AIR - Air NZ.

[brend]

http://www.nzherald.co.nz/business/n...ectid=11618764

Hoop going to cringe at this??

Or smart move by the broker to bait people into buying

[mikeybycrikey]

http://www.nzherald.co.nz/business/n...ectid=11618764

Hoop going to cringe at this??

Or smart move by the broker to bait people into buying

Have they changed that article? When I first read it a couple of hours ago, the article specifically referred to AIR as a "value trap". Now it just talks about low P/E and risk of intense competition.

[brend]

no i saw it at 5:00 am (baby wakes up). Content still the same.

[mikeybycrikey]

no i saw it at 5:00 am (baby wakes up). Content still the same.

I've found a printed version of the article. It says:

He warned however that investors needed to be wary of "value traps". With a price-to-earnings multiple of around 6 times, Williams said Air New Zealand, for example, was one of the cheapest stocks on the market. But he said there was risk of intense competition eroding the airline's earnings base.

The online version is now missing that first sentence of that paragraph, replacing it with just "Investors need to be wary, however." Not a big change to the article but I spent a while googling "value traps" so I was sure I had read it somewhere today.

[Beagle]

Not worried by that bloke. You think increasing competition isn't already factored into the super low PE...for goodness sake, (sarcasm intended) Long term average PE is about 11 and that's based on long term average interest rates. With interest rates headed to 100 year lows a PE of 12 is appropriate across the cycle so at the current price that implies long term average earnings of only 25 cps. Consensus analyst forecast is 55 cps this year and next falling to 42 cps in 2018. He's obviously in Warren Buffet's camp when it comes to airlines and that's fine that's his prerogative.

[couta1]

I'm fully convinced in my own mind that this is not a long term hold kinda stock at current prices, there's just too many factors that can step in at short notice and trash the share price (More than other stocks) Very little margin of safety unless your average buy price is below $2.80 and not a lot of upside with a $3.26 medium target (We won't mention the low target) PS-I learnt a lot of lessons whilst holding a large number of Air shares and left a lot of money on the table.

[Hoop]

http://www.nzherald.co.nz/business/n...ectid=11618764

Hoop going to cringe at this??

Or smart move by the broker to bait people into buying

Nope...no cringe...well done just a great example and timing of how to advertise your fund management business on the cheap..getting those timid customers back into the market and their exixting customers to load more into the funds during the "feel good" rally to new highs is the way to go to generate extra business.

The advertising bait used is usually cyclical type stocks because at the top of the boom cyclicals are raking in the money at obscene levels...To the inexperienced investor and to the Mum's and Dad investors seeing huge profits, high dividend yield and a very low PE Ratio's some as low as 3 who could blame them for assuming Mr Market has got these cyclical stock price value all wrong...

As with most media interview type advertising the business usually adds a typical advert disclaimer.. ".... maybe [Air New Zealand shares] are still cheap enough to invest in ... but we're cautious." ... Great stuff

Have they changed that article? When I first read it a couple of hours ago, the article specifically referred to AIR as a "value trap". Now it just talks about low P/E and risk of intense competition.

Only a wild guess from me..... maybe the media asked why AIR is so "cheap"... maybe he mentioned that Cyclicals are not necessarily a buy when PE Ratio get to very low levels..and then got asked to explain why ..The media then may have over-assumed Stuart Williams meaning, dramatised it and blew it out of proportion, then got asked to tone down the article......who knows..

What ever happened doesn't matter.... what matters now is that investors should is very careful with Cyclicals as they are volatile beasts especially when they are well away from their cyclic wave bottom point.

History shows to an layman investor what seems to be a paradox mirage....... that in realty, often the best time to buy cyclicals is when the PE Ratio is extremely high and the most dangerous time to buy into a cyclical stock is when the PE Ratio is extremely low, much lower than the overall market...

Disc: have no AIR

[winner69]

Good $3 holding up strongly today

Precursor to next week being a boomer

[Raz]

I'm fully convinced in my own mind that this is not a long term hold kinda stock at current prices, there's just too many factors that can step in at short notice and trash the share price (More than other stocks) Very little margin of safety unless your average buy price is below $2.80 and not a lot of upside with a $3.26 medium target (We won't mention the low target) PS-I learnt a lot of lessons whilst holding a large number of Air shares and left a lot of money on the table.

I agree, if you are confident trading then you can make a return, hard otherwise.

[vin]

No longer holding AIR, got out at $3.020. Sticking to game plan, will watch from sidelines for a while.

Kinda weird having held them for last 2 years, was my first purchase!