SPK - Spark NZ

[Breezy]

Crikey..... just checked the TA for SPK. Unrelenting. GLH's.

Amazing value, big boys selling and big boys buying, retail have no influence in this stock.TA stands for Take Advantage in this case. Lol
I remember when CNU was the biggest dog and went down to $1.40 odd from $4, now $9.

[Basil]

I remember when CNU was the biggest dog and went down to $1.40 odd from $4, now $9.

Good point.  When the TA says the downtrend is over this could be a good value income stock to hold.  As leftie correctly points out, at this stage the downtrend is relentless.  I might take a modest position as an income stock when a new uptrend is eventually confirmed.  Not interested in the risk of trying to pick the bottom on this one.  Who knows where the bottom really is with the earnings multiple still quite high for a stock with no demonstrable growth to date.  I'm not sticking my neck out and saying where I think the bottom might be because some people are very quick to throw that sort of thing back at you if you are wrong.

[Breezy]

Good point.  When the TA says the downtrend is over this could be a good value income stock to hold.  As leftie correctly points out, at this stage the downtrend is relentless.  I might take a modest position as an income stock when a new uptrend is eventually confirmed.  Not interested in the risk of trying to pick the bottom on this one.  Who knows where the bottom really is with the earnings multiple still quite high for a stock with no demonstrable growth to date.  I'm not sticking my neck out and saying where I think the bottom might be because some people are very quick to throw that sort of thing back at you if you are wrong.

Not concerned as its a 10 yr hold for me and I reckon it will be back to around $4.50 2 yrs from now (Happy for you to throw it back in 2 yrs if not so) Speaking of multiples, interestingly CNU had a ridiculous PE ratio but that didn't stop it getting to $9.

[BlackPeter]

Crikey..... just checked the TA for SPK. Unrelenting. GLH's.

Quite easy lesson to learn for holders: If TA and fundamentals agree, than dismiss their signals at your peril ;

[Breezy]

Quite easy lesson to learn for holders: If TA and fundamentals agree, than dismiss their signals at your peril ;

No learn the long term lesson from CNU above $1.40ish in 2013, now $9 and continued to pay dividends along the way whilst displaying awful metrics but fundamentally an essential service just like SPK. Whether you buy now or wait for a bottom you may never pick right matters little over the longer term, cheap is still cheap even when it could be cheaper or not.

[LoungeLizard]

Everyone knows - or should know - that just saying high PE bad, low PE good, is too simplistic. It might a rule of thumb that applies to smaller business's but not necessarily to the big business's or infrastructure stock, who have earned the right to have high PE's. Virtually all of NZ's big names have PE's equal or greater (in some cases, much greater) than SPark's current PE of 19. It's the same everywhere - Apple (30), Tesla (100). Those who slavishly follow what is just a very general rule, will have missed out on some of the best performing NZ stocks over the years.

SPK's profits and margins are getting squeezed at the moment but I have no doubt they will come right again. And, as has been noted, the current dividend is 11.6%, so a possible cut wouldn't be the end of the world, and certainly no reason for the level of selling we are seeing.

disc. holding and buying.

[Breezy]

Everyone knows - or should know - that just saying high PE bad, low PE good, is too simplistic. It might a rule of thumb that applies to smaller business's but not necessarily to the big business's or infrastructure stock, who have earned the right to have high PE's. Virtually all of NZ's big names have PE's equal or greater (in some cases, much greater) than SPark's current PE of 19. It's the same everywhere - Apple (30), Tesla (100). Those who slavishly follow what is just a very general rule, will have missed out on some of the best performing NZ stocks over the years.

SPK's profits and margins are getting squeezed at the moment but I have no doubt they will come right again. And, as has been noted, the current dividend is 11.6%, so a possible cut wouldn't be the end of the world, and certainly no reason for the level of selling we are seeing.

disc. holding and buying.

Yes some on here get fixated on PE ratios as if its the holy grail of investing, its just one ingredient in a cake mix. They could consider that CNU had a PE ratio of up to 186 not so long ago. Lol

[BlackPeter]

No learn the long term lesson from CNU above $1.40ish in 2013, now $9 and continued to pay dividends along the way whilst displaying awful metrics but fundamentally an essential service just like SPK. Whether you buy now or wait for a bottom you may never pick right matters little over the longer term, cheap is still cheap even when it could be cheaper or not.

Everyone knows - or should know - that just saying high PE bad, low PE good, is too simplistic. It might a rule of thumb that applies to smaller business's but not necessarily to the big business's or infrastructure stock, who have earned the right to have high PE's. Virtually all of NZ's big names have PE's equal or greater (in some cases, much greater) than SPark's current PE of 19. It's the same everywhere - Apple (30), Tesla (100). Those who slavishly follow what is just a very general rule, will have missed out on some of the best performing NZ stocks over the years.

SPK's profits and margins are getting squeezed at the moment but I have no doubt they will come right again. And, as has been noted, the current dividend is 11.6%, so a possible cut wouldn't be the end of the world, and certainly no reason for the level of selling we are seeing.

disc. holding and buying.

Quite amusing. Not really following LL (though remembering him constantly attacking some stocks with much better fundamentals than Spark), but learned a lot from Breezies "hold and buy more" messages with some of his previous holdings while they went down the gurgler.

I wish both of you that things will work out for you this time ... but clearly - none of you has Warren Buffetts successful track record, and even he occasionally gets things wrong. Would he invest into Spark given the current fundamentals? Of course not. No growth, no real moat but inertia and lack of better competition in an duopoly, unappealing valuation and mediocre board and management. The only thing they seem to be good in is keeping their NTA as close as possible to zero - but hey - light balance sheets look much prettier in times of low interest rates, don't they?

