Sectors: Technology
In May, XRO posted a solid FY24 result, as they balance the challenges of growth and increasing earnings. They had previously flagged their focus on achieving what’s called the Rule of 40, which says the sum of annual revenue growth and the free cash flow margin should be above 40, and at this recent result they achieved it. Software-as-a-service business often use this as a guiding principle to get the balance right, and XRO is now hitting the mark.
We have been bullish but too conservative towards PME through 2024, but this medical software business is going from strength to strength; it’s the sector standout this year, advancing over 45% year-to-date. The stock is ridiculously expensive on today’s numbers, but its valuation will fall over the coming years if earnings growth continues as its impressive pace. From a risk/reward perspective, ideally, we like PME ~$135, less than 5% lower.
The most widely discussed and covered stock on the planet is Nvidia (NVDA US), which designs, manufactures and ultimately sells a lot of very sophisticated graphics processing units (GPUs), originally designed to simulate human imagination, enabling the virtual worlds of video games and films. They have since leveraged the same architecture to create platforms for data science, artificial intelligence, autonomous vehicles, robotics, 3D applications and other cutting-edge solutions. As the demand for these sorts of applications increased, their sales exploded, and so too did the share price.
Nvidia (NVDA US) dropped -6.7% on Monday night, adding to its 4% decline last week that snapped an eight-week winning streak. The pullback occurred after Nvidia briefly dethroned Microsoft as the most valuable company in the U.S. However, even after the recent selloff, shares are still up nearly 140% for the year. At this stage the ~16% pullback in Nvidia is “pretty healthy,” assuming you didn’t buy ~$US140!
Hi James and Team
Your thoughts please on DroneShield ($1.70) and Suncorp($16.80 ). Both have hit YTD highs today.
Would you be taking some profits on DRO or let it run for now? What are some of the Broker valuations on DRO?
Hi James & team.
Hi James and Team
A whopping 9% of the ASX200 is up over 30% so far in 2024, although a lot of better-known “high flyers” didn’t make the cut with such a high bar. Surprisingly, after moves on the sector level, there were still plenty of miners in the winner’s enclosure driven by stock specific influences – which is true across the list below. While the Macro is important, and we place a lot of emphasis on it, stock picking is where the rubber hits the road.
Every dog has its day is not always true in the stock market, but it has been the case with MP1 for investors fortunate enough to have timed their entry well – the stock was at $22 back in 2021. The network connectivity business has delivered in 2024 with an upgrade and excellent earnings report in January, which showed the impressive combination of an increasing number of new customers, strong revenue and lower costs.
