CCI Holdings (CHL) Has been a strong performer over the past 12 months with the share price rising from 16-36c (+125%).
The fundamentals suggest the chart will continue to rise for another 5 years yet, with this stock strongly leveraged to coal volumes which are on a sharp rise to meet the global steel demand being driven by China, India, brazil, and Russia.
The stock is only trading at 10 times forecast earnings for this FY, yet has said it expects to grow revenue by 100% over the next 5 years, and more quickly if it is able to find some synergistic acquisitions. If they don't find suitable acquisitions shareholders will just have to satisfy themselves with stronger dividends. (5.8c in operating cashflow was generated last year, not bad for a stock priced at 35c!!).
Whichever way you look at this one, there's an awful lot to like. These 3 dot points do it for me:
1.Mining services is the best sector on the ASX.
2.Coal mining services is the best division within the mining services sector. (This is because while coal prices have been up high for a couple of years, coal volumes are only now starting to rise significantly as infrasructure constraints come off with new capacity coming on stream. Rising volumes of coal will drive the demand for services higher, yielding high margin inherent growth.)
3.CHL is the cheapest coal mining services company available. Typically stocks exposed to the lucrative coal services sector are attracting P/E multiples around 20, CHL is currently trading at a 50% discount.
CHL Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
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