Keep a close eye on cycli­cal op­er­a­tions

Finweek English Edition - - Marketplace Simon Says -

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.

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