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Compass Minerals International Inc. Message Board

  • chickenguy_nc chickenguy_nc Feb 13, 2006 10:51 AM Flag

    Response strange - and worrisome

    CMP announces an 11% dividend increase, trade volume is up - maybe 3X average by day's end -and price is down a penny. Yield at current price over 5.5%, and price is touching 2-year bottom. Institutional selling? If it breaks through $22, it won't stop until below $20. Only thing I can think of to cause this sort of response is hints of a really weak financial report coming up.

    Does anybody else think that shareholders would be better served by CMP using income to pay down debt, rather than increasing dividend? Cound debt be what is worrying large shareholders?

    I don't own it, don't short it - just been following it for some time, trying to decide when/if to buy it.

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    • yOu should have bought it between 2/8 and 2/13 if you have been paying attention. Rapid unquestioned price-drop into low 22 range, Morningstar praise and a fat dividend for a business that has a high barrier to entry, is best-of-breed and sells a product necessary for survival; even salt will sell in the biggest reccessions!

      With the Dividend increase to $1.32/share you may never see the $22-23 range again. I'd say wait for a price drop into the $23-23.50 range to buy but hey, I'm not Cramer!

      • 1 Reply to tropicalboy23
      • yep, should have, would have, could have - clearly missed an opportunity. What I still can't get resolve with CMP is whether the amount of debt they carry is a major concern. I can't even figure out what a company with such a simple business model would go into debt FOR. Does anybody know the history of this debt? What did they use the money for? I just have no experience with a financial picture that looks like this one - so still on the sidelines, sadder but no wiser. Congratulation to longs.

    • Well the finacials can't be that weak, afterall they did raise the dividend. The debt restructuring is also to help EPS. I think it is just the mild winter syndrome. Win some lose some, but I like my chances with this one. EPS potentail to improve off debt restructure and now dividend has been hiked.

    • <<Yield at current price over 5.5%, and price is touching 2-year bottom. Institutional selling?>>

      A2/A 10 yr bonds are around 5.5%, and presumably a "safer" bet than CMP. I think yield is what drives pricing here, and rising interest rates are likely to put price pressure on all the yield stocks. I'd still rather be in equities than debt-10 years from now the principal on debt will have lost 20% of its real value to inflation, where equity pricing ought to at least keep pace.

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