A slow start to a big week (KDR, APT, Z1P, WPL)
WHAT MATTERED TODAY
A fairly slow start to the week with the market opening reasonably well, selling off into lunchtime before clawing back up into the close – all up a choppy day with the banks underperforming the resources, energy stocks best on ground while CBA remained in the cross hairs of the banking royal commission, and was again the weakest link in the sector closing down -0.60% at $74.89.
The index finished higher overall by +10pts or +0.17% at 5959
Looking ahead for the week, most interest will be on the US Federal Reserve which is due to hike rates on Thursday – or so the market thinks. The real insight will come from the Fed members dot plot where they set out their expectations for future hikes. We should see a few members pencilling in 4 hikes rather than the 3 currently expected.
ASX 200 Chart
ASX 200 Chart
CATCHING OUR EYE
Kidman Resources (KDR) $2.24 / +5.16%;Came out this morning with a good announcement in terms of its Earl Grey Mineral Resource Estimate - essentially showing what we already knew – that it’s a huge resource, one of the world’s largest hard rock Lithium deposits + they dangled the carrot by saying that JV activity is progressing and they’ve had lots of off-take discussions but no deal just yet.
The stock was up on the news versus the sector which was down giving those subscribers who may have missed the boat initially the opportunity to sell around $2.25. We continue to like KDR from an operational perspective however given the relative performances from a sector perspective in recent months we now view ORE as a better risk adjusted bet, although we’re yet to pull the trigger and buy ORE just yet.
Kidman Resources Chart
Orocobre Chart
Woodside (WPL) $28.99 / +1.51%; A good day for WPL and other energy names thanks to a strong move in Crude on Friday night…WPL also announced some new incentive structures for its executives which I actually find interesting….and so does the bride so here’s the numbers AG….The CEO can make between 200% & 300% of annual salary through incentives. The key take way to me is a long lead time for incentive’s to accrue and these are tied directly to company performance which creates good alignment with shareholders…we like WPL at current levels.
Woodside Chart
Payment Platforms; We’ve written a few times about Zip (Z1P) + AfterPay (APT), both are big in the payments space and both stocks have done exceptionally well last year but have become less loved in more recent times + APT in particular is getting hit by shorts after the CEO left while there are some obvious issues from a regulatory standpoint that could raise their head this year.
We actually like the space, like these two players, and we tried to BUY Z1P a few months ago but didn’t get set, and we didn’t chase the stock. We covered in the AM report today saying that… We could technically buy Z1P around 90c with stops under 80c but we will not be partaking – simply the trading action on both of these names looks weak for whatever reason and we’re happy standing on the sidelines for now – APT looks particularly weak.
Zip Co (Z1P) Chart
Afterpay (APT) Chart
% Short Sold has increased substantially
OUR CALLS
No trades on the MM Portfolios today
Have a great night
James & the Market Matters Team
Disclosure
Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday, or after the session when positions are traded.
Disclaimer
All figures contained from sources believed to be accurate. Market Matters does not make any representation of warranty as to the accuracy of the figures and disclaims any liability resulting from any inaccuracy. Prices as at 19/03/2018. 5.11PM
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