Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Dear James and Team, What are your thoughts on CHC, CCP and GMG? To my untrained eye they all look like good shares with solid history and forecast of steady growth. Yet they are down 20%, 11% and 15% respectively for the CYTD. Also well below analysts valuation. What am I missing? Keep up the great work.
Hi Charles,
We believe they are all solid companies but as the investment landscape changes for the first time in more than a decade there’s been plenty of stock / sector rotation unfolding under the hood of the ASX as fund managers realign their portfolios for a higher interest rate environment:
Charter Hall Group (CHC) – has dropped around 30% over the last few months as its been tagged as a property company that may have limited growth as its negatively impacted by rising rates with the top line unable to mitigate a decline in margins due to rising borrowing costs.
Credit Corp (CCP) – still looks healthy around $30 and we can see 15-20% upside through 2022, we feel the current 20.8x valuation and forecast 3.5% grossed up yield remains attractive.
Goodman Group (GMG) – we are long this quality integrated industrial group which still isn’t cheap trading on an Est P/E for 2022 of 28.7x and as most subscribers know as bond yields rise high valuation / growth names get rerated, we believe its gone far enough and the stocks recent bounce suggests we are correct -fingers crossed, we are long!
NB We still prefer GMG over CHC.
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