Straight down but still going strong October 23, 2007
Posted by CamdenKiwi in : Little Green Portfolio, Miscellany , trackbackIn the last year shares in Straight plc, Leeds based manufacturer of plastic bins for recycling and other purposes, have dropped from a high of 285.80 in November to a sorry low of 128p today. The only news has been disappointing half year results issued at the end of September which sparked a steepening in a downward trend which was already well underway.
It seems to me that at least part of this is explained by the unusual highly price of this stock last summer. With Britain in the grip of the worst drought on record, sales of water butts soared propelling the share price to a dizzy 314p. Straight struggled to meet deliveries, and moved their distribution to DHL in February to deal with future growth. The costs of these changes in the early part of the year meant that profits were down.
In August, the company acquired Gummy Bins Limited, manufacturer of bins for collecting chewing gum ‘for a nominal sum’. The share price reacted well to this, and it allowed Straight more control over the product line.
I haven’t sold my shares in this company, although they are now sitting at a loss. It doesn’t look like anyone’s selling at these prices, as trading volumes are very low. Lower than expected profits are a concern, but the company still has solid cashflows and at this price is probably now a bargain. It’s suffered some growing pains, and a little irrational hype, but I’m betting it will be a solid performer now. And if you’ve googled this after the annual results are announced in March, you’ll know if I’m right, or not.
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