Viewpoint: Bullish
Melbourne bases LOV is a $1.2bn fashion jewellery business which has experienced a volatile road over the last 12-months including a sharp dip earlier in the month after they temporarily closed more than 40 stores in the UK after a national lockdown was ordered by Boris Johnson. The companies Australian operation is almost 4x larger making this event painful but not catastrophic, fortunately it’s only early days for their foray into Europe.
We envisage exciting medium-term prospects for LOV as the vaccine fights COVID in Europe and management can start building on its purchase of Beeline, potentially huge growth considering they already operate well over 100 fashion jewellery stores in 7 countries across Europe.
MACA Limited offers contract mining, civil earthworks, and material haulage solutions. The Company
specializes in providing mining services to predominantly mid-size mining projects for open pit
mining including loading and hauling, drilling and blasting, crushing and screening, and civil works.
Cedar Woods Properties Limited is a real estate development company. The Company develops, constructs, and manages residential and commercial properties. Cedar Woods Properties serves customers in Australia.
Estia Health Limited provides aged care services. The Company operates a network of retirement homes, providing housing, nursing, food preparation, community building, and related services. Estia Health serves residents throughout Victoria, Australia.
Fertility company VRT have a market cap of $434m and has rallied strongly from the COVID sell off aided by its constant 2.2% fully franked yield which was significantly higher when the stock was trading around $3. We considered this business a number of times for our Income Portfolio last year and in hindsight it would have been a solid addition but after its recent 15% pullback we see some value returning to the stock – we are bullish initially looking for ~15% upside with stops below $4.70, only ok risk / reward but the upside momentum and yield tips the scales for us.
Back in March like many stocks VRT was valued is if things would never recover, today the world is watching the early stages of a vaccine rollout and a return to elective surgery including IVF is inevitable plus VRT has the potential for international growth making is current valuation still feel conservative.
Virtus Health (VRT) provides health care services. The Company offers clinical, scientific, diagnostic services, and day surgery for reproductive and fertility health care. Virtus Health serves patients and operates reproductive health and fertility clinics throughout eastern Australia.
Major gold producer NCM has been a disappointment since we went long in August last year, the gold price is only 2% lower since our purchase yet our holding is ~12% underwater. We remain bullish gold targeting fresh multi-year highs and the current plan is when / if this advance ensues MM will be selling our precious metals exposure across all of our portfolios including NCM in our Growth Portfolio.
Megaport Ltd (MP1) finally rallied yesterday following a positive report from Goldman Sachs with a price target of $15. Following the company’s 2nd quarter report the stocks had a tough few sessions following weak customer growth but GS believes investors should be focusing more on the increasing number of services and average revenue per customer both of which are increasing. MP1 has a strong balance sheet and is well positioned to grow revenue in the years ahead making this cloud business “feel” ok at current levels, but MM will still reconsider our holding ~20% higher.
