Viewpoint: Bullish
WPL delivered its March quarterly update yesterday which received a mixed reception on a day when the whole Energy Sector came under intense pressure. Revenue and production slipped slightly but higher oil prices led to sales of $3.3 billion, more than double the same period last year leading to some expected positive comments from the CEO. Stock/sector weakness allowed us…
Many European bourses and especially the FTSE continues to tread a very similar path to the ASX and while this morning things again feel pretty uncomfortable we shouldn’t lose sight of indices remaining very close to multi-year highs i.e. it’s the action under the hood that’s most likely to dominate over the coming weeks as opposed to the underlying index.
The ASX200 tested its all-time high this time last week but this morning we look set to open down ~2% taking the index back into the middle of its multi-week trading range. With the Resources Sector looking vulnerable to a steep correction it’s hard to imagine the ASX challenging its milestone level as we enter the infamous May i.e. “sell in May and go away”. Overall MM still believes the major action will be on the sector level with some reversion to 2022’s moves looking likely:
Encouragingly for the local index the Brits have enjoyed a strong stock market, even with war raging in Eastern Europe. Very similarly to the ASX we are looking for “pop” to fresh multi-year highs in the coming weeks / months – its hard to imagine more bad news being thrown at the index and just imagine the short term outcome if we saw a resolution to the Russia – Ukraine awful conflict.
US stocks reversed early gains overnight with all 11 sectors closing lower while Energy names underperformed the tech Sector for a change. As we mentioned earlier and in previous missives US investors are extremely bearish as they key their view from bond yields and the influential tech stocks. We are “happyish” to maintain a contrarian stance anticipating a squeeze higher believing the market…
While we were considering banks we felt MQG deserved another brief mention as it also rallies towards fresh all-time highs, now only 3% away – the “Millionaires Factory” is due to pay a $3.50 partly franked dividend in May. This is another Australian bank which MM can see rally ~10% from current levels, well above its previous all-time high suggesting the sector has more fuel in the tank.
We have been discussing a potential switch from the ex-dividend CBA into cum-dividend ANZ over recent weeks and the move remains on the radar:
QAN has been following the tourism sector higher and from all the accounts what I hear from colleagues who have / are travelling within Australia, or overseas, it makes sense with hotels, flights etc booked out to capacity. A lucky MM colleague returned from Hamilton Island yesterday relaying how even the buggies were fully booked out until June, many weeks after the school holidays finish…
SGP +2.44%: Released a Q3 trading update this morning with operations inline with expectations and they reconfirmed full-year guidance for both funds from operations (FFO) of 35.1-35.6c and distribution per share (DPS) of 75-85% of FFO. If we price SGP on a cap rate of 5.5% and a P/E multiple of 11.5x, it should be worth ~$5.10.
Supply chain issues & chip shortages have hurt RMD in the short term, however, these influences will pass, and the developer of sleep disorder treatments will fill the almost ‘unlimited’ demand for their products as described by their CEO Mick Farrell on a recent earnings call. With a 10-15% earnings growth rate likely over the next 3 years, the 25% pullback in the stock from 2021 highs…
