Simple thesis of Turtle bought Alcom

I discovered this stock while I was researching dividend yield strategy. This was part of my preparation in case the market start to move sideways. The reason of sideways movement is to allow earnings to catch up with prices. If you look at the big cap stocks many of them already selling at fair price(neither too expensive nor too cheap).

Dividend stocks on the other hand had been ignored. BJ Toto for example is giving almost 10% yield despite of all the bad news of tax increase or being removed from FBM-KLCI 30. Digi, TM, etc are also providing attracting dividend yield in excess of 7%.

Back to Alcom, this company has almost $ 46 million cash plus. It has outstanding shares of 132 million. They have been paying dividend consistently between 10-15 sen per year. They have to fork out like $ 13 to 20 million. But I think $ 13 mln dividend a year is very sustainable. The operations churns out about $ 12-13 mln cash/year. At $ 0.91, this translate into almost 11% dividend yield. 10% price recovery in one year time will give a potential return of 20%.