Sunday, February 04, 2007

Analysis of Shares from 10c - 20c with a Price to Earnings ratio under 10

Topic Discussion

This is the second article in a series of articles that give my quick perspective on a number of stocks. They will be very brief but hopefully I give you a quick rundown on the stocks and why I would or would not look further into them.

The only criteria is that the stocks need to have a PE or 10 or less.

ASX:BPK - Bremer Park Limited - This company focuses on the manufacture of timber products. it is going through tough times and I see no reason they can turn this around. Decision : Not worth looking into further.

ASX:TMR - Tamaya Resources Limited - This company is is an Australian mining company primarily involved in the production of copper and gold in Chile. They are burning through some cash flow but they are also making some earnings. Resource stocks are always risky and this stock is no exception. It is a possible takeover target for its assets but this is not a reason to buy the company. Decision : Not worth looking into further.

ASX:COM - Comops Limited - This company makes its money from the licensing of the five software products owned and developed by COM and to provide professional and support services to new and existing customers. It is sitting near its year high at the moment yet is still sitting on a P/E ratio of 5.5 This stock got my interest but after reviewing the quarterly report I have a few questions about it. The most important is that the company has dramatically increased staff costs but has not increased revenue. Decision : Wait and see if Revenue Increases or staff costs are reduced before analysing further.

ASX:EZE - Ezenet Limited - This companies aim is to develop and supply digital movie services to the hospitality and mining industries in Australia. They have recently became cashflow positive (before capital expenditure) and it is increasing every quarter. They have a strong pipeline of work according to management. While the company looks like they are on track they are more than likely not going to match the profit from last year. Decision: Wait for profit guidance or report before deciding on valuation.

ASX:AIG - Aircruising Australia Limited - This company operates special interest tour programmes under the Bill Peach Journeys brand, both within Australia and to other global regions. The tour programs are separated into three categories: Air cruising, Australian Expeditions and Rail Cruises Australia. The tour programs are targeted at small groups, with all tours including accommodation and meals. They are currently going through tough times but they have been able to increase NTA backing and profits. Management seem to be confident in the company after reading the reports. Decision: Wait for profit guidance or report before deciding on valuation.

ASX:RPC - Repcol Limited - This company is a specialist manager and purchaser of debt ledgers acquired from Australian credit providers. The company provides an end- to- end service with operations in Perth, Brisbane and Bangalore, India. RPCs competitive advantage is its low cost business model with operations ramping up in Bangalore, India. They will be making a loss this year hence the decline in its price. But it has gone about restructuring the business and expect an increase in profit in future years. This stock has declined from 70c to 12c. Decision : Wait to see if restructure has fixed costs before analysing further.

Well that is a few more shares covered but unfortunately there were no possible buys found in this range. There were a number of "wait and see's" though and those that like to gamble might take a stake in those companies. Personally though I like to make sure the company is sound before I buy into a company.

Good Luck Investing

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