NOL - SHORT TERM

winstorn
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14 years 3 months ago #2334 by winstorn

Replied by winstorn on topic Re:NOL - SHORT TERM

Hi Sharpeindex. You are right that I have use the words improve and not recovery. Recovery may takes anytime from 1 year onwards. To mention that it takes 3 to 5 years to recover means that there will be no profits for this period. No profits means unlikely any CD given, no CD means less investor will be interested in this stock, let along any run up of the prices. Any stocks rises in prices are all due to antipication of better future earnings or turning the company into black again. That is why there is a PE ratio there to antipate forward earnings. Let say you want to play safe and wait until NOL turns into black again by 2011. Do you think the price will be at 2.00 level or 4.00 level. At 4.00 level, there will be less buyers, given the run up in prices and also the PE ratio will be much higher. Finally one have to look at the risk / reward ratio to determine if it is better to buy now or later. I post - you decide.

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sharpeindex
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14 years 3 months ago - 14 years 3 months ago #2335 by sharpeindex

Replied by sharpeindex on topic Re:NOL - SHORT TERM

winstorn wrote:

Hi Sharpeindex. You are right that I have use the words improve and not recovery. Recovery may takes anytime from 1 year onwards. To mention that it takes 3 to 5 years to recover means that there will be no profits for this period. No profits means unlikely any CD given, no CD means less investor will be interested in this stock, let along any run up of the prices. Any stocks rises in prices are all due to antipication of better future earnings or turning the company into black again. That is why there is a PE ratio there to antipate forward earnings. Let say you want to play safe and wait until NOL turns into black again by 2011. Do you think the price will be at 2.00 level or 4.00 level. At 4.00 level, there will be less buyers, given the run up in prices and also the PE ratio will be much higher. Finally one have to look at the risk / reward ratio to determine if it is better to buy now or later. I post - you decide.

I like your upbeat take on this counter. In shipping, container segment generally provides the thinnest profit margin. With a high operating cost, this may turn against the company in a severe overcapacity and raising operating costs situation. For investment, I would go for a counter that gives me a greater ROI. Turning black in 2011 is one possibility that I would not consider but well, there\'s a possibility. The problem with shipping is that the cost structure is generally high and returns are subjected to many factors. NOL is lucky not to have bought Hapag Lloyd back in 2008. Otherwise, we will not be talking about 2010 or beyond. They are also lucky to have the backing of a strong sovereign fund. Despite my negative view on this company, I must say that the management has done a good job of keeping investors engaged and their CEO\'s a good man to have. If I have 1 buck, I\'ll not put in any of the listed players in the container sector...unless there is a put warrant in place. The stock market is a pressure cooker of emotions. Whether the company makes money or not, its not always reflected on the share price. Sentiment may have driven the counter up but when investors view BDI (Dry Bulk Index) as the gauge for shipping companies profitability index, it just meant that investors still need to be educated.

Last edit: 14 years 3 months ago by sharpeindex.

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