My opinion is that anything south of $1.50 represents good long position for Skilled Group: strong balance sheet, reasonable customer base spread across different industries, costs well enough controlled. The market has factored in the company's exposure to its clients in the resource sector. But I believe that the market has over-compensated for that exposure and the impact on profitability will be less than anticipated because; 1) much of the effect of the down-ramp in projects has already been experienced, 2) existing assets still require labour input, 3) clients outside the resources sector will not be directly impacted.
I summary, I believe that Skilled have managed the resource cycle well and proactively and are well positioned to take advantage of opportunities when they arise.
SKE Price at posting:
$1.27 Sentiment: Buy Disclosure: Held
