FY16 was my best yr in investing since i started 30 yrs ago. I was fortunate to make big gains by short selling the energy sector and energy related stks such as WOR. Several long positions eg UGL made big gains and was forunate to sell out near the top. I also made my fair share of blunders eg EPD, ASB etc. SWK remains one of my larger long positions and my average entry price is 11.7cents.
But SWK seems unable to break above 15 cents and hold onto any gains. The buyback has helped put a base under SP but interest in SWK remains minimal. Nevertheless, i intend to keepmy holding as i reckon FY17 can bring an increase in the SP. However the FY result in August is crucial and i hope it is very detailed explaining company's situation, prospects and outlook for the year ahead.
Positives:
Net Tangible Assets 37c/share. These rigs/workshops are money earners and not a pile of rusting bulldozers.
The company is profitable. Not by much but it makes money before depreciation and amortization.
The rigs are 'best in class'. They require less man hours/metre drilled than their opposition. HUGE competitive advantage.
Mines are profitabe esp gold sector. Base metals are however barely breaking even.
More exploration drilling could eventuate esp for gold.
Concerns
Drilling sector remains subdued and winning new contracts is difficult but far from impossible.
New contracts are signed with reduced margins.
Threat of further falls in commodity prices remains.
What will SWK do in FY17?
Assuming we don't have a collapse in world mkts then it could make subdued gains esp if buyback maintained. Perhaps we'll see 16-17c by Christmas. More rigs into work will be a game changer.
What do others reckon?
SWK Price at posting:
14.0¢ Sentiment: Hold Disclosure: Held
