Viewpoint: Bullish
A2M +12.08%: Rallied strongly today on reports in The Australian newspaper that global food giant Nestle was interested in taking them over. We doubt a bid would be launched pre-FY21 results which are scheduled for the 26th August however where there is smoke, there is often fire. The news snippet was enough to get the shorts covering today, currently…
PPS -3.97%: FY21 result out this morning was a miss to expectations and the stock has tumbled as a result. Revenue came in at $65.6m was a 7% miss, and EBITDA at $14.2m was a 13% miss to consensus.
Bluescope (BSL) FY21 Results: A very strong update from BSL this morning with a ‘beat’ overall. Revenue of $12.87b (small beat), EBIT of $1.72bn (small beat) & an underlying NPAT of $1.19bn was a strong beat v the $1.17bn expected. A FY21 dividend of 25cps was below 32cps expected however they’ve topped up with a 19cps special dividend + they announced a…
The US Banking Sector has largely moved in tandem with our own although for a nice change the Australian sector has outperformed. We believe there are 2 things to bear in mind at this stage of the influential sectors advance from its panic COVID low:
Precious metals have a strong inverse correlation to bond yields & the $US hence last week’s reversal helped gold rally over 5% from its August low, a good recovery but it’s still well below the ~$US1900 level tested in June. We see further upside in the sector but remain mindful of our medium-term bullish outlook for bond yields which by definition will create a major headwind for gold, silver et al.
Commodities appear to have been 2nd guessing the $US / bond yields with mixed success, obviously they have their own fundamental drivers also at work but their correlation to the macro drivers remains strong. MM is looking to increase our exposure to the Resources Sector into weakness e.g. we took a small position in energy stock Santos (STO) last month and are planning to add ~$6.20, or 3% lower.
The ASX200 continues to rise on a wave of strong corporate earnings, record low interest rates plus of course an almost tsunami of cash looking for some semblance of a decent return in todays challenging world. There are clear signs that investors are migrating up the risk curve looking to add value / alpha but it definitely doesn’t feel like panic buying leading to a classic…
MM bought IAG yesterday for the MM Growth Portfolio while already owning it in our Income Portfolio, we are targeting an initial test of $6.40 resistance as we expect the sector to outperform the banks moving into 2022. The company had pre-released their earning so no surprises this week but things are improving on the operational front after a tough few years.
Health insurer NIB has been rallying strongly since the pandemic as they benefit from lower outlays on health expenses, i.e. less elective surgery, less injuries etc which helps the insurers but not the private hospital operators. We feel it still goes higher although the risk / reward is not exciting as we approach $8 resistance – this is now one for the Hitlist when…
SUN delivered a solid result on Monday, beating expectations by 6% leading to a strong rally in the stock. The board announced a healthy 66c full year dividend and $250m stock buyback but as we mentioned earlier in the week, MM is more comfortable either buying a bank or insurer as opposed to a mixture of both – a move we feel the board should consider!
