G'day Folks,
Some may have noticed that ION was up 2c today today to 1.62 and others may not even be aware. The stock was brought to my attention last week when it was in the mid 1.50's and after a study I bought some.
ION is an Auto parts supplier to Australia, Asia and the US - it has a contract for wheels for the new Ford Taurus for example in the US and a contract to supply Harley Davidson through tp 2010. Right now it is paying a dividend of 12c p.a. plus imp credit which is a yield of around 7.5% plus the credit - probably the best yoelding stock on the asx.
Why so cheap then? Well it was trading around $2.40 late last year/early this and then had a placement of $60m or so in Feb at $2. Seems like those that got left out of the placement gave it a spanking out of jealousy and knocked it all the way down to the 1.40's.
Anyway, take a look at a chart, it appears to have turned around and trading sugests its on the way back up. Target? well $2 certainly, which would still be a yield of $6% plus imp credit but who knows, maybe even $2.50; only time will tell. I would expect $2. by Oct.
Why the capital raising? well ION had been in acquisition and expansion mode and was topping up on capital.
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