NO LONGER ANY RELATION BETWEEN PROFIT AND SHARE PRICE
trading at R50, the same as early in 2006, when the profit was 379c/share. The profit for 2009 is estimated by analysts at 541c/ share. However, Craig Venter’s trading update of early February this year hinted at a possible increase of 19%, or perhaps as much as 600c/share, for the year to 28 February 2009.
Not too long ago the share was still trading at almost R80. Sometimes shares are too expensive, as was the case in August 2007. Sometimes shares are too cheap, as may be the case now – especially if there’s certainty about the quality of the company’s profit, and particularly its cash flow.
It’s a pity investors (and I include myself ) always look at the share price rather than focusing on the bars in the
THE PROFIT OF Allied Technologies (Altech), where Craig Venter is in the hot seat, has increased steadily over the past six years. That is and was quality profit: full positive cash flow from which a regular and increasing dividend was paid. The company and its management also grew along with the technological developments and further ensured an increasingly larger portion of its income was of the annuity kind, thus regular income not subject to fluctuation.
Those are just a few of the requirements that value investors look for. In fact, on any scale – from the Warren Buffett model to Motley Fool’s value investments – Altech will receive a high score.
On PSG’s quality scale, Altech regularly attracts attention with a score of 100% as a top value investment. The share is currently background of this graph – bars that show the growth in profit rather than the daily vagaries of the share market.