Should i buy carillion shares

It seems that in all my recent stock purchase posts , I have talked about Brexit and the opportunities it provided to buy shares at discounted prices.

I bought my shares at p a piece and at this price, the valuation placed on the company was so low and the pessimism surrounding the company was so high that the father of value investing, Benjamin Graham, would be licking his lips. Carillion is one of those companies you buy because it is so damn cheap!

Which ever way you look at it, long term investors will be very happy buying Carillion at such a low point.

So this begs the question, why has Carillion become so cheap? The reason hedge funds have shorted the stock is to mainly to do with the failed takeover of Balfour Beatty , the oil price drop as Carillion has a big operating base in the middle east, slowing growth in the core UK market and like every other company in the UK these days, a large pension deficit.

Carillion - Latest news and analysis - Telegraph

Another reason for the share price falling over the past year is due to a dividend cut potentially being on the cards. The current dividends are not fully covered by the free cash flow that the company is producing. So this begs the question, how is the company funding the dividend?

Carillon has been funding its dividend in recent years by disposing some of its assets. People are so pessimistic about the company and the stock price reflects this.

Carillion Share Price | CLLN Stock News | Interactive Investor

Essentially, the negativity surrounding the companies future is already baked into the stock. Since they could potentially be a dividend cut, the negative consequences of that are already priced into the stock.

Carillion PLC, CLLN:LSE forecasts - icamaveyi.web.fc2.com

But this is not necessarily a bad thing. Because the stock is trading at such a low multiple, it only takes a little bit of good news to send the shares rocketing. Just look at what happened to BHP BIlliton and Anglo American earlier this year.

When they announced dividend cuts, instead of the share price falling, they intact rose dramatically. This is what I mean when I say that you need to buy stocks which have odds heavily staked in your favour.

With Carillion, it will only take a little bit of good news for this to turn out to be a fantastic investment over the long run. The best investors have a contrarian spirit.

They draw their own conclusions. Contrarians understand that fear and greed cause people to push prices too high or too low.

So the key is to look at market fluctuations as your friend rather than your enemy. That way, you can profit from folly rather than participate in it. I bought 64 shares in Carillion for my high yield account.

With the current dividend of Your Personal Finance Website Home My Journey Stock List Earn Money Save Money Invest Money Investing Theory Practical Advice on Investing Tax Advice Contact us About Contact us Archive. Carillion CLLN Share Purchase — Undervalued and Unloved! This entry was posted in My Journey and tagged dividends on August 8, by MG. If Ads are in the way, simply refresh article.