If recession is the sole reason for the SP decline, this is the right time to be buying into CTD. Recession will go away in a couple of years but the business will still be here. There is no better time to buy a quality business than when it's SP and performance is down due to external factors (that are temporary). The more I think about it, the more I am convinced there is nothing dark at play here. This seems to be a sell off based on recession risks and ofcourse inflationary pressures along with poor airline performance. All of these will be away in the next 12 months. I am prepared for a very bad H1 but as long as they are profitable on a NPAT basis I am satisfied with my investment. If H1 is particularly bad the SP could go lower.
I must say part of the reason I sold out initially was because Jamie talks a big game but then comes up with excuses of why the targets weren't hit. I think CTD has done a good job of getting the revenue but profitability is low. This is why I wouldn't be surprised in the least if 1H doesn't hit NPAT of $24m.
The interesting question is, how low will the price go. I will definitely be keen for a top up around $12. Looking at the charts, there is a gap at $11.93 that hasn't been filled. From what I can see that is the last remaining gap on the downside for the last decade so it will be interesting to see if it gets filled.
CTD Price at posting:
$14.08 Sentiment: Hold Disclosure: Held
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