RCR - RCR Tomlinson

[winner69]

Mosteph ...... should have looked at that OBV line

There was a STEP down last September when the price was about 241 ..... and has been trending down since ....... the writing was on the wall back then .... and not many TA signals since

Promise i won't tell Phaedrus

Sorry mate ... couldn't resist it

[winner69]

Prob just as much as why did RCR shareprice top on Guy Fawkes Day (or close enough to it).... spooky eh

[Phaedrus]

This is just another example of the folly of buying downtrending stocks - no matter how good the fundamentals might be.

RCR was in a nice tidy uptrend and going well. The first warning was the large downward OBV "step" mentioned by W69. This was caused by a big player ("smart money") getting out and as such has bearish connotations. All other technical indicators remained strong, though, and the price continued to be pushed higher as the little guys ("mug-punters") continued buying into RCR.

A few short weeks later, the picture abruptly changed. Technical indicators such as the 6 featured here all fired SELL signals. The first to be triggered was a break of the confirmed trendline, followed in very short order by a break of the Trailing Stop, then all the oscillators fired Sell signals. Uptrends can't end any more cleanly and clearly than that.
The ensuing downtrend has been steady and remorseless, with no false rallies to tempt premature re-entry. The same 6 indicators that monitored the uptrend are now monitoring the downtrend and as you can see, none are anywhere near triggering buy signals.

This downtrend has continued in spite of management predictions, good fundamentals, broker recommendations, enthusiastic support and a healthy balance sheet. In such a perfidious world, what can a poor girl rely on? The chart.



MoSteph has noticed an apparent contradiction between the daily and weekly OBV plots and asks "when you have the chart at weekly it's a step up, so what's that then tell you?"
It tells us (if we didn't already know) that OBV does not work well as a weekly indicator. This matter has been raised before and is fully discussed here.

[Mick100]

Hi Phaedrus

Could you do one of these charts, with indictors, for EHL please

Bought in at $1.15 and wondering wether to add to position

[kura]

I'v never been much of a believer in tax loss selling, but now I'm starting to be convinced that it does happen.

Disc: purchased both RCR & GRD on Friday (both mining "service" companies, and both have had price slumps in year) but I think I will just say "thank you" and take some money off the table.

[kura]

Mosteph in a less nervous market, the share price would be at least $1.50 by now !

However I'm comfortable to hold a few for the medium term, the PE ratio is fairly undemanding, and I see limited downside.

[winner69]

Today RCR released its results and, not surprisingly, the long-term downtrend was broken. Below is the chart. I entered RCR way too early but continued to hold thinking the fundamentals were going to end up good enough to justify a re-rate (yes, even in this market). The main things that interested me, aside from the accounting ratios, were the inelastic income stream the Maintenance division enjoys, strong revenue growth, and that the current earnings issues flowed mainly from one-off events.

I’ve just started reviewing the accounts but in the meantime here’s a quick calc going off the current management forecast at a P/E of 7.5. Accordingly, revenue’s been increased by 15% and margins 1% (which I think is fair) resulting in a price of $1.61.



Mr Noordhoek said:

“RCR is expecting organic revenue growth of 15% in the 2009 financial year and an improvement in margin levels that will result in a commensurately stronger net profit after tax”

“This order book which now includes Positron, is currently standing at $170 million compared to $50 million at the corresponding period last year… This level of
enquiry represents more than two years of project work for the Company.”

“The Positron situation has improved significantly over the past few months following an organisational restructure and employee numbers returning to similar levels as at the time of purchase now that the Prominent Hill project is underway.”

So at 36 cents RCR is on a PE less than 2?

Hardly say anything to the market do they Mosteph so you have to believe that that 15% growth with improved margins is still on the cards .... share price saying something else though

Amazing stuff eh ..... maybe PPT were intelligent afterall back in August

[contrarianinvestor]

So at 36 cents RCR is on a PE less than 2?
.. share price saying something else though
Amazing stuff eh .....

We call this market over-reaction. Earnings may drop although the current low valuation seems to be excessive. On top of that we have all the price-trend followers who don't care about valuation - they only sell in downtrends and buy in uptrends. This behaviour is pushing prices to the extreme of undervaluation and overvaluation. We may look back on this price in 5 year's time and wonder what the market were smoking.

[winner69]

We call this market over-reaction. Earnings may drop although the current low valuation seems to be excessive. On top of that we have all the price-trend followers who don't care about valuation - they only sell in downtrends and buy in uptrends. This behaviour is pushing prices to the extreme of undervaluation and overvaluation. We may look back on this price in 5 year's time and wonder what the market were smoking.

This what bull and bear secular markets are all about. It is not price per se that defines a bear or bull market but rather changes in valuation.

A bear market will end when valuations (on the average) reach the bottom ... market PE on the ASX probably still has a way to fall from where it is today ... because earnings are under extreme pressure. That doesn't always mean price will fall much further ... rather it'll stay about the same for some time

Thats the average but the average is jsut that eh. There will be some extreme cases both sides of the average and RCR is possibly falling into that group.

Yes, one day we will see increasing earnings multiples (and hopefully increasing earnings) and the share market will once again become a great place to be invested in.

[COLIN]

Something must be "up" here - the share price certainly is - climbed 60% in the last month.

I previously lost a lot on these, by holding too long into the downturn. However I bought back in, in June last, at 60c - now 95c and still being propelled up.

Love those "Shovel Suppliers" (some).