Viewpoint: Bullish
IGO is really in the right place at the right time owning quality assets with exposure to nickel as well as copper, cobalt and lithium, a great smorgasbord in today’s environment. We like the company and its current direction and the market clearly agrees as the stock roars ahead, one for the hitlist at present as MM looks for solid risk / reward opportunity.
WSA has struggled in 2021 but its quarterly released this month was good and the best one of FY21 which implies strong operational momentum, the $770m company is cheap in our opinion with solid risk / reward with stops below $2.20.
Following our comments earlier around “what ifs” following a potential breakout in the ASX200 the online US goliath retailer Amazon.com has indeed enjoyed such a move albeit on fairly lackluster momentum. Technically we believe AMZN is bullish unless we see a break back below $US3450 i.e. 5.2% stops are required.
Overnight saw another solid session for US stocks with the tech stocks leading the indices rallying around +0.7% as bonds climbed, sending yields lower. No change with our core stance of being keen buyers of weakness with our optimum target pullback area slowly edging higher as stocks firm.
TWE has had the kitchen sink thrown at by China over recent times due to painful tariffs e.g. Australia’s sales of wine to China over the first 6-months of 2021 fell to just $13m compared to $490 million in 2020 illustrating that picking a fight with China often leads to painful repercussions- thanks Scott Morrison on this one.
This week Hamish Douglass defended his average returns over the last year due to his conservative stance towards stocks, he drew the markets attention to the importance of a rolling 3-year return as opposed to potential 1-year outliers – we agree. Generally he believes the risks for equities are rising due to the likes of mutating strains of COVID and of course the prospect of rising interest rates / inflation.
This weeks summed up perfectly both June & July for the ASX200, we kicked-off on Monday with one of the worst days in months leading to a test of 7200 on Tuesday morning, but by the close on Thursday these losses were well and truly in the rear view mirror as local stocks closed within only 0.3% of their all-time high, buy the dips is clearly still the winning formula.
NCM +0.42%: Some good and some bad news out of their quarterly up-date today. Their Cadia mine showed what it can achieve, hitting record production with negative costs thanks to copper credits. Gold production at the group level was in line with guidance with a softer result at Lihir taking some of the shine off.
LYC +9.01%:announced a nice $14.8m cheque from the Australian Government to go towards their Rare Earth carbonate refining facility in Kalgoorlie. It’s a decent cheque, expected to fund around half of the cost to implement a refining process that will reduce the impact on the environment.
STO +2.59%: Strong day for Santos, helped by strength in energy markets overnight but also a decent quarterly result. Production was lower in the 2nd quarter following the sale of assets which was offset in part by stronger production in WA & Queensland.
