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Opened an OSH position on the Australian stock market yesterday (18 April 2007) - totally forgot about it. I opened 5,500 OSH CFD @ 3.66 and below is the analysis I quickly did when my broker called me.

Looking at the charts, there is very strong support lines at $3.40. OSH is currently in an up trend for the past 6 months following a very large correction. There is potential for OSH to return back to its previous high of $4.50. Technically OSH is sound in my books.

Following the fundamental rules that I learnt from Daniel Kertcher I looked at some of the basic profitability indicators:

• Earning Per Share was a little low at 5-6% (we want >=10%). 
• Earning Growth rate was also a little low @ 1-2% (we want >=5%).
• Not sure what the Revenue growth is,  but I remember the broker saying a +ve number (we want >=10%).
• The profit margin is insanely high at around 50%, (we want>=30%).
• currently ratio is 2-3:1 which is good (>=2:1 is good).
• Return on Equity is 16% (we want >=15%).
• Market capitalisation, ~4billion, is not the biggest, but its one of the biggest of the 2nd tier.
• There’s obviously a continuing high demand for oil and gas (energy) - so we don’t expect it to go bust over night

 What does all this mean?
earning per share - making sure the company is earning money!
earning growth rate - making sure the company will be making money in the FUTURE
revenue growth rate - making sure they are selling more stuff, because companies can reduce cost to increase profit (cost cutting) we don’t want cost cutting companies
profit margin - making sure they can compete with others by cutting their margin (if they need to)
current ratio - making sure they have enough cash to pay wages, short term borrowings, operating cost etc.
return on equity - making sure money that is reinvested is earning more than what we can earn by clicking a button
market capitalisation - making sure its a big player

All in all, OSH is technically strong, could have been better on fundamentals, but seems to be relatively profitable. There currently good news in the market and is a takeover target, so hopefully this will push the price up. I don’t expect it to go back up to $4.50, but I expect it to get to around $4. Its about a 10% growth, which will 100% my portfolio with CFD.

Thats all folks.