any thoughts on this one, page-5

Yes - even good companies are being trashed in this market, as Roger Montgomery from Eureka Reports notes this morning.


http://www.eurekareport.com.au/iis/iis.nsf/pages/C4D8BE84D6165B99CA257563001A7F8B?opendocument&rand=7PGJZX9034

Value in Focus: Fleetwood magnificent

By Roger Montgomery
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The financial crisis and global economic woes sometimes makes you believe that all companies have high levels of debt, declining profits, pressure on dividends and cash flow and the administrators at the door. But even in the midst of this crisis, there are some sound businesses whose share prices reflect fear rather than fundamentals.

One such company is Fleetwood. Its latest half year result is another example of what we have seen so many times before. While assumptions about manufactured housing, contracts with miners and declining caravan sales may be true in aggregate, Fleetwood has produced high and rising levels of cash to comfortably pay increasing dividends and meet debt obligations.

This reminds me of another company. It was only in 2004 that The Reject Shop’s exposure to discount retailing was seen as a ball and chain thanks to the poor performance of The Warehouse Group and Millers Retail, but The Reject Shop demonstrated entirely different economics to its peers, low debt, rising returns on equity and now it’s the darling of many an investor’s eye.

Fleetwood’s economics are one of the best this reporting season but fear of the unknown has driven the price down to produce a dividend yield close to 20 per cent before tax. The balance sheet is robust and most importantly, profitability remains very high and stable.

Provided that continues, the current price does not reflect the true value of the business.