At the start of both the calendar and financial years we usually take a quick a look at stocks that have significantly both under and outperformed, they’re often very different to consensus at the beginning of the period. The exercise is virtually always interesting and can also throw up an opportunity or two especially today as we are in a strong bull market where investors are striving to find value after stocks like CBA have rallied well over 20% in just a few months, 3 moves which caught my eye:
- Who would have picked corporate Travel (CTD) to rally +111% while were back in lockdown and international travel still appears off the menu until 2023.
- MM picked the banks to rally over the last year but Virgin Money (VUK) more than doubled the returns of any other sector name, the highest quality doesn’t always deliver the best returns.
- NZ based a2 Milk (A2M) was a favourite of many pundits over recent years but over the last 12-months its plunged -68% as growth became contraction and the stocks valuation was simply wrong.
The second point demonstrates how investing for optimum returns has a number of facets from company quality to a stocks valuation at any moment in time, the later can often become enticing when stocks are unceremoniously thrown into the naughty bin e.g. one of MM’s best performers of recent times is NSW coal business Whitehaven Coal (WHC) which plunged under $1 even as the coal price kept rallying with the desertion of many fund mangers from the fossil fuels space creating the catalyst for the deep valuation opportunity.
MM remains long and bullish WHC
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