Shipping stocks are overanalyzed! Beware.
Below is an exchange of views with one of the oldest members at thaistocks.com And one general market prediction.
"I say: better one horse then a whole bunch of laggards". Paul A. Renaud. end of May 2005
Dear Pe.....
Hope all is well with you. I see shipping is getting pounded today. After all the bullish broker reports, it almost got me nauscious....:). Of course the bulls will now say they took profits? Anyway, take a look at my latest article, to be uploaded within minutes. How are things going? BTW, since taking away the paying memberships, thaistocks.com readership has soared. I still update for members only for now, of course.
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Hi Paul,
I"m doing well thanks......
Re shipping stocks. I know how much you enjoy those "I told you so" chances when they come along, but I would not write RCL off so quickly.
They have certainly come a long way since our Landmark meeting when you plumped for AJ over RCL, when they were both at abt 5.5.(RCL at 55 before 10 for 1 split).
It seemed apparent to me then that yr "set" against RCL at the time was prompted more by yr antipathy towards the Quest fund management who were big holders, than by any real analysis of RCL’s prospects. Since then RCL went on to quintuple their profits and probably will rise eightfold from those levels this year.
This is not the first time RCL has dropped in price before reversing and going on to better things. Last year they fell as low as 13 ( where I bought more) during the " China boom is over" scare, then went on to triple that level. Even TISCO’s analysts who have the most negative attitude towards shipping stocks, project earnings of over B9 per share from 2005-2007. In these 3 years RCL will make earnings that add up to about their current price. A P/E under 4 is appropriate for a company that is about to suffer an earnings crash, not one with booming profits for at least the next 3 years.
You might do your "free readers" a favour by adding RCL to what has longed seemed almost a one horse portfolio. RCL have wipped back into favor before and as the winner of our last bet, I am prepared to bet again that you will see them at much higher levels than today’s before too long. Let’s wait and see. No ill feeling if you want to stick to your view, differences of opinion are what make a market.
Kind regards,
Pe....
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Thanks Pe..., I have no energy left these days for the "I told you so" type of mails, however I do note the fact that Ticon did considerably better then RCL (or most all others) since last October when you expresses your upbeat views on RCL at our Member Lounge.
I have always been leery of overanalyzed situations, like shipping clearly has been for some time, or banking which is forever, for that matter. To date it was more then right to ride out the prolonged SET storm, with Ticon, the horse.
Your punch on Quest Fund is off the track, as in those times RCL disappointed again and again with either FX losses or losses on their large Singapore property, again and again got marketed down. Further, just for the fair record, AJ did end-up tripling in value besides strong dividends, and I long ago stated to take profits, as you must well know.
I do not view/agree that shipping p/e’s are "low" because this is historically are a very cyclical sector -and stock prices often peak one year before their earnings do. When China slows down, or shipping supply increases, their earnings will certainly peak. (I know some will say "this time is different", but in my view those sort of words have cost investors more losses over the years then just about any others.
RCL being back to around 30 and others in the sectore are taking a real tumble on huge volume this week, reflects this view, in my opinion. Just 3 weeks ago I was in BKK visiting companies -and had to hear again and again by some fund managers how great PSL is, today at 15% lower I guess its even greater? :)
Best Regards,
Paul Renaud.
"Never short a dull market" is an old Wall Street saying and I feel upbeat and postive about the SET with tremendious values to be had at current levels.
PS. Thaistocks.com has a high quality active member lounge where all registered members can post and read other postings. Questions, criticism etc.. is all welcome but we do not, nor ever have, give individual investor advise.
