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    Turnaround Opportunities

    Hi MM, There have been some pretty average/awful results reported in the current reporting cycle. Though not a complete list, examples are Viva, Adairs, Johns Lyng, Domino's amongst others- all of which have been hit hard with share price drops. My question is are there any good potential turnaround opportunities amongst them i.e. those that may have current issues but potentially only short term issues and bright futures? Many are now cheap compared to historical pricing but I'm not wanting to get dragged down the toilet with them if they continue to implode. Cheers, Peter

    Answer

    Hi Peter,

    Very eloquently put! In today’s market which has been unforgiving toward markets that disappoint a degree of trepidation is certainly required. In general, we prefer stocks that have fallen with the general market pullback as opposed to ones that have plunged due their own issues.  Below are some stocks to consider:

    Top 3 stocks that have underperformed during current market unwind: Pro Medicus (PME), Goodman Group (GMG) and CAR Group (CAR). Roughie that appears oversold with poor optics: Wisetech (WTC).

    Of the ones you covered, we think Viva (VEA) has longer term structural issues, Adairs (ADH) may be a short-term blip, Johns Lyng (JLG) we think will take a while for it to improve given scepticism around their 2H guidance, and Domino’s (DMP), we doubt shutting underperforming stores will be enough.

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    Pro Medicus Ltd (PME)
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