While always best to DYOR, Michael Carmody of Centennial Asset...

While always best to DYOR, Michael Carmody of Centennial Asset Management in the 'lively' blog this morning has some LAU comments:

Which companies make the cut?

There are a handful of stocks that Carmody highlights as examples that fulfil the above criteria, three of which were major contributors to the performance of the Fund over the past 12 months, and two that are major positions within the Fund currently that Carmody expects to perform well.

The performers

Lindsay Australia (ASX: LAU) – Lindsay Australia is an integrated transport, logistics and rural supply company. During the year the company delivered several upgrades to forecast earnings following ongoing consolidation within the road transport sector.

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The 'consolidation' that he refers to is almost certainly slowly ongoing. Media is constantly featuring how small and medium sized builders are running into financial trouble and in some cases being liquidated. The road transport sector has historically had many small independent operators, some of whom are 'mum and dad' business names (or $2 companies) with one or perhaps two rigs. These must be coming under pressure as interest rates and inflation increases, especially if they can't pass on increased costs such as what I'm told are much higher truck insurance premiums, plus fluctuating diesel fuel prices and truck repair costs.

What the above blog extract fails to mention is how much of LAU's increased profit is coming from its increased foray into carrying railable containers through its five year deal with rail operator Pacific National.

The increased presence in rural retailing (seemingly with rising emphasis on serving hobby farmers through the W. H. Hunter acquisition) may also be a good, accretive over time move.