Hi all.Great little comment from John Durie in the Australian...

Hi all.
Great little comment from John Durie in the Australian today. He is a economics writer I really respect.


Fortescue on a tear

Dr Andrew Forrest’s (the PhD was in marine ecology from UWA) Fortescue Metals is literally hitting the ball out of the park right now on just about every score, from production to cash generation, debt reduction, energy conservation, Aboriginal employment and a genuinely infectious corporate culture.

Yes, the stock price did fall 2.1 per cent to $11.29 after a gangbuster production report on Thursday, but it was trading at $4.61 this time last year and iron ore is more than $US90 a tonne, which no one expected.

Assuming a half-year dividend of 90c a share, that puts the dividend yield at 15 per cent — but beware buying mining stocks on dividend yields.

The iron ore price will fall, but on UBS analyst Glyn Lawcock’s numbers even at $US64 a tonne the stock is fairly priced and even Shaw’s Peter O’Connor, a long-time bull, figures the stock may be priced to perfection.

Each time it comes to market the news is seemingly better than expected, which is a run no one can maintain, but so far CEO Elizabeth Gaines is doing just that.