Thoughts on TWE and GEM?
Just wondering what your thoughts are on these two businesses. Especially given their recent price rallies heading into reporting next month.
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Answer
Hi Nathan,
Treasury Wine Estates (TWE) -During their AGM in October they outlined EBIT rose 3% while net sales revenue decreased furthermore the full year dividend paid also increased 10.7% all showing tell signs of a strong business model. While key highlight was that they have expectations for solid growth and margin expansion for FY23. We think this is a great business as it has shown it can adapt to tougher trade tariffs and further resolution of such issues will only benefit the share price. Technically the stock has rallied past it key resistance level and any pull backs to the $13.70 area will be attractive entry points, with the next level of key resistance at $15.
G8 Education (GEM) – GEM is one of the turnaround stories in the markets which we are keeping a close eye on, they are expected to meet consensus for FY22 and while there are some hurdles to navigate we like the fact that is has a relatively low P/E of 13x for FY23 while paying a dividend yield of 4.9% fully franked, with another $8m of stock to buy-back. While the stock has been ranging between $1 and $1.30 we expect a test of the highs to be evident sooner than later, if this promotes a pull back it would be an ideal entry for a run up to $2.
