Buy EOH – Stock market darling turned value stock

Buy EOH – Stock market darling turned value stock

EOH is trading at a 50% discount to its NAV even after jumping 14% yesterday. Traders who are short and investors who dumped stock to sit on the sidelines, can’t wait and risk a massive rally as its results are released this morning. 

Investors have dumped this stock market darling with reason, but it’s down over 90% from its all-time high. You can expect investors to be accumulating stock as sentiment improves and the CEO Stephen van Coller delivers on selling the turnaround vision to investors at today’s company presentation. Investors will be questioning the process on how the business will be consolidated into three main units. 

Friday’s trading statement signaled earnings have been impacted by massive once off non-cash items. The positives are revenue has remained robust at R8.4 billion and NAV is just below R4.6 billion. Normalised earnings before interest, tax and depreciation from continuing operations came to R387 million for the half year. Net Tangible Asset Value I estimate to be around R2.65 billion.  

It closed at R13.00 yesterday, investors should split their purchases if the share price spikes at the open. 

Buying below R15.00 will give investors a margin of safety that sets them up for long term profits as the turnaround gains momentum. 

The week ahead: 

  • Local Data: CPI; Retail trade sales (17/04) 
  • Results Due: EOH, ZED (16/04); CLS, CMH (17/04); ALP, PEM, KST, PPE, SNH (18/04) 
  • EXDiv (16/04): ACG, CPI, MTA, AVI, CCO, BRN 

 

Other Economic data releases of interest… 

  • Tuesday: Average Earnings Index, Unemployment Rate (UK); Manufacturing Sales (CAN); CPI (NZL); GDP, Fixed Asset Investment (CNY) 
  • Wednesday: CPI, PPI Input, BOE Gov Carney Speaks (UK); OPEC Meetings (All); CPI, Trade Balance (CAN); Unemployment Rate (AUS) 
  • Thursday: French Flash Services PMI, German Flash Manufacturing PMI (EU); Retail Sales (UK); Core Retail Sale (CAN); Core Retail Sales (USA) 
  • Friday: Treasury Currency Report (USA) 

 

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