Interesting analyst opinion

On 10 Nov 2014, Morningstar said "As advised in September, we cease coverage of Ausdrill to focus our attention on companies with higher-quality sustainable earnings, which we are more likely to recommend to investors. Ausdrill has no moat and a very high uncertainty rating. Ausdrill's vertically integrated mining service offering, geographic diversification, reputation and long-term relationships provide only limited barriers to entry and minimal assistance in protecting margins.".
[ANZ share investing - ASL - Profile - Recommendations]

On 10 Nov 2014, ASL share price closed at 0.57. The price as I write is 2.475. That is, up 334%. Last full-year earnings were 9.1c/shr, dividends have resumed, and next year's earnings are expected to be 30-40% higher.

Well done, Morningstar. Their assessment of Ausdrill may have been a long way away from the most spectacular misreading ever, but it is 'up there'. The cyclical nature of resources is well documented, but Morningstar appears not to have noticed. I wonder whether any of the companies "which we are more likely to recommend to investors" have even got close to ASL's performance.

Note: I have no faith at all in analysts, free or pay-for. My experience over many years suggests that a "Buy" recommendation means that the share price has already gone up, and that a "Sell" recommendation means that the share price has already gone down. The challenge for shareholders now is to pick the next resources downturn - my feeling is that it is well over a year away, but of course the situation can change quickly. Maybe I'll sell my ASL when Morningstar rate them a "Buy".