Sectors: Technology
This Chinese tech giant which owns the likes of WeChat has been hammered over 60% very much shadowing Alibaba, the company’s also the world largest video game publisher and China’s 3rd largest cloud infrastructure platform i.e. it’s operating in all the right areas but China’s been a worry. The company now has to deal with unpredictable fines and restrictions on M&A…
MM mentioned Alibaba early in the month hence it’s not one of our 4 picks today but it would be if we hadn’t discussed it previously.
After correcting 40% in both 2021 and 2022 I’m sure subscribers can understand why MM regards EV maker Tesla as a trading stock that has delivered in the past for more patient players. The last few weeks has seen TSLA rally strongly in a similar fashion to the ASX’s lithium names, the stock looks great under $US1,000 but we would be operating stops under $US880 due to its penchant for large swings.
Following its sobering 32% fall ALU like much of the IT sector has started to shrug off rising bond yields, a very encouraging short-term signal for the recently unloved growth sector. We are looking for an ongoing bounce which makes sense when we consider fund managers exposure to tech is at its lowest level in 16-years.
REA is a quality business that’s enjoyed strong pricing power over recent years but even after its 31% correction MM is nervous towards property volumes as mortgage rates rise, if people decide not to move REA makes less money. Conversely as the economy reopens post COVID more people will be looking to relocate for work as WFH becomes less prevalent hence it’s a tough balancing act to value REA through 2022.
On-line recruitment business SEK has corrected 20% from its 2021 high even though in February the company reported a 147% lift in earnings while its dividend bounced back to 3-year highs. As borders reopen, migrants return to our shores, and companies strive for staff we feel SEK is well positioned for the next phase of the economic playbook.
If it can go wrong for BABA it probably already has i.e. major Chinese Government intervention (Jack Ma got that wrong!), high valuation tech names falling out of favour as bond yields rise, the potential alienation of Chinese stocks if it helps Russia, to fresh COVID worries. However the stock is now trading on 10.7x earnings significantly below where it was in 2020, remember this business is growing albeit in tricky time for the companies…
A position we bought early on, and well, for the portfolio back in 2020 now feels frustrating given we have seen shares in the payments company have a crack at $4.40 on 3 separate occasions while it now languishes ~60% below its highs. Margins were in focus across the board in the latest reporting period, with any company hinting at a squeeze dealt a blow by the market & Tyro was no different. There are strong signs of growth though with…
The Chinese e-commerce operator reported fourth-quarter results overnight that were inline / slight beat to expectations in terms of both revenue and earnings while its annual active customer accounts were below consensus estimates. That saw a ~15% decline in the stock dragging down other U.S.-listed Chinese stocks.
Market heavyweight Apple has already bounced 10% from last weeks low and technically we can see fresh all-time highs in the coming months, it would need such a move for MM to consider trimming our holding but in today’s market we shouldn’t forget MM’s mantra for 2022/3 – “buy weakness and sell strength with the emphasis on the later”.