CDA - Codan Limited

[Valued]

Out at 0.80 for a 15.6% profit after brokerage. Sellers were picking up a lot of volume and once I hit 0.84 I set a stop loss at 0.80 since I figured if it dropped that low 0.80 wouldn't act as support just looking at the market depth but at the same time the price could continue to bounce upwards. Buyer's volume was pretty thin at that price range compared to the sellers though. Unfortunately, a new buyer did not come along. I don't think the stock will close any higher than 0.80 today. Time will tell if I should have made more money but I think I got out at the right time. Since we are down to 0.785 the 0.80 mark was no support like I predicted so I think I made the right choice

 

[Valued]

I was wrong. It closed half a cent higher! Ah well, I think I will sleep tonight anyway

 

[jancha]

I was wrong. It closed half a cent higher! Ah well, I think I will sleep tonight anyway

Ah but what will tomorrow bring?
Look how OZL finished.

 

[Valued]

Ah but what will tomorrow bring?
Look how OZL finished.

It's true that the stock may go up tomorrow. It may also go down. At the point of time I sold I thought that the price was going to go down. 0.80 looked like it was serving as support for a little while this morning (after serving as a resistance before that - which you can see on commsec course of sales) but then the market depth for that support was poor. The buyers had very little volume in the 0.79 - 0.8x range compared with the seller's volume. The only thing that could have saved the support falling was a large buyer of a good volume (maybe 50k or so) but I wasn't going to bank on that happening so I sold. I was correct that it did fall below 0.80c but then over the course of of three more hours it bounced back to 0.805. I couldn't have known about the half cent at the time making my decision to sell a correct one.

If it looks like the price will trend upwards tomorrow there is no reason why I can't buy again anyway. I doubt I will though. I only like to day trade if I get to buy in at around fair value where a stock is likely to bounce back or trend upwards that will exceed a 5% return. I thought CDA was trading at approximately fair value at 0.67 given their reduced forecasts. I now think the stock is overvalued so I am cautious.

 

[jancha]

It's true that the stock may go up tomorrow. It may also go down. At the point of time I sold I thought that the price was going to go down. 0.80 looked like it was serving as support for a little while this morning (after serving as a resistance before that - which you can see on commsec course of sales) but then the market depth for that support was poor. The buyers had very little volume in the 0.79 - 0.8x range compared with the seller's volume. The only thing that could have saved the support falling was a large buyer of a good volume (maybe 50k or so) but I wasn't going to bank on that happening so I sold. I was correct that it did fall below 0.80c but then over the course of of three more hours it bounced back to 0.805. I couldn't have known about the half cent at the time making my decision to sell a correct one.

If it looks like the price will trend upwards tomorrow there is no reason why I can't buy again anyway. I doubt I will though. I only like to day trade if I get to buy in at around fair value where a stock is likely to bounce back or trend upwards that will exceed a 5% return. I thought CDA was trading at approximately fair value at 0.67 given their reduced forecasts. I now think the stock is overvalued so I am cautious.

Good reasoning's for your decision on selling at that point. I was a little concerned also when it started falling from the 80c support but happier when it closed at 80.5c. Sold at 89.5c today but I must admit I was taking a bit of a gamble not selling at the point when you did.

 

[Valued]

Good reasoning's for your decision on selling at that point. I was a little concerned also when it started falling from the 80c support but happier when it closed at 80.5c. Sold at 89.5c today but I must admit I was taking a bit of a gamble not selling at the point when you did.

Yea. I didn't expect the market to run that far today. I missed the morning open. I am in Qld so open is at 9am and it took me to 9:12am to log on and by that time it was already up a fair bit. I wish I was able to get in at 8:55am to see how things looked and maybe jumped on again for a quick return.

I think it has to fall below 0.80 though again. Given their forecasts for next year the stock is not worth what it's currently selling at. I don't see how the market is so bullish about this company from a value perspective. I suspect a lot of people are averaging down instead of cutting their loss. I think it will take some years for the company to bounce back. They arn't even putting their new detector on the market until 2015 and it's targeted at the retail market so it's hard to predict sales.

I was always bearish on this one though. I thought gold detectors and radios seemed like a rather sketchy business to begin with which is why I never invested. I like businesses where I can walk in and see the lines of customers buying products and services that make sense in my mind for them to buy.

