Seriously kicking myself that I didn't have the funds to get in when it pushed through the $5.00 resistance. I still think the upside here is significant, i keep waiting while I accumulate some funds to get in and hoping for some kind of a small correction to make my move, but its just not happening.
FGE - Forge Group
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Yep they are my portfolio favourite.
I only wish there were more companies like FGE out there.
In the last few weeks when I was thinking of buying more FGE they have jumped significantly.
However I still think they a good buy even at todays price.
Have to agree with you there. As my largest holding (34.4% of portfolio) I am now switching my thinking and watching FGE very closely with a view to taking some profits - no rush however.
MCE - Matrix Composites & Engineering is up there with FGE.
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tinhat
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I also hold Matrix
I also hold MCE. Forge is definitely my favourite stock right now, and over the past couple of months I've been increasing my position in my best performing stocks such as FGE, EQN and MML.
I'm gobsmacked every time I look at a chart of FGE or MML and realise that you could have picked them both up for around the $0.50 mark two years ago. We live during interesting times.
I'm looking forward to their report next Tuesday. I believe the share price could have a long way to go up yet and I'll be keen to look at the figures.
I was one of them picking them up for 50 cents. I told my mates dad to sell everything, and invest in fge. His reply was he likes to invest in penny dreadfulls because they give you a better return short to medium term. Oh dear, should have taken my advice, only doupled his money so far, and doesnt get the 50% cpaital gains discount if he sold now.
My dumb think was to sell some out last yr, to recover all my losses from the gfc
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Didnt even realise this one reported today...I guess you dont need to worry with companies like forge...I wouldnt care if the market closed for a year with this stock!
Anyway, the report slightly beats earnings guidance..which was already upgraded from a previous earnings guidance...so two upgrades you might say..this is the same as CCP..excellent companies will continue to under promise and over deliver...for this reason I picked up another couple of hundred today. I know that the price has run hard recently, but thats irrelevant if your a value investor..what matters is that this stock is still largely undervalued (although it is catching its value..its a hard fought race! )
Anyway, the report slightly beats earnings guidance..which was already upgraded from a previous earnings guidance...so two upgrades you might say..this is the same as CCP..excellent companies will continue to under promise and over deliver...for this reason I picked up another couple of hundred today. I know that the price has run hard recently, but thats irrelevant if your a value investor..what matters is that this stock is still largely undervalued (although it is catching its value..its a hard fought race!
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Didnt even realise this one reported today...I guess you dont need to worry with companies like forge...I wouldnt care if the market closed for a year with this stock!
Anyway, the report slightly beats earnings guidance..which was already upgraded from a previous earnings guidance...so two upgrades you might say..this is the same as CCP..excellent companies will continue to under promise and over deliver...for this reason I picked up another couple of hundred today. I know that the price has run hard recently, but thats irrelevant if your a value investor..what matters is that this stock is still largely undervalued (although it is catching its value..its a hard fought race!
A nice doubling of interim dividend as well. I don't think you could really say that they "beat the upgraded forecast" since it went from "30 mil" to 30,222,152 which is higher than 30 mil but only by a comparatively small amount. Who really cares though, all FGE holders would be happy today.
They are still trading below IV but they are a large enough part of my portfolio so I'm only holding - you would have to be bonkers to sell!
I was hoping for more on the dividend front since its having a great year on earnings, sure its nice its doubled but FGE's dividend yield is very low, only around the 1%. If you look at a similar company like MND who pay out around 4.5% yeild.
Over the last week i've bought some FGE and MML, they have had a great long and hard run to where they are now, but my intrinsic values and forecast values are still offering some margin of safety on the current prices.
In terms of the dividend, I wouldn't be too disapointed with the low dividend yield, as if they can deploy the increasing cash funds they are holding onto with projects that yield the same returns on equity they have produced so far, then surely that is better then having a 4% dividend yield to keep punters happy?
I know i'd much rather them deploy the funds and continue their extraordinary growth. Sounds like they are looking at making acquisitions but are on the cautious front. Lets just hope they make a sound decision and don't overpay or acquire something that cannot aid with the organic growth of the business as a whole.
To date management have done close to everything right, if it continues, then there is no reason for the trend to stop anytime soon.
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Agree 100 percent.
I don't care about the dividends as long as they keep running the company well and the share price keeps rising.
I also think FGE is still below intrinsic value.
There are not many value investment opportunities still out there.
I think FGE and MCE are two that are still worth getting into even at their current levels.
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Just fully read through the latest report in its entirety. Had no idea about expansion into West Africa...I hope they can manage that well.
I dont like all this talk of earnings accretive acquisitions..anyone can buy something that will add a few cents to the EPS...what we really want is an excellent addition to the business at a fair (bargain) price.
Other than that the company appears to be going from strength to strength with its operations and looks to be building a bigger and bigger name within the industry.
With all the capex undertaken over the last 3 years Forge will be very appealing to potential customers as it will have modern equipment.
The diversifying of income streams (west africa and non resource based revenue) is also important as it reduces the reliance on the Aussie mining boom.
