That wasn't fun was it? Fortunately it looks like normal service has been resumed. The question remains as to why we have had four days of mild panic and reversal.
On the plus side: - The PE is still only 13, which means there is still room on the upside - Investors get a 4% fully franked dividend return, which is a return that is difficult to get elsewhere. - The company has (virtually) no debt - The company has has identified two new business stands, which will hopefully add to profits from FY2014 onward. The US expansion in particular has the potential of massively adding to CCP's size and profitability over the next couple of years.
On the negative side: - FY2013 looks like it will be a period of subdued growth for CCP. - The SP has risen approx 90% in the last 12 months, making it harder to get future incremental gains and tempting for people to take profits. - The global economic situation continues to deteriorate - Average daily volumes are 100k, which makes CCP relatively illiquid. Should a shareholder want to sell say 200k shares they will, unless they have found a willing buyer with whom to deal on market, a sale of this volume will inevitably force the SP down. The initial sale(s) will inevitably act as a catalyst for additional declines from; algos, momentum traders and CFD stop losses. I suspect that is is what has just happened.
Underneath it all the company has been one of the best investments around, and although the ship goes through the occasional storm over the medium term it keeps on sailing onwards and upwards. I remain a long term holder.
K
CCP Price at posting:
$7.96 Sentiment: Buy Disclosure: Held
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