STU - Steel & Tube Holdings

[Brain]

I prefer to invest in companies with growth potential. I think these guys would be running hard to stay in the same place.

[Waikaka]

I prefer to invest in companies with growth potential. I think these guys would be running hard to stay in the same place.

Luckily when some thing is this cheap I don't have to worry too much about them finding growth. All I need is for them to tread water and I should expect a reasonable return.

and like SailorRob mentioned consistent dividend payments and free cash flow for the last while:

2011 = $8 million
2012 = $15 million
2013 = $22 million
2014 = $-17 million
2015 = $7 million
2016 = $8 million
2017 = $3 million
2018 = $4 million
2019 = $25 million

Not a huge fan of the variability in FCF, but as the company has been listed since 1967 and been selling steel around for over 50 years suspect they might last another few years. Happy to own a little part of the business for now.

[Balance]

I prefer to invest in companies with growth potential. I think these guys would be running hard to stay in the same place.

Turnaround stories can be extremely rewarding but need deep pockets, patience, fortitude and even more patience to see the story through.

And there may not be a turnaround in the end!

Imo, STU is a worthwhile turnaround story.

[Timesurfer]

Then when Fletcher’s tried to buy them I became convinced it was a dog, as Fletchers seem to have a strict corporate policy of acquiring only dogs and overpaying for the privilege.

Good point.

[macduffy]

Then when Fletcher’s tried to buy them I became convinced it was a dog, as Fletchers seem to have a strict corporate policy of acquiring only dogs and overpaying for the privilege.

I'm not buying, yet, but it's worth noting that Fletchers have had management changes since then.

[Justin]

at current stage flectcher doing much better than bluescope

[trader_jackson]

FBU's steel unit EBIT down from $22m in 1H19 to just $1m in 1H20... makes STU look pretty good
No worries as, like STU, everything improving now.

[Balance]

FBU's steel unit EBIT down from $22m in 1H19 to just $1m in 1H20... makes STU look pretty good
No worries as, like STU, everything improving now.

Market seems to be 'buying' the FBU steel improving conditions in 2H.

Being the two principal players who have been at each other's throats for market share at the expense of margins, a turnaround could happen very quickly indeed if both sides declare ceasefire.

[BlackPeter]

Trendchart certainly does not look inspirational, but my question today is - did the analysts predict this slippery slope a year ago?

STU had in January 2019 a (peak) share price of $1.20 and analysts (consensus) forecast for January 2020 was $1.39, which means analysts predicted the SP to go up. They have been wrong - the STU shareprice in January 2020 actually peaked at $0.86, i.e. instead of the forecasted rise of 16% did punters get a 28% drop. Ouch.

Looking into the consensus buy recommendation - it was in January 2019 a "Underperform"(3.1/10) - i.e. analysts said that the share will underperform the NZX. This prediction was correct, while the NZX went up by 27% did STU drop by 28% (i.e. STU underperformed over the last 12 months the NZX50 by a woeful 55%.

Consensus prediction was clearly wrong, while recommendation was (while sort of inconsistent with the prediction) correct.

I am doing this exercise as well with other NZX listed stocks - the overview is here:
https://www.sharetrader.co.nz/showth...arket-analysts

10 stocks checked so far (checking for each consensus and buy recommendation);
Consensus shareprice forecasts correct: 1/10; analyst hitrate: 10%
Consensus recommendation vs NZX50 correct: 3/10; analyst hitrate: 30%

[Independent Observer AUNZ]

10 stocks checked so far (checking for each consensus and buy recommendation);
Consensus shareprice forecasts correct: 1/10; analyst hitrate: 10%
Consensus recommendation vs NZX50 correct: 3/10; analyst hitrate: 30%

Wow. So why does anyone believe in active management guided by analysts!!?