In today’s daily we have covered stock research on Fleetwood (Overvalued). To view Dividend Calendar click here

S&P 500 was up by 8.04 points or 0.42% to 1900.53 on Friday.  The S&P 500 closed at a record high on Friday, buoyed by a rally in housing stocks after better-than-expected home sales and a jump inHewlett-Packard shares a day after the personal computer maker said it would cut more jobs. The S&P 500 ended above 1,900, just below a record intraday high of 1,902.17 set on May 13 and above its record closing high of 1,897.45 the same day.

The CBOE Volatility Index, or VIX fell 5.6 percent to end at 11.36, its lowest level since March 2013. Known as Wall Street's fear index, the VIX is extremely low by historical standards. Housing stocks rallied for a second day after data from the Commerce Department showed sales of new U.S. single-family homes rose more than expected in April and the supply of houses on the market hit a 3-1/2 year high. 


S&P 500 Daily Chart   (Source – Thomson Reuters)
 
S&P ASX 200was up by 12.9 points or 0.24% on Friday and closed at 5492.8 points. BHP and RIO believe that further coal mine closures are on the card due to a strong Australian Dollar and high operational costs. Gold output in Australia fell in the first quarter. Production was 68 metric tons in three months through March.

Last week Australian Dollar went down 1.3% against the US dollar due to a combination of global and domestic factors. China’s wobbly economy is making the A$ look considerable overvalued. Asaleo which makes toilet paper and tissues brands Sorbent and Pura, Libra feminine hygiene products and Handee paper towels is about to embark on an $800 million-plus public float.



S&P ASX 200 Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:-



 Stock of the Day – Fleetwood (FWD)
 
Fleetwood is engaged in the manufacture and sale of caravans, parts and accessories, and design, manufacture, sale and rental of manufactured accommodation. The Company's business segments include Recreational Vehicles and Manufactured Accommodation. Recreational Vehicles segment is engaged in the manufacture of caravans and vehicle parts and accessories. Manufactured Accommodation segment is engaged in the design, manufacture, sale and rental of manufactured accommodation. The Company operates in Australia and New Zealand. Its operations include caravan parks and the manufacture of park homes. The Company’s activities are focused around three sectors: Recreation, Retirement and Resources.

Fleetwood announced in March the resignation of its CEO Steve Price effective 30June 2014. We assume the board will review internal and external candidates. Potential internal candidates may include the CEO of Manufactured Accommodation, Ben Rosser or the CFO Brad Denison. However the Board may prefer an external candidate with a fresh perspective. The incoming CEO will have a challenging role ahead given the unfavorable supply/demand dynamics for manufactured accommodation and the group’s high gearing.


Source - Fleetwood

Fleetwood reported 1H14 net profit of $4.2m down 18.1% on the previous corresponding period of $5.1m. Trading condition remain weak with Searipple occupancy 60% in Q1, 50% in H1 and likely to be softer in H2 FY14. Searipple is continuing to hurt with an oversupplied Karratha market. This is offsetting the positive development of the Osprey village which is ready to move in. The Osprey Key Worker Village consists of 293 units.


FWD Daily Chart  (Source - Thomson Reuters)

The potential 1,000 person camp at Gladstone has been abandoned. This resulted in a $1.5m H1 pretax write off. In Queensland Fleetwood now has a 150 man, 2 year BOO contract with Aurizon. The recreational vehicles division has a strong order book and increased production by 56% during the half driven by new products. The division is steadily increasing production which should boost H2 earnings. We believe the stock is overvalued at its current price and would review the stock at a later date.
  

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