I would call TLS a low risk company but certainly not high growth...low risk as in there not going to fall over any time soon, have the cash flow and deep pockets to keep the dividend high and will almost certainly be a major player in the NBN.
Don't be fooled....the market isn't as smart as some people think it is.
See thats where you and I differ so much....risk perception / risk assessment
.... you seem to classify a stock as low risk if you think its not going to fall over any time soon....
Where as when i wiegh up whether its low or high risk...I look at
Firstly its debt to equity....and personally TLS debt to equity is getting up amongst many companies that have already failed.....
Secondly thier current assets to current liabilities
Their ROE projections and ROE history and ROE growth
Risk of dilution of share holders equity to institutions...
If that all check out plus a few other minors I then look at political risk, partigularly regulatory ones....risk of new competitors and barieres to entry or market share....
Risk to price control
On nearly all these fronts TLS rates fairly high risk....
You say TLS wont fall over any time soon.....I dont think it will either but a 128% debt to equity ratio is tremendessly high.....its unsustainable if free cash flow falls too much and only the govt would be stupid enough to refinance them.....
As you pointed out yesterday you have only been in this game just over three years, and there is still a lot to learn.... Ive been doing it since roughly very early 1990's and im still learning everyday......
You accuse me of being risk averse....however i am not....i invest in many stock that i highlight as being high risk, and my argument is not to avoid risk....
My argument is that there are many factors associated with risk other then an inexperienced assessment of whether the company will iminently collapse....and that this risk is nearly always reflected in the risk/yeild/ growth price characteristics of the stock......
An example im in right now with rediculous positive and negative risk is VIL....its a tiny oil miner with potential for massive upside in an area very possibly likely to yeild a oil and gas strike....but the risks are massive...and thats priced in....there is no yeild, the price is extremely cheap compared to if its result are positive, but the risk and possible reward is massive...hence why im in it.....
I weighed up all thos risks, claculated the likilihood of a find, its probabilities, discounted them, came out with worst, best and most likely prices and chose to go in with a lot of money as an acceptable risk....right now im up more then
$40,000 in just a few weeks.....My point is the risk was huge and it was priced in.......and learning how to calculate it and assess it from many dimensions is very important...and when you start to get better at it , it aslo becomes not only a capital preservation issue, but a way oif generating huge profits.....
Another example of this is MMS. MacMillan Shakespeare....they have excellent ROE and financials in most but not all regards...on corrections they often offer quite good yeilds.....they where hurt by the GFC but are now recovering.....
From time to time MMS throws up rediculous yeilds, but generally its when the govt looks like making a big chnage that will affect them for the worse...or when an announcment is due...
But in investing in them they always have a huge risk....looking at thier financials they have little risk of falling over as you put it...with 0% debt to equity , rising sales, no capital raising, stable operating margins, growing NPAT, Good ROE, and ROC, sensible payout ratio...current assets double current liabilities...
I do own them,,but the risk they carry is a significant legislative one and its important when investing to know your risks so you can react if they change for the positive or negative...the huge risk with MMS is that the Henry review may lead to a reduction in salary sacrifice benefits..... MMS primary business is govt employee salary sacrifice.....
Now this risk may be both positive and negative...if the govt makes minor changes thats a huge positive as all govt employees will want their SS arrangments altered....if however SS is eliminated or reduced significantly, initially MMS may benefit, but as people drop out of SS , MMS would suffer a massive earnings and sp hit.......
So in light of an imminent Henry response from the govt, I didnt sell MMS, but i assessed the risk as extremeley high and have sold half of my holdings to reduce exposure.....
So my point here is , risk is not necesarily all bad, but it exists in many ways , and it pays to know your risks on your stocks, know how its priced in and then make decisions and act accordingly......
This is all opinion, no reccomendation of stocks is suggested or implied....Always DYOR and seek expert advice....