Viewpoint: Bullish
FY21 Result: strong result for SRG, marginally beating guidance for FY21. EBITDA came in at $47.1m, just edging out consensus expectations on the back of a strong mining services result. SRG now has net cash of over $12m and an enviable position of $1b of work in hand. This sets the up well for FY22 where guidance points to 15% EBITDA growth…
We took a healthy +46% profit from our XOM holding in April missing the top but most importantly also the sharp correction through July and August. We again like the risk / reward with this $US232bn goliath for subscribers who are looking for some overseas exposure into the energy sector.
The ASX listed FUEL ETF has also corrected over 20% from its mid-June high, in very similar fashion to STO. This is a currency hedged ETF which looks to follow global energy companies not including those on the ASX i.e. offering some diversification into overseas names.
MM increased our position in STO this week after the stock’s ~25% correction. This has been our preferred local company throughout 2021 and it maintains this mantle today, our patience towards entry has been rewarded with this one – we are bullish STO ~$6 liking the risk / reward after the stock’s pullback over the last 2-months.
The ASX200’s Energy Sector has corrected -22% from this year’s January high while crude oil didn’t turn lower until July when not surprisingly the local names accelerated lower. Crude oil reversed strongly to the upside overnight and we feel its 15% correction is complete with our current target somewhere in the $US75-80 area. The markets skepticism…
XRO has been MM’s proxy on the tech space for the last year hence todays quick update – we remain bullish targeting fresh all-time highs in excess of $160 however we may consider trimming our 5% holding into such a move after increasing our position size back in June.
IAG held up well yesterday in the face of sector weakness, the technical picture looks great to us for the insurer targeting a break of $6 after trading sideways for the last year. When combined with an earnings report void of any nasty surprises earlier in the month and forecasted 4.5% yield over the next year MM remains happy with our recent move into IAG.
Lithium came back into vogue with a bang yesterday as Pilbara (PLS) rallied +11.4% supported strongly by Orocobre (ORE) +5.2%. The technical picture for this volatile stock / sector is bullish at present with our initial target for PLS new highs above $2.50 although surprises are likely to be on the upside i.e. with the trend.
The ASX200 fought hard to bounce yesterday finally closing up +0.4% with over 60% of stocks closing in positive territory. The interest rate sensitive sectors largely outperformed with IT and Real Estate catching my eye but the more interesting action was on the stock level with 13 stocks rallying by over 4% while 10 names fell by the same degree.
Commodities finally followed the MM script last week although the plunge caught even us by surprise and we’ve been calling a drop – markets love to move in the direction / speed of most pain! Resources stocks follow their respective commodities, in both directions, and recent weeks has been no exception e.g. Iron Ore -35% / Fortescue Metals (FMG) -25.5%…
