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I don't see any reason to be disappointed with the current share price of M2. Substantial increases in earnings and dividends have been announced in every financial report since the PEO and Commander acquisitions and a price increase of around 350% from 60 cents to $2.15 in 18 months isn't anything to complain about. The price has now reached a new high following the latest end of year 2010 financial report announcing record earnings and a healthy dividend with further substantial increases in earnings and dividends expected in 2011. Several directors have recently sold some of their shares and taken some profits (a perfectly reasonable thing to do) and some people that have made a decent capital gain are no doubt using the current price high and surge in buying interest as the dividend eligibility cut-off date approaches to do what some of the directors have done and take some profits.

Around $2.15 or $2.16 appears to be what people are prepared to pay to get the 5 cent dividend payable at the end of October (plus another probable 13 or 14 cents in dividends in the next 12 months and likely further capital growth if you keep your shares). When the current buying and selling activity dies down after the share goes ex-dividend if past history is any guide the price could drop back more than is justified due some small shareholders abandoning it and lack of institutional support and this could present good buying opportunities as it has in the past.

The next surge of interest should occur around February/March 2011 when the next half yearly report comes out and the interim dividend is announced and the dividend eligibility cut-off date approaches. If the report at the end of February is in line with expectations and forecasts and the interim dividend is 6 or 7 cents there should be another price surge I'm guessing to around $2.40. It remains to be seen what will happen to the price once the benefits of the acquisitions are fully realised in 2011 and growth slows down and becomes organic in 2012. It will depend on factors such as how much organic growth M2 can generate, whether it can find more acquisitions and how much confidence the company can generate about being able to continue to grow and deliver further increases in earnings and dividends.