Thursday, September 21, 2006


ARB Corporation Limited (ASX: ARB) has had a great run over the many years it has been listed but I think the fundamentals behind the business are starting to change.

HIGHER petrol prices and interest rates put the brakes on new car sales last month, with new figures today showing gas-guzzlers are out of favour. New motor vehicle sales fell a seasonally adjusted 2.3 per cent to 78,974 in August, from 80,810 in July, the Australian Bureau of Statistics said. CommSec chief equities economist Craig James said high petrol prices slowed vehicle sales in August, although sales were expected to accelerate in the coming months.

Gas Guzzlers ( Four wheel Drives) are taking the major hit. I believe this might have an impact on ARB's sales as their main revenue is 4x4 accessories. ARB Management has said it anticipates further growth in 2006/07, however the rate of growth and the companys overall performance will continue to be influenced by external factors such as general economic activity, fuel pricing and the value of the AUD.

This may present us with a buying opportunity in the near future. ARB has been a good company and if they can continue to show growth then it might be worth a buy if we can get it a bargain levels. A bargain price for ARB would be around 10 times earnings which is $2.30.

For those that hold this stock .. continue to hold but be prepared for a decline if petrol prices rise significantly again.

Good Luck investing.

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