Surge in soft commodities leaves company well placed

By Graeme Dickson
Updated:

 

Keep an eye on New British Palm Oil (NBPO) over the next few weeks as it benefits from the surging price of soft commodities:

Palm Oil can be used in a multitude of different ways including stock feed, soap production, margarines, biscuits, ice cream and explosives.

The company, which operates in Papua New Guinea, said its average selling price during the first six months of the year was $792 (£512) a metric ton, compared with $730 (£477) a year earlier.

However, prices recently spiked to $900 (£588) a ton due to concerns about food shortages caused by poor wheat harvests in Russia and Ukraine.

There have also been concerns about supply shortages caused by production problems in Indonesia, a major producer of palm oil.

New britain Palm oil LTD graph
The shares are tightly guarded with 80 per cent in institutional and directors hands. This leaves just 20 per cent of the £829 million company available for the public to trade with. However, this does decrease its chances of becoming a bid target, for example, one investor has an 51 per cent share.

It trades on a 2012 price to earnings ratio of 12.7 and a very low net gearing of 9.2 per cent and a dividend yield of 1.5 per cent. Look for 620p to be broken, its all-time high, followed by further gains. A pull-back to 545p, its 50 day exponential moving average will be a decent buying opportunity.

Update

Communisis was tipped last week at 23.625p, the stock closed yesterday at 24.75p. The institutional investor road-show should be in full swing this week so expect further upsides for the next couple of weeks.

Tipped at 24.25p two weeks ago, IQE closed yesterday at 32p after excellent interim results. Retain your position for further potential upside.

Tissue Regenix was suggested as a buy three weeks ago at 16p, the stock is unchanged.

Pursuit Dynamics was recommended as a buy three weeks ago at 223p: the stock closed yesterday at 289.25p a 29.7 per cent gain – look for the next level of resistance at 320p.

United Utilities was last suggested 4 August at 593p: the stock closed yesterday at 594.5p. It is worth holding for the six per cent dividend yield alone. Some excitement is expected regarding M&A activity within the sector, after a number of approaches had been initiated, such as the International Power/GDF Suez earlier in the year.

Bodycote – Buy status suggested on 28 July at 236.4p: the stock closed yesterday at 238.1p and with M&A rife within the sector, keep holding for now.

The material for this report comes from Alpha Terminal. The writer does not hold any shares or derivatives in the above mentioned companies.

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