Now there's another opportunity to profit from this share
Wescoal was one of the best performing shares in 2016, with a 161% run. It’s current 12-month rolling performance is 200%.
Many investors use all-time highs like this as a selling opportunity. Surely, great runs like this can’t continue can they?
Well, they might not continue for ever. But this run is far from over. In fact, I expect Wescoal’s share price could still double from this level!
Let me explain…
Eskom ‘forcing’ Wescoal to get a BEE shareholder will make the company a fortune!
Thanks to Eskom’s BEE coal procurement policy they’re now only buying from companies with more than 50% black ownership.
Like it or not, that’s the reality.
This forced Wescoal to rethink its business in 2016. Management realised it needed to get a black shareholder with more than 50% ownership if it wanted the good days to continue.
So the company did just that. It offered new shares to a black shareholder, and raised R178 million in cash. That was roughly equal to HALF of Wescoal’s entire market value at that stage.
Now selling a part of your business when you don’t need the money seems stupid. But Wescoal’s management made a big opportunity out of this…
You see, they realised there are many other small coal miners that will sit with the same problem, and if the company acquires them and puts its low-cost mining plan in place it can profit greatly from these companies.
And that’s exactly what the company is doing – as we speak!
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