Keep a close eye on cyclical operations
Astral results for the year to 30 September totally blew it away as headline earnings per share (HEPS) nearly doubled. It also declared a dividend of 1 050c per share, making for a total dividend of 2 050c for the year (compared with only 1 055c in the previous year and 490c the year before). Astral is deeply cyclical as maize forms one of its main inputs. Less cheap imports from Europe, larger birds and price increases all add to the profits. The lesson is simple: Buy Astral when there is blood on the floor and the profits are being smashed, but do not forget to sell. After a high of over R300 the good news is all in the price, and the stock now trades under R180. The dividend yield of over 9% is not cast in stone and can disappear in a hurry.