Aveo group (ASX:AOG) is a stock that i currently own. I bought it about 1 month ago (for $2.18) and since then the market value portion that i own has declined about 10%. This hasn't phased me one bit and I'm actually excited as i will be purchasing more soon. The company has recently turned to profit, with strong growth in its sales/cash flows. The major problem i have with his company is it's low ROE.
Despite this, the company is going through a rationalisation of it's assets as it moves to a pure-play retirement. Due to the aging population (this may seem like a 'forecast' but i don't think it is, as the ABS has reports showing how fast the population in Australia is aging, so i'd say that it's fact as opposed to 'wishful thinking') and i think it's positioned very well to cater for this and it should serve the group fantastically. However, this wasn't the main reason i bought this stock. The stock is actually trading at a significant discount to book value (with net tangible assets at $2.78 per share), and in this current climate where i think the market is getting overvalued whereby valuations are jumping ahead of earnings, it's getting tough to find bargains.
I have high hopes for the stock in the long-term and the price decline of 10% hasn't moved me, and in fact, i welcome more decline so i can purchase more of this business at even a greater discount.
No comments:
Post a Comment