Shares in metals and electronics recycler Sims Metal Management Ltd [ASX:SGM] have been on a tear the past few days. The stock gained nearly 3% today, outpacing a neutral Australian stock market, after putting on nearly 6% yesterday. These gains have pushed Sims shares to a two-year high.
Yesterday morning, Sims announced a five year strategic plan to boost earnings by up to 350%. The company expects to achieve this through further cost cutting and by exiting loss-making operations. Sims does not expect to have to take any significant restructuring charges beyond what the company has already announced.
Investors are giving a big tick to the company’s ideas and are bidding up the shares at a rapid rate.
Sims has built scale through a long history of acquisitions, but the jury has been out on whether the company has extracted full value from these deals. This week’s news gives investors a roadmap to capturing that value and more. The ride for investors in Sims Metal Management should be interesting as its new strategic plan unfolds.
Cheers, Tim Dohrmann+
Small-Cap Analyst, Australian Small-Cap Investigator
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