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I wouldn't be worrying what RM is doing like the original asker anyway. But I am sure he has sold out a long time ago. No point riding the ship to the bottom. He can always buy again *if* it did rise.
MCE is probably a great business but I just don't think that has much to do with share prices in any case (not just for MCE). I mean look at how the market itself reacts to news. Half the time it is hard to reason one way or the other.
Right now though MCE is unbelievably risky. It moves way out of range with the market. I really couldn't guess why (things should be looking better for MCE given the time to digest their situation).
Robusta said:
This was on the first page of this thread, dated almost 12 months ago. funny how things can work out.
Seems the analyst did his homework after all. MCE trading at about 3.60
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Cochlear looks good with the recent drop.
This was on the first page of this thread, dated almost 12 months ago. funny how things can work out.
Seems the analyst did his homework after all. MCE trading at about 3.60
Well really the response to the analyst was correct. MCE was at full capacity and was building a new facility. This took a chunk of cash and *may* have been a significant factor in the lack of new orders (along with natural business factors - MCE is not selling Weet-Bix). I would guess this single guy/girl just got lucky and should put this on his/her CV as it is probably one of the few times. Not much has changed with MCE really (they didn't build this new plant because they thought they were going to be uncompetitive) so it would be hard to imagine why this guy picked that price (as it is more market-wide/global factors playing a part and also some surprising volatility in MCE itself).
MCE is the largest holding in my personal portfolio and the second largest in my SMSF. Time will tell but IMO the market is overreacting to the bad second half of fy2011. These guys have been through massive changes in the last two years from listing on the ASX to building the worlds most advanced manufacturing plant in its field. I am not surprised they have taken their eye off the ball with sales but I would be very surprised if this situation is not rectified.
The other thing I find interesting is how MCE has gone from a "market darling" to being shunned and hated by the majority. I think I may have to find a way to take advantage of this interesting situation.
The other thing I find interesting is how MCE has gone from a "market darling" to being shunned and hated by the majority. I think I may have to find a way to take advantage of this interesting situation.
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I reckon you ought to speak with your bank manager tell him what your plans are and get one of those massive loans and put all your eggs in the one MCE basket.
Opportunities like this don't come up very often - once in a lifetime at best.
You'll kick yourself if you don't.
skc
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Expectation is a funny thing and it probably should be part of one's valuation methodlogy. Look at the difference in valuation for a share with 20%, 10% and 0% growth and you will see what expectation you are paying for.
The way to take advantage of market darling is to buy before it is a darling and sell before it's a dog. Alternatively short it as soon as it smells like a dog, shows a tail or says 'woof'.
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Should've used the measured move for a more accurate target...
Will be surprised if it doesn't hit $3 after the next MACD bearish cross though...
I am not qualified to comment on the MACD bearish cross, support and resistance but IMO the thing that will move MCE share price is new orders (or lack of).
I would question how likely it is for oil companies to be placing orders for deep sea drilling gear in the near future. During an economic boom with soaring oil prices, its reasonable for oilers to be investing in risky, expensive deep sea rigs.
During economic malais, as we have now, I don't see how they are going to justify it.
During economic malais, as we have now, I don't see how they are going to justify it.
You may be right in the near future but somehow I doubt it. Countries are trying to secure energy needs and with a volatile middle east driling offshore seems to be the favoured alternative. Not even the Gulf of Mexico disaster could stop it.
Here are some pretty graphs on future oil output and demand.
http://www.oilcrisis.com/curves.htm
I know this is old so here is something more recent (this may prove you right in the near future)
http://omrpublic.iea.org/
But a glance at consumption by country and looking at China's growth, well draw your own conclusions.
http://www.nationmaster.com/graph/ene_oil_con-energy-oil-consumption
Then there is the Peak Oil arguement
http://www.energybulletin.net/primer.php
Well I have a big problem with the whole 'China is an unstoppable engine of economic growth' idea that seems to have been accepted rather too readily. I've addressed this in the 'End of the China bull' thread in the 'international markets' section. When it has a blow-off, it will smash the oil price down another peg.
Yes in the long run oil is going to be running out and ambitious extraction projects will become financially attractive (hence companies like MCE will profit heavily). However, we all saw what happened to oil during the GFC. MCE just built a big new expensive factory - how are they going to fair if say, they didn't get orders for a whole year? How will they pay off the debt that will come due, that they used to build the factory?
Risky. Definitely not a value company.
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At this rate, in a couple of weeks you may get them at under $3.00. If you wait a few months they may be $2
Your portfolio has stood up extremely well since you got your 30K margin loan in late July- in just over two months you've only manged to lose 40% of it - remarkable.
Will have to read the 'End of the China bull' thread, my opinion is there is no such thing as a miracle economy, China included, they will experience recessions and market bubbles and crashes but I have trouble finding any scenario where China does not become the worlds largest economy in our lifetime.
It is difficult for me to believe that no new rigs will be built and MCE will get no part of those orders. MCE also is building the engineering side of the business with a particular focus on shale oil and gas. Quotation book was over $500 million at the end of FY, MCE is priced as if they will maybe win 5-10% of these not the historical 30% plus.
Definately risk involved (where are the rewards without risk?) but different opinions make a market.
All things being equal and if I have capital left to invest that would be wonderful.
Thankyou.
Just as I am not going to cut my wrists about paper losses now, I will not pop the champagne with paper profits in a few years.
I will update the portfolio this weekend if you would like to discuss the remarkable performance.
(bought some COH today and sold MIN)You have got thet right Tightwad, until proven otherwise I consider MCE to be a good growth stock with a decent dividend yield to follow.
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With regard to the underlying issue of oil, I'll just say that it we have global economic turmoil and the stuff is selling for over $80 per barrel, a price that would have seemed impossibly high just a few years ago.
Also consider that oil fields gradually deplete. So unless demand really does collapse on a scale far larger than 2008, we'll still need to be drilling new wells to replace falling production from existing ones.
So long term, the future seems fairly bright to me. It's more a question of whether or not MCE has the ability to ride out short term (year or three) down periods which could occur if the economy does fall in a hole.
Also consider that oil fields gradually deplete. So unless demand really does collapse on a scale far larger than 2008, we'll still need to be drilling new wells to replace falling production from existing ones.
So long term, the future seems fairly bright to me. It's more a question of whether or not MCE has the ability to ride out short term (year or three) down periods which could occur if the economy does fall in a hole.
I think saying the oil price is going to be smashed down a peg is a bit extreme. I think the lack of new projects and haltings that occurred a couple of years ago is only going to put upward pressure on the price over time. Good for MCE. BHP just predicted a huge skills shortage in the next 5 years and do not see China slowing down yet. I can't see any issues for MCE going forward apart from mis-management and this is not unlikely in my opinion. It amazes me how incompetent these guys seem to be. Now there is the bad press over the lay-offs.
Separately, I believe they owe very little on the new plant at this point.
It is also worth noting that the BP fiasco in the Gulf had a negative impact on projects and this will, of course, be reversed over time. Its just a run of bad-luck for MCE along with (yes this is my opinion) poor management and market savvy.
