Fo­cus on div­i­dends, not price

Finweek English Edition - - Marketplace Simon Says -

Small caps are hav­ing a tough time and, in many cases, un­fairly so – as ev­i­denced by Wescoal’s re­sults for the six months to 30 Septem­ber. Rev­enue was up 28% and HEPS was up by 16%, with mas­sive free cash flow (R291m this half that it used to pay off debt, is­sue a div­i­dend and buy back shares). It now sits on a priceto-earn­ings ra­tio (P/E) and div­i­dend yield of both around four. A qual­ity ju­nior coal miner, this stock is cheap, but no­body is in­ter­ested. The mar­ket just doesn’t care for small caps, re­gard­less of the qual­ity or val­u­a­tions and it will be some time be­fore it starts to take no­tice. So if you hold, en­joy the div­i­dends. But don’t ex­pect any se­ri­ous price moves.

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