Viewpoint: Bullish
The high growth tech stocks have endured a tough 12-14 months as inflation and interest rates soared ever higher but calm now appears to have returned and amid signs of slowing inflation in the US we can see an ongoing bounce by the sector. The Feds set to raise its benchmark target rate to 4.5%-4.75%, a hike of only 0.25% as they at least dial back the size of the increase for the 2nd straight meeting lifting hopes of a soft economic landing i.e. the markets already positioned for rates to breach 5% this year.
CSR used to be referred to as ”sugars” on the old trading floor but this is now a building products business after selling its sugar and ethanol business in 2010. The stocks outperformed its peers over the last 12 months, this building materials company is most exposed to detached housing, and while it appears clear that higher interest rates and elevated…
ABC was hammered over -20% in October following a profit downgrade and the departure of its CEO. The company blamed wet weather and additional cost inflation (particularly energy & diesel) for the ~20% reduction in earnings guidance, with the 2H recovery they had previously flagged proving elusive. The key point was around prices, and their…
BLD is not a clear-cut picture because of its $2.65 capital return in March but in a similar fashion to JHX the stock has started to regain some investor interest after its significant decline over the last 18 months i.e. some long-term bargain hunters appear to be circling. Boral has been targeting strong price growth which they believe (combined with further cost control) will…
MM holds JHX in its Flagship Growth Portfolio and while it’s been a rocky road since our purchase in October we are showing a small paper profit at this point in time. The building materials business downgraded its FY23 guidance by around 7%, in October right after our purchase but following the initial dip the stock and sector appear to be slowly…
Unlike D.R. Horton Inc (DHI US) the broader US Homebuilders Sector has struggled since late 2021 illustrating how usually only the strong survive/perform during tough times. While the embattled sector looks cheap we believe it’s imperative to avoid a scatter-bomb approach to stock selection as we remain in a contraction cycle.
This week saw DHI beat downbeat analyst expectations which have seen the stock make fresh 12 months highs e.g. consolidated revenue increased 3% to $US7.3bn. If this American builder can continue to deliver “ok” results during these tough times we believe it’s laying excellent foundations when interest rates and the economy stabilise however we wouldn’t be chasing the stock to fresh highs when 27% of its gross sales orders were cancelled for the 1st quarter of 2023.
US stocks rallied 1.1% overnight as the GDP grew at a faster pace than forecast on the surface but there were signs of slowing demand as rate hikes start to bite. Overnight the S&P500 managed to post its highest level since early December dismissing a disappointing report card from IBM (IBM US) which saw the stock fall over 4%.
At MM we’ve evolved our view towards WOW from neutral-bearish, to neutral and now this morning we’re moving mildly bullish as the stock treads water ignoring most of the market’s recent gains i.e. it’s time for some catch-up. As supply chain and workforce conditions improve so should the outlook for Australian supermarkets with WOW arguably best placed to benefit. This is a definite candidate for MM when we decide to re-risk further this year.
This mining services stock has looked great over recent sessions with optimism around China’s reopening appearing to increase sentiment towards the company. Considering its link to the Australian Miners we like MND i.e. as their Capex increases after years of relatively low investment MND should become a major beneficiary.
