They say timing is everything and certainly when it comes to investing, managing to time your entry into a stock can certainly make a world of difference.
Consider vacuum retailer Godfreys Group Ltd (ASX: GFY) for instance…
Investors who chose to pile in to the initial public offer (IPO) at a float price of $2.75 are nursing some serious losses; it's an even bigger loss being pondered by many investors who bought on-market post-IPO, as the stock spent the first 10 months of its short listed life trading above the $2.75 level.
Then things changed!
Since last September the stock began drifting and then crashing lower, hitting a low of 78 cents at the beginning of February.
Since touching that low the stock has bounced and bounced hard with the share price soaring 33% in the past five days inclusive of a 5.5% gain on Thursday when the company reported its interim results.
Here are the key points from the profit announcement:
- Total sales of $90.6 million
- Comparable store sales down 5.2% due to the previously flagged poor execution of Godfreys' response to key market trends
- Underlying net profit after tax (NPAT) of $4.5 million
- Underlying earnings per share of 11.06 cents per share (cps)
- Interim dividend declared of 7.5 cps, representing 68% of underlying NPAT
- During the six months to December 25 the company opened 11 new stores and converted four franchise stores to company-owned stores, taking total store numbers to 223
What now?
It's certainly been a mixed bag of performances from the retail sector recently with the failure of Dick Smith Holdings Ltd (ASX: DSH) in stark contrast to the strong results from JB Hi-Fi Limited (ASX: JBH).
Godfreys' management has provided guidance for a full year underlying NPAT of between $8.5 million and $9.2 million, with an additional four new stores to be opened. With long-term debt on the balance sheet of $20 million and a market capitalisation of approximately $46 million this stock is bound to entice some investors for value.
