US Edition Cookson
405¼p -30¼p
Questor says Hold
As Cookson's main line of business is making the ceramic moulds for steel manufacturing, it is perhaps understandable that the company’s shares have taken a battering.
Mining groups have been hammered on fears that the global slowdown will have a dramatic impact on Chinese demand for metals.
Understandable then, but rather unfair.
The company said yesterday that its performance so far this year had shown a marked improvement, with the integration of Foseco progressing well.
True, the electronics business was trading marginally below last year’s levels in the third quarter but precious metals continues to hold up well.
Cookson trades on an earnings multiple of just around six times forecasts for 2008.
Certainly, multiples in the sector have come down, but, even given the de-rating, and with the worst possible macro-economic environment anticipated, Cookson shares do not deserve to trade at such a sizeable discount.
Questor backed the company as it began to show promise following a painful turnround process and tipped the stock at far higher levels than those they stood at yesterday.
The world may have moved on since then, but we believe shareholders who have stuck it out should still hold on, not least for the well-covered 4.5pc dividend yield.