If you have ever been seduced (as an investor) into a “sexy” investment such as an internet start-up, a brilliant new engine manufacturer or (ahem) Planet Platinum, you may have sworn off glamorous stocks forever. Investors in this tent may wish to take out the HB pencil and the calculator and do the numbers on Transpacific Industries (TPI).
The chart below shows the recent fall from grace of this waste management company – a halving of the share price from $1.20 to 60 cents. Recent is the operative word. In 2007, TPI hit a high of $14.56. In other words, its share price is just 4% of its peak price.
The company is transformed from those heady days. After a forced post GFC de-levering of their balance sheet, and divestments, the company has transformed its operations over the last two years. The $24 million loss for 2015 announced a month ago contained a $77.5 million impairment charge. With much of the hard work done, TPI may be about to reap the earnings benefit, yet analysts are forecasting a fairly modest increase in EPS from 2.9 cents to 3.5 cents. Rubbish.