Fleetwood (FWD) Having briefly mentioned this stock in the context of dividend paying shares - http://forums.silverstackers.com/message-432482.html#p432482 - I thought I'd start a thread (or read mini-blog) on it. I am watching it every day, but have refrained from starting a position yet. I've been thinking it is in decline as a chart and so far this is eventuating. My reasons for liking it are via the rear vision mirror, as it has been a very consistent earner and dividend payer in the past, including during the years of the GFC. Investing with a view to the past rather than the future can be a newbie pitfall. During the GFC years its share-price was crushed, losing 70% of its market capital, so one must be cautious. You can see however that the share-price came back strong in 2009-10 and by start of 2011 was at an all time high of 14 bucks. So anyone who held during the GFC debacle would have lived to see significant capital appreciation, not loss, while pulling in superb ff dividends right through. The earnings themselves never skipped a beat over FYs 08-09, and in fact rose - the market got it totally wrong. So what's happening now is FWD is lumped into the mining services sector and everything in that sector has been shunted across to Leprosy Island. However FWD does have problems specific to itself, and management has warned that markets for all its divisions are soft and expected to be so for FY13. So FY13 should be the first year in a decade where earnings per share decline (except for FY05 following an exceptionally sharp profit rise in FY04) The company is dealing with: - low occupancy rates at its manufactured accommodation village, Searipple, due to resource projects winding down. Two other villages in WA and Gladstone have yet to kick off. - the end of Building the Education Revolution (over priced school shelter-sheds and toilets) - consumer negative sentiment affecting its caravan sales - floods in Thailand affected car supplies and thus canopy and tray sales Looking at the chart, it's conceivable that there will be significantly more downside. This could reach a bargain for investors. Not shown here are the monthly standard Bollinger bands. The stock has pierced the lower mthly Bollinger band for two months and looks like closing outside it for November. Bollinger bands are a way of measuring volatility, and only in extreme negative volatility and sentiment do you see the price landing outside the monthly bands. For me, I'm using that as a step back and wait signal. Also there's the comparison with the chart's behaviour in the GFC period. The price back then in 2008 had a A drop, a B recovery, and a very heavy C drop. I'm musing that something like this might happen this time and that makes $6 a conceivable target. Depends partly how the general market behaves - any big drop in the general equities market will be amplified here in FWD imo.
OK- declaring my interests first - I have owned this stock before. Bought in at around the $5-$6 mark and sold out around the $11.50-$12 mark several months ago. I have like Fleetwood for several years. They produce a good product which is in demand from several different areas of the economy (mining, retirees etc). Management seems to be good although they have made a couple of questionable calls (in hindsight). However - I have to admit to not having bought back in despite recent falls in price and a higher than average Div. Back in 2011 the share price had factored in all possible good news and no real bad news. I think at the moment it still has a "hopeful" factor built into the price that may prove in the future to be false. Not saying the company is bad - just that the environments they work in are in decline or have changed. We are seeing mining accomodation requirements falling as more and more projects are either shelved, not expanded or reduced. Some of the FIFO comanies (aviation) are reporting slowing demand for services and pilot employment is slowing (showing less people being flown out to mines needing this temporary accom). I think as a trend - this can only continue as the demand/price for commodities continues to decline. The "Grey Nomad" movement seems to have peaked. The big wave of retirees has come through and done the travel thing and are now wanting to move back to normal housing (those that can still afford to after the GFC) and stay near family/medical services. Those that haven't gone already or delayed have seen their super reduce by 30%+ and are now thinking they might be better off staying home. All of which increases the number of 2nd hand mobile accomodation on the market and reduces the demand for brand new ones. (On a personal note - a few years ago it was a given that you could buy a caravan, use it for 6 months and then sell it for MORE than you paid as the van was available now whereas a brand new one would be 6 months wait for delivery. Having bought an