Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
G'day Team Incitec Pivot Ltd has dropped below MM's interest level around $3.50. Request your thoughts on IPL around this $3.44 level or scale in to see if it approaches previous low's. My interest is the div return and possibility of the split that may prove beneficial given the drive for more resources and the need for explosives.
Hi Michael,
The recent -19% pullback by Incitec Pivot (IPL) has clearly returned some value to this fertilizers & explosives business – its now trading an an Est PE of 7.3x earnings for 2023 while its forecast to yield ~6.4% over the next 12 months.
In January alone the stock fell over -8% while the market surged higher, not good for a stock that announced a record net profit and $400mn buyback in November, the market clearly expected more. We like IPL into further weakness, for the reasons you mentioned, but a test of $3 wouldn’t surprise over the coming months. Scaling would be the way to approach this investment.
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