I held this one a while ago and made decent money before selling...

I held this one a while ago and made decent money before selling out at $2.15 in January 2012. I thought then that valuation was looking a little heavy and i didn't like how they were continually tapping investors for more money to buy what looked like ordinary businesses at full valuations.

Since then, it's been increasingly clear that the resources/mining/energy sectors are coming off very heavily, and TOX are very heavily exposed to this region. They've also acquired further businesses at what in hindsight looks to be the top of the earnings cycle. Anyone who holds this stock should have a read of TPI's announcement yesterday to see what is going on in the industrial waste sectors in resource-exposed areas - it's not pretty, and the impacts are almost invariably two-fold: revenue growth slows (or even goes backwards), and margins come in as desperate contractors compete more aggressively for less work at slimmer margins to keep their heads above water.

This is trading on roughly 8x FY14 EBITDA, vs. TPI's 5x, and i suspect TOX will have trouble hitting their broker earnings forecasts given the speed and extent of the downturn unfolding in WA/QLD. Very, very hard to justify this differential given TOX's diversification and exposure to WA/QLD which looks likely to be a headwind rather than a tailwind for the first time in a decade.

Good luck to holders but i wouldn't touch this at $3.40 with a barge pole. Cheers