updated van recently (as well as having a couple of friends do it recently too) I can tell you the 2nd hand prices have dropped and this "premium" or demand is not there anymore). In summary - I'm not saying Fleetwood is a bad purchase. I think overall it is a good company with good management. However - I do think there is a high probability of further price falls and a reduction in dividend growth over the coming few years. My suggestion would be too see how it settles over the next little while and wait for the market and the company to give a bit more of an indication of direction in price and div growth. You may lose a bit if the caution proves false but you could lose a lot more if it doesn't! PLEASE NOTE - THIS IS A PERSONAL OPINION ONLY - DO YOUR OWN RESEARCH AND MAKE YOUR OWN DECISIONS!!! malachii
Those insights help to fill in my understanding quite a bit malachii - particularly the perspective on the 'grey nomads'. I hadn't really factored that - thinking of the slackening off of demand from that sector as temporary and just reflecting general consumer tightening. I'm annoyed at myself for making an earlier off-hand suggestion of FWD as a buy for dividend as it wasn't all that responsible given my superficial grasp of the company. Sounds like agreement anyway on the best stance towards the company for a potential investor. Definitely a wait and see, and not jump too early into a possible yield trap. I'd always be interested in any charting thoughts you might have towards this stock and any other under discussion. Last night one of the commentators on 'Your Money Your call' answered a viewer question on Fleetwood. He said the management had spelled out clearly their expectations for earnings softness and he expected the share price to drift for 6 months or so. I'm suspecting it will be more dramatic than that, but whichever, how can the chart get buoyant with a cloud over earnings and shareholders continually pressured to sell and protect price profits made since 2009?
Although I do chart (and this chart both short and long term doesn't look flash) I think this comment sums it up pretty well. Until we (shareholders and potential shareholders) get a firm indication of the future - either from a general upturn, sector specific upturn or company announcement on sales/purchases etc - this share will at best drift along. malachii
Motley Fool has had them on their watchlist for a few months now. There's still the big camp they are building in Gladstone, which could potentially turn things around.
Looks like Searipple is getting filled up after an accommodation agreement with Rio Tinto. http://stocknessmonster.com/news-item?S=FWD&E=ASX&N=617559 I was thinking - why should the Grey Nomad phenomenon be pass? Yes there's the GFC impact on savings mentioned. Stagnation of share portfolios and real estate, but the big feeder is just starting I figure - the baby boomers. The baby boomers retirement hasn't necessarily peaked has it? 1946 + 65 years of working life = 2011. They just started retiring a year or so ago! Twelve or thirteen years to go. Baby boomers "With the end of World War II in 1945 Australia's servicemen and women returned and family life resumed after an interruption of almost six years of wartime conflict. Nine months later saw the start of a population revolution as childbirth rates soared - more than four million Australians were born between 1946-1961. People born during this period became known as baby boomers." http://australia.gov.au/about-australia/australian-story/baby-boomers
Edited - can't get this right Whoops - I guess average working life would be more like 45 years in the work-force? So that would suggest the baby boomers are well advanced in the transition to retirement 1946 + 45 = 1991 - would be around when the earliest stated going out to pasture
Baby boomers haven't so much peaked as the grey nomad thing has lost it's appeal. Retirees now are not so much travelling Australia as doing shorter trips. They are not selling the house and buying a campervan and cruising but rather keeping the home in the city and going on destination holidays. There has been a realization (rightly or wrongly) that if you sell your house - you may not be able to afford to buy back in when the need arises (medical, family etc). We are big caravaners and we are seeing less grey nomads around now than we did even 2-3 years ago. Don't get me wrong - there are still some - but just not in the numbers they were a few years ago. malachii
Phew, it helped discussing this one here, I was near a cliff. The discussion on this thread started when the price was about $9. Today FWD dropped 17% to $3.40. Still looking ominous as price has fallen out of its sideways consolidation. This was worse than a dividend trap back when it was being discussed in Nov 2012, because in addition to capital loss of +60% the dividend has been scrapped as well. DAILY MONTHLY
