upside suprise - bil some thoughts.

Kids,

I have been a fan of the BIL since the last AGM when Angry booted CK and Turnaround Turner took the helm.

Brambles is a global cash cow - when run correctly.

The GKN merger and subsequent loss of 14 million pallets left many wondering if their 10 year old could do a better job.

THAT is the past.

The market may have some past memory drag over the loss of pallets and the shake up - but the price always always reflects the expectation of the value in BIL.

So, is the potential upside of BIL fully priced or will we see a spike above $6.50 prior to the announcement and a MAJOR reevaluation on BIL ?

YES - and heres why.

1. INDEX WEIGHTING - if BIL surgers its weighting on both the FTSE and all ORDS will have index managers scrambeling to reweight the increased value of BIL in the indicies. ( this creates upward price preassure ) UPP.

2. Illiquidity in stock - the top 20 holders have almost 70% of BIL's free capital - this creates MAJOR UPP.

3. Late to the party - spikes in prices create a catch up effect - that sees punters and mum's & Dad investors jumming on board.

4. Suprise profit announcement and surguing cash flows - If they suprise on the upside which is almost a certain given the lack of news and the prevaricating over the clarification of profit guidance until the results, screams good news ! If correct BIL will pass $7 post announcement. ($6.50 prior)

5. Todays AFR " Analysts are expecting a full-year profit of about $378million from Brambles, up from $330 million last year when it revealed a drop in profits because of a cost blow-out at Chep in the US. "Indications are that they are on the road to recovery," said Ausbil Dexia chief executive Paul Xiradis."

So Is Brambles fully priced ? thats for you to determine.


Read the red and do your own reading - this post is my view only and should not be used as investment advice.

I hold BIL - rate LT buy


singas