Grandmaster,I can't resist having a go at picking the bottom for...

Grandmaster,

I can't resist having a go at picking the bottom for STS right now. The AGM was today and the company announced that it has started buying back shares again for the first time in ten weeks. The last buyback was done at 73.5c on 12 September so it has been a disastrous ten weeks and there is plenty of room for a rebound.

I was at the AGM today and nothing negative came out. Their work in hand is actually larger now than it was a year ago. The reason for the drop in profit forecast seems to be that they had built up resources and staff in anticipation of a booming time and they have had to correct that. The Chairman announced that the company has rationalised its costs to right size the business with a saving of $4.7m on an annualised basis. Hopefully with work in hand greater than in the past and costs brought down in this way, the drop in profits will prove to be a short term distraction. Regardless though, even if that level of profits continues (e.g. at around 5.9m a year), then the price earning ratio comes in at around 5 and the net tangible assets are 80.5c a share. This company has net debt of only 12.3m compared to net assets of $76.5m so there are no worries of capital raisings or bank problems.

I loved your selection of six stocks that you used as examples of how difficult it is to pick bottoms. The first three of your selections have bottomed and gone up very strongly since you named them. Seven West in particular is up over 50% from its bottom around that time. Pick some more bottoms for us :)

GPASAS