

(10) http://aspect.comsec.com.au/company/GTP-ch.asp indicates a large
dividend to the founders of the company, at least one of whom has received
notable media publicity for recently selling most of their shares. The good
news is that the shares have largely been taken up by institutional
investors
http://archives.f2.com.au/rlprod/members_rlsearcher?ac=viewDocument&rs=1&sy=
trs_gca&ax=GTP&pb=asx&sf=all&dt=selectRange&dr=entire&so=date&la=search&st=c
a&ss=TRS&rc=20&rm=200&docID=gca010306_1664_2813&docType=C .

Could the stocks mentioned halve in value and the DOW and NASDAQ crash
in the next few months? Yes. Could any of them be unfavourably taken over
or go bust? Yes. Are disastrous outcomes likely? No. As for other
forestry stocks, TIM and WBA were not considered due to price exceeding
asset valuation or less favourable earnings. The few others with some
forestry interests were not analysed.

Disclaimer: I don't own any of the stocks mentioned, but have recently been
trading FEA and have picked FEA and GTP in the comp. I also have an
interest in some wine and forestry plantations which are not listed on the
ASX