 

[So_Cynical]

I think it has to fall below 0.80 though again. Given their forecasts for next year the stock is not worth what it's currently selling at.

Traded at 0.79 today...still profitable and a solid little niche business, debt is up a bit but costs are down.

Double bottom coming up?

 

[galumay]

I hold - and my entry was a long way north of where it is now. Perhaps oddly, I am not too concerned, i reckon they are around their IV at 80c given the current state of their business, the results delivered today where well and truly flagged in advance so there were no surprises for me.

The next 12 months will be critical to the future of the company I believe, they are still in reasonable shape if they can turn the business around and increase earnings again, I dont mind holding companies like this where I can see a potential improvement and I think they have reached the bottom of a cyclic market while keeping their heads above water. (Well, i dont mind holding one company like this! wouldnt want too many more in the portfolio!)

 

[Ves]

Is it just me or does that debt on the balance sheet stand out like a sore thumb?

It would be a real problem if the most recent CDA profitability slide isn't a cyclical down turn, but a return to normality and the prior years of higher profitability were outliers / aberrations.

Even if the answer lies somewhere in between, the chances of a liquidity event (ie. a capital raising) are probably much higher than they were 12 months ago.

 

[VSntchr]

Debt needs to be refinanced this year too...

 

[skc]

Debt needs to be refinanced this year too...

It's being priced by the market like a capital raising is coming.

$6.5m cash, $20m receivables, $43m inventory vs $15m payables and $71m debt.

Operating cash flow -$16.9m vs +$22.8m a year ago, plus another $10m outflow for investing.

If they could reduce production (I have no idea how varable their production profile is) and clear some inventory and pay down the debt... May be they should have just put the dividend on hold. It's always sad to see some management attempts to keep up with appearance rathen than accepting it's time to conserve a bit of cash.

 

[systematic]

Possible 'value trap' (and therefore 'avoid') for mine, and that's before today's performance.

 

[So_Cynical]

Double bottom coming up?

Yesterday i raised the possibility and today it almost came true, 52 week low (the 1st Bottom) was 0.63c

Still a great little business and now we get a chance to get in cheap before the next POG run up.

 

[tinhat]

Still a great little business and now we get a chance to get in cheap before the next POG run up.

... starting sometime around 2030.

 

[So_Cynical]

... starting sometime around 2030.

Some would say that the next run has started...double bottom $1190 is in.

 

[tinhat]

Some would say that the next run has started...double bottom $1190 is in.

I'm also hopeful that we are seeing a correction in the price of gold as I am currently holding SLR and MML. But who knows how long it will last and what the outlook is? Gold might settle into a trading range between $1200-$1400 in the medium term. It might go lower and we will see mines getting mothballed all over the globe and little exploration. Who knows. That's the problem with being in an industry that is leveraged to the underlying commodity especially at the exploration end of the industry.

Is there anything about the fundamentals, industry outlook, or the chart that suggests this stock is at or near the bottom? 12/12/13 does have a look of capitulation to it. I don't follow it and don't know it in detail.

 

[So_Cynical]

Is there anything about the fundamentals, industry outlook, or the chart that suggests this stock is at or near the bottom? 12/12/13 does have a look of capitulation to it. I don't follow it and don't know it in detail.

They make metal detectors that are sold predominantly to people looking for gold in one form or another, therefore their fortunes are linked to POG movement and sentiment....pick bottom for POG and buy Codan at close to the low point and wait.

Personally i sold out of Gold stocks about 2 years ago..figured the top was in about 6 months before the actual top...go figure.

 

[ROE]

Current price worth a shot ... It operates in a Niche market and the other business need a bit of time to pick up speed ... Probably over sold in my opinion...

 

[pixel]

Current price worth a shot ... It operates in a Niche market and the other business need a bit of time to pick up speed ... Probably over sold in my opinion...

Agree, ROE;
while still below the falling trendline, my scanner picked it up this morning, noting the strengthening volume and Bullish Divergence in the momentum window.



Alert set for break above 72c.

 

[Huskar]

Good result this year if you ask me - bloated inventory swell has been reversed and revenues steady while margins up.