Anyhow - I guess we all agree that Spark won't go down the gurgler anytime soon. Kiwis are just ways too lethargic in changing their utilities, and admittedly - the other guys are not better either in providing a very mediocre service.

However - they are neither a monopoly, nor do they have any other unique selling proposition, other than the inertia of the masses. Long term earnings growth is slightly negative (no, this is not good - and there is nowhere any reason to see for why this should change in the short to medium term.

In this situation is PE a very sensible method to assess whether a company is over or undervalued.

If you allow for a mediocre service provider with a lethargic customer base a PE of say 10 (I am quite nice here ...), than Spark would be worth (based on the last 10 years earnings) $2.50 per share.

Do I know, whether the share drops that far (or further - we normally have under swings after rapid declines)? Of course not, but neither do LL nor Breezy know, whether the down trend will change anytime soon.

Sure - it might, if hype swaps the other way - but this is something nobody can predict.

So far the share has still all indicators of a dividend trap, and we probably all know how these play out.

Anyway - no interests in Spark here, other than watching the development with interest. How do they say - anything is good for something, and if its just as bad example to learn from.

[LoungeLizard]

Quite amusing. Not really following LL (though remembering him constantly attacking some stocks with much better fundamentals than Spark), but learned a lot from Breezies "hold and buy more" messages with some of his previous holdings while they went down the gurgler.

I wish both of you that things will work out for you this time ... but clearly - none of you has Warren Buffetts successful track record, and even he occasionally gets things wrong. Would he invest into Spark given the current fundamentals? Of course not. No growth, no real moat but inertia and lack of better competition in an duopoly, unappealing valuation and mediocre board and management. The only thing they seem to be good in is keeping their NTA as close as possible to zero - but hey - light balance sheets look much prettier in times of low interest rates, don't they?

Anyhow - I guess we all agree that Spark won't go down the gurgler anytime soon. Kiwis are just ways too lethargic in changing their utilities, and admittedly - the other guys are not better either in providing a very mediocre service.

However - they are neither a monopoly, nor do they have any other unique selling proposition, other than the inertia of the masses. Long term earnings growth is slightly negative (no, this is not good - and there is nowhere any reason to see for why this should change in the short to medium term.

In this situation is PE a very sensible method to assess whether a company is over or undervalued.

If you allow for a mediocre service provider with a lethargic customer base a PE of say 10 (I am quite nice here ...), than Spark would be worth (based on the last 10 years earnings) $2.50 per share.

Do I know, whether the share drops that far (or further - we normally have under swings after rapid declines)? Of course not, but neither do LL nor Breezy know, whether the down trend will change anytime soon.

Sure - it might, if hype swaps the other way - but this is something nobody can predict.

So far the share has still all indicators of a dividend trap, and we probably all know how these play out.

Anyway - no interests in Spark here, other than watching the development with interest. How do they say - anything is good for something, and if its just as bad example to learn from.

For a non follower, you sure seem to reply to a lot of my posts, BP 

My main point - and I guess it does need to be said again - is that the huge sell off to SP levels not seen for over a decade, isn't justified by looking at PE's or other fundamentals. Yes, an adjustment is required, and most businesses go through some periods of SP retrenchment, but the sell-off is way out of sync with what is happening. So, no problem with those that are scared off by the slide. I see an opportunity, but each to his own.

BTW, Buffet made his wealth by buying into companies that were undervalued. He wasn't deterred by market sentiment or even TA for that matter - it was all about value. I believe at current valuations he might well be interested in Spark. I'll ask.

Patience is required when these sort of adjustments happen. Will it slide further? Possibly. Will it eventually recover over a reasonably short time frame. Definitely.

[Breezy]

My hold and buy more messages, hmm I wonder who else on here has been guilty of that, ill get the casting stones ready for the pure ones.

[BlackPeter]

For a non follower, you sure seem to reply to a lot of my posts, BP 

...

OK - don't take that personally - but just for clarification ...

The people I tend to follow are posters I can learn from. Normally little reason to reply to them (except maybe to praise them for their wisdom or give them a like). Unlikely that this happened already too often in your case, did it?

If I reply to a post, than this is normally because I feel that I have something to add to the relevant subject, or that I feel that I need to provide balance to a quite one-sided or non-sensical post.

The latter is where many of your posts come into the game ; No need for you to feel followed - let me assure you, you are absolutely safe in that regard ;

[BlackPeter]

My hold and buy more messages, hmm I wonder who else on here has been guilty of that, ill get the casting stones ready for the pure ones.

Nobody (well, clearly not me) said that you are unique in that regard, did I?

[LoungeLizard]

OK - don't take that personally - but just for clarification ...

The people I tend to follow are posters I can learn from. Normally little reason to reply to them (except maybe to praise them for their wisdom or give them a like). Unlikely that this happened already too often in your case, did it?

If I reply to a post, than this is normally because I feel that I have something to add to the relevant subject, or that I feel that I need to provide balance to a quite one-sided or non-sensical post.

The latter is where many of your posts come into the game ; No need for you to feel followed - let me assure you, you are absolutely safe in that regard ;

Thanks for the re-assurance there, BP

[Breezy]

Thanks for the re-assurance there, BP

Thank goodness your not being stalked just observed and you don't make the cut for the follow list, gutting I know.

[LoungeLizard]

Thank goodness your not being stalked just observed and you don't make the cut for the follow list, gutting I know.

Hehe - I'll get over it