Sectors: Technology
The payments business rallied 10% on Monday after peer Smartpay (SMP) released its FY results for the 12 months to March. We met with Smartpay’s management team yesterday to get a better understanding of what is going on in the industry.
The recent APX saga has been almost as dramatic as the stocks plunge from its 2020 high, a quick recap:
APX +29.22%: AI tech business announced a non-binding takeover offer had been put forward by Canada’s Telus International today, sending the stock soaring. The $1.7b bid at $9.50/sh is nearly a 50% premium to yesterday’s close, but it’s still not enough for Appen to give Telus a deeper looking into the books as they push for more out of the deal. Telus International was spun out of a Canadian telco Telus early last year and has already…
NZ based on-line accounting business XRO has seen its share price basically halve as valuation contraction hammered the growth stocks and in particular those like XRO who were trading on extremely large P/E’s. However we still like the core business its just a matter of what’s a fair price in todays rapidly evolving market, at this stage the $110-120 area feels about right.
CDA +14.52%; the communications and metal detection business saw shares jump to 3 months highs today after providing guidance for performance in the second half. The company expects net profit for the second half to be in line with the record $50m posted in the first half, in line with consensus expectations. Cash flow for the period has also been strong, banking $41m so far, bouncing back…
MM has written about XRO a few times of late which is no great surprise considering it’s a stock we hold and it’s been absolutely hammered over the last 6-months. We continue to believe that this quality online accounting business has been the victim of valuation contraction as opposed to anything more sinister. We were asked about the company’s medium / longer-term outlook in Saturday’s “Ask James” report…
This advertising technology stock is extremely volatile and certainly not for the faint-hearted. Having added TTD in the portfolio back in April of 2020 around $US35, we have seen our funds triple and now more than half in the recent tech sell-off. With a market capitalisation of $US26bn – about the same size as Goodman Group (GMG) in Australia, TTD is not a small business however on an estimated P/E of 61x it is in the growth camp.
At MM we’re often asked what’s our favourite beaten up tech name (s) and the answer is by definition dependent on the market/prices on the day however one that looks attractive today after its 34% correction is on-line employment business SEK which importantly has a strong degree of certainty around its earnings as opposed to the “smoke and mirrors” that carried much of tech stocks…
XRO -11.58%: Hit hard today following their FY22 results (March year-end) with a few swings and roundabouts in the update. The headline numbers were solid, and XRO is delivering on its long term aspirations, however, as we know in this market, growth is being shunned and any semblance of weakness in the composition of results is being dealt with harshly. The key takeaway’s as follows: Revenue of $1.1bn was a slight…
Firstly identifying a classic Australian tech stock as our 1st pick was a tough ask after so many good companies have been hammered over the last 6-months on valuation concerns. We finally opted for Xero (XRO), a stock we hold but as a stand alone right here right now scenario we believe XRO is the best pure local play, especially as its likely to gap lower this morning – we believe the next 20% for XRO from todays open will be on the upside.
