I wouldn't count on it any time soon. I've made several post about the shorting effect on TFC's under valued share in the past. The almost biennial shorting of this stock is a cash cow for our shorter. They won't stop anytime soon. The 100EMA over the last to years is falling yet the harvests and forward sales are great.
There are several reasons.
* The share registry is full of retail investors who essentially panic on any price manipulation. eg Oct 2015 to Feb 16 1.85 to 1.10. Mar to June this year 1.80 to 1.28. The registry needs more institutional investor who sell into the rises and buy the dips. The swings will happen but not so wildly.
* How do you get more institutional investors? Easiest way is for management to steadily grow dividends. Currently the dividend is stuck on 3c annually for a number of years. With this years good harvests and sales they should consider an interim dividend of 0.5c in March and target a 3.5c final dividend. Year by year of steady growth of dividends will prevent the plunges of the stock prices down to 1.10-1.30 levels seen in the past.
* A 5% discount on dividend reinvestment entry price will further encourage shareholders hold on to the stocks during the plunges. The company gets the use of this money for buybacks but also increases the number of shares on issue and the MCap.
* Management should be targeting to become an ASX200 stock which will further attract institutional shareholders.
When it becomes an ASX200 stock you should see the share price around the $3 mark but that's not going to happen anytime soon.
How do you trade this stock as an investor. Do what I do. Roughly every 6 months sell 60% of your holdings at a range of 1.68 - 1.78 wait six months and use the cash to buy in the 1.32 - 1.42 range. If you had done this for the last 2 years (5 swings) you could have double your shareholding with no extra cash.
TFC Price at posting:
$1.42 Sentiment: Buy Disclosure: Held
