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APA , PLS , RFF

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Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.

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    APA , PLS , RFF

    Hi , I have looked at APA it is below $8.00 seems to be in the buy zone yet it,s price to earning is still so high is there a reason for this and how do you rate this company , Also I am looking back at PLS seems to have formed abase around the 3.00 is it worth getting back into ? RFF I own but am under weight do you see any growth from this company ......Thanks I enjoy the Q and A each week it is good to see what others are looking at .....Regards Glenn G

    Answer

    Hi Glenn,

    Three stocks in clear downtrends hence caution is warranted as the weak have generally got weaker through 2024:

    • APA Group (APA) $7.90 – we spoke about APA on Friday morning, we like the stock as defensive play supported by a strong and sustainable yield but a break of this years $7.78 wouldn’t surprise, especially as RBA rate hike fears remain in play. We price a stock like APA on yield rather than PE. The PE is not as relevant for a stock like APA. On a spread over the 10-year bond yield, a margin of over 3% is very attractive from a historical standpoint.
    • Rural Funds Group (RFF) $2.10 – this Agricultural property trust pays a yield close to 6% but again we wouldn’t be surprised to see the stock trade towards its recent lows, over 10% lower.
    • Pilbara (PLS) $3.03 – this lithium producer made fresh multi-year lows this week on fears that Donald Trump will win the US Presidential Election in November and he’s likely to wind back some of Joe Bidens EV friendly initiatives. At this stage it feels like a “punt” to call a low in PLS or the lithium sector.
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    Rural Funds Group (RFF)
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