Monday, November 27, 2006

Strong Outlook for Gloucester Coal

Gavin May, CEO of Gloucester Coal(ASX:GCL), has suggested there is a strong outlook for the company. Gloucester recently discovered the Clareval coal seam at its tenements, which is more than 30m thick and sufficient for it to commence planning to increase production by 40% from 2009. To allow for this increase in production, it will require a $A30m investment in a module at its Stratford plant.

This current find and outlook statement suggest this could be a good stock for the future. At the moment it is sitting on PE ratio of around 9 times earnings. It has a good dividend yield which should hold the stock price up. Its share price has been climbing the last few months and its return on equity for the last few years has been phenomenal. At this stage I am wary of resource companies but this company seems to have a solid base and a future ahead of it.

I must say its not the worst company out there and if I had some spare cash at the moment I would be be buying a small stake.

Good Luck Investing.

No comments: