Current Price: $6.98
Industyr: Metals & Mining
What I Like:
- Grupo Simec had a rough 2009, with sales falling almost in half from 2007-08 levels and profits going into the red. However, 2010 saw sales up by over $500 million from 2009 and 2011's first 2 quarters have shown similar improvement.
- This company was able to come out of the red without taking on any significant, long-term debt. Their most recent June balance sheet shows $54.35 million of short-term debt, yet no LT debt.
- The company recently removed all intangibles from its balance sheet.
- Grupo Simec's financial strength ratios are well-above average compared to others in their industry.
- This stock has recently bottomed out and only recently rebounded from its 52-week low of $6.42.
What I don't like:
- There is really nothing to complain about when performing YOY financial statement comparisons for Grupo Simec. The biggest concerns have to do with its performance relative to their competitors. For instance, Grupo Simec does not pay dividends while many of its competitors do.
- Sales growth rates have not kept up with its competition, and the profitability ratios of the company lags behind the industry average.
Recommendation: Buy This stock has performed in the low-teens in the past, and with its balance sheet and profits looking to be in order again, there's no reason this stock can't reach that level once again. However, with a weak market I can't see that level being hit any time soon. But there's no reason this stock should not rebound to its level of $8-9 from a few months ago in the near future.
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