Next few years look very exciting...lets hope the price doesnt overshoot the value tooo far so that we can hold and compound our returns
Well they were my thoughts after reading..just thought I'd share
I dont like all this talk of earnings accretive acquisitions..anyone can buy something that will add a few cents to the EPS...what we really want is an excellent addition to the business at a fair (bargain) price.
Other than that the company appears to be going from strength to strength with its operations and looks to be building a bigger and bigger name within the industry.
With all the capex undertaken over the last 3 years Forge will be very appealing to potential customers as it will have modern equipment.
The diversifying of income streams (west africa and non resource based revenue) is also important as it reduces the reliance on the Aussie mining boom.
Next few years look very exciting...lets hope the price doesnt overshoot the value tooo far so that we can hold and compound our returns
Well they were my thoughts after reading..just thought I'd share
My favourite part of the interim report (after NPAT);
"....we are particularly fastidious with M&A prerequisites. The target must fit. We will not make it fit. We have managed our growth to date without the impost of goodwill impairment or taking on debt or people that are not culturally aligned to the Forge philosophy of propriietorship and we wish to preserve these benefits as we continue to grow the company.
With such strong cash reserves simply earning interest, there is increasing pressure on the executive and the Board to fast track an earnings accreditive acquisition. Shareholders, however can rest assured that this will be done in a responsible manner with long term benefits to shareholders being the major determining factor in the decision making process."
WOW that makes me sleep a whole lot better.
"....we are particularly fastidious with M&A prerequisites. The target must fit. We will not make it fit. We have managed our growth to date without the impost of goodwill impairment or taking on debt or people that are not culturally aligned to the Forge philosophy of propriietorship and we wish to preserve these benefits as we continue to grow the company.
With such strong cash reserves simply earning interest, there is increasing pressure on the executive and the Board to fast track an earnings accreditive acquisition. Shareholders, however can rest assured that this will be done in a responsible manner with long term benefits to shareholders being the major determining factor in the decision making process."
WOW that makes me sleep a whole lot better.
My favourite part of the interim report (after NPAT);
"....we are particularly fastidious with M&A prerequisites. The target must fit. We will not make it fit. We have managed our growth to date without the impost of goodwill impairment or taking on debt or people that are not culturally aligned to the Forge philosophy of propriietorship and we wish to preserve these benefits as we continue to grow the company.
With such strong cash reserves simply earning interest, there is increasing pressure on the executive and the Board to fast track an earnings accreditive acquisition. Shareholders, however can rest assured that this will be done in a responsible manner with long term benefits to shareholders being the major determining factor in the decision making process."
WOW that makes me sleep a whole lot better.
I was pretty pleased with that part as well robusta. Of course all companies are going to say they will make acquisitions that align with their philosophy etc etc, however this comment from FGE was very stern and strong I thought.
Also consider this, the $69 mill earning interest now, is deployed into an acquisitions or venture that even earns a return on equity of just 15%, that is still better then what they would be getting on the interest now, so while it wouldn't be a 'great' acquisition, it would still keep the FGE train rolling at impressive returns.
More then happy I bought in now.
worrying part for me was the result from webb. They arent making money, and havent really picked up many contracts. Its is a far away place africa, and this could distract managment away from looking after our booming australian market. Might have to add an aquisition to africa to give scale, or exist the business. Peoples thoughts
I see your point about getting that cash to work but I am much happier fot FGE to wait for the right fit. ROE is still ~40% even with that extra cash sitting on the ballance sheet.
I am more than happy to give FGE the benifit of time to find the right aquisition but would prefer them to pay out the money instead of making a overpriced takeover.
The Australian market will not boom forever. The Webb result was explained away due to "project run off". Webb has recieved letters of intent for approx $10m of work in Sierra Leone when you compare this to revenue for the half year off $1.36m I am happy to give them some time.
Totally agree 100%, just mean that even if they take their time and make an acquisition which turns out to only yield a 15% ROE, its still better then a bank account.
I am definitely looking forward to what they can achieve with these funds.
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Personally if they make an acquisition that only yields ROE of 15% id be quite disappointed. Whilst the shares are still below my estimate of IV I would rather them buy back the shares.
Anything under 15% ROE for an acquisition and id prefer a dividend as I am confident of achieving 15% return from investing.
I do see your point however.
Anyway, on another note - FGE along with many others have been added into the ASX300 today. Seems to have solidly spurred the buyers which are hoping to get on board before the funds do on the 18th(ish).
Currently sitting on 156% on my first purchase price 36% on my second and level on my third (about a month ago).
Will continue to watch intently with interest~!
Anything under 15% ROE for an acquisition and id prefer a dividend as I am confident of achieving 15% return from investing.
I do see your point however.
Anyway, on another note - FGE along with many others have been added into the ASX300 today. Seems to have solidly spurred the buyers which are hoping to get on board before the funds do on the 18th(ish).
Currently sitting on 156% on my first purchase price 36% on my second and level on my third (about a month ago).
Will continue to watch intently with interest~!
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Why will they be buying in around the 18th?
