Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi MM, I know APA recently notified the market of a pipeline impairment charge but their price has languished significantly recently. Are there concerns about their recent Alinta purchases that are driving the price lower? Is it standing out on price as a strong dividend stock? Welcome your views, Peter
Hi Peter,
Great timing with your question as we identified APA as one of our preferred defensive plays into recent weakness. We like APA below $8, especially from a yield perspective but we are conscious that it could test/break its 2024 low, now only 2% lower.
As you pointed out the stock has been weighed down by several headwinds over recent years, but if we are correct and the RBA eventually follows global central banks and starts to cut interest rates moving forward, it will finally enjoy a macro tailwind that should support a market turnaround. The impairment announced this week is non-cash, and we don’t think is the issue.
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