Viewpoint: Bullish
US stocks surrendered a small portion of their recent recovery overnight as war in Eastern Europe showed no signs of improving – Apple ended its longest rally since 2003 illustrating how a rest was more than overdue for stocks. We currently have a balance between investors looking to buy the dip as they sit on decent cash levels while a worsening economic backdrop due to the war is concerning many, especially in the bigger picture.
We bought GMG a touch early in its 22% correction from late December highs, the stocks proved far more correlated to tech / growth than we expected. Our position is now close to breakeven as the $25 area feels the next likely objective for this quality operator. We may consider trimming this holding around such levels due its current characteristic but we are unlikely to abandon ship altogether.
Vicki Brady has taken over the reins at TLS just as the business finally enjoys an optimistic earnings outlook, it’s certainly taken a few years! Obviously there are a number of moving parts within a business of TLS’s size but we feel it could be one beneficiary if Scott Morrison fails to retain power in May with a potentially improved NBN position on the table – we like TLS under $4 and it certainly fits our desired defensive stance towards equities through 2022.
Motor vehicle accessory company ARB caught our eye yesterday as it opened firm and continued to rally throughout the day to finally close up +3.4%. The company delivered strong profit & sales growth in February and we feel the markets just starting to realise that after a 34% correction the stocks good value – for the half year revenue grew 26.5% to $359mn while its profit before tax is up 27.6% to $92mn.
Wednesday saw the ASX200 continue its march towards new all-time highs finally closing up another 50-points, the index closed within 1.6% of its previous milestone set back in August of 2021. Gains were reasonably broad-based although we still saw over 30% of the index close in the red, the resources again weighed on the index while the growth related stocks were the standout winners e.g. Xero (XRO) +5.3%, Megaport (MP1) +7%…
Shares in the shipbuilder fell during the week after it was announced it had been overlooked for a key Philippines Navy contract despite having a MoU in place on the deal. There are a number of other contract negotiations ongoing which we’re hopeful will end more favourably as Austal looks to replenish its order book. Yesterday, though, Twiggy Forest’s investment vehicle Tattarang announced it had acquired an 8%…
The ASX200 rallied another +0.7% on Tuesday taking the local index to within 2.3% of its 2021 all-time high – our call for a test of 7700-7800 through March & April is starting to feel almost conservative. Gains were broad-based yesterday with over 75% of stocks rallying, only the previously “hot” energy and resources stocks slipped lower while growth stocks regained their mojo with a small degree of gusto as bond yields took a rest, although…
After 2019’s result which surprised most pundits the likes of CBA, which delivers strong fully franked yield to Australian investors, quickly popped 7% before treading water for months i.e. it enjoyed a sustainable relief rally. However this year we aren’t hearing (yet) of any new policies that are likely to have such an obvious dramatic impact on equities hence we need to consider less obvious potential impacts on local stocks.
US stocks again pushed higher overnight with tech stocks posting fresh 6-week highs, the “easy” money may already be behind us but MM still feels the path of least resistance is on the upside hence we’re maintaining our bullish skew for now although as we saw last night not all sectors will rise as one in today’s aggressive rotational market.
The rally in global bond yields including our own has accelerated and the 3% we thought would cap the local 10-years in 2022 looks likely to be eclipsed in the coming weeks. Even though it’s starting to feel like panic the current momentum could easily take the local 10-years towards 3.5-4% before we see a meaningful correction – how far they surge is hard to gauge but this is not a…
