Viewpoint: Bullish
Building products business CSR suffered through May after being downgraded by a number of brokers following its full-year result coupled with a fairly bleak outlook for construction over the coming years – it’s been hard to imagine CSR enjoying a meaningful recovery in the current economic environment. However the company has just announced a $100mn buyback at the end of June again illustrating a strong company balance sheet.
ALL delivered a strong 1st half result in May which included strong revenue, earnings growth and a $500mn buyback i.e. what wasn’t to like! The business is well positioned as the world attempts to move on from Covid aided by a strong business model and balance sheet demonstrated by the buyback although we should mention that some funds will be precluded from buying…
Qantas endured an extremely tough June not helped by surging fuel costs posing the obvious question – will the market be able to handle rising air fares if tough economic times are coming? The company is also facing rising wages, industrial action and inflationary costs plus a shortage of staff before we even discuss the ongoing risks of Covid which continues to linger beneath the surface.
The ASX200 rallied +0.8% yesterday on reasonably broad based buying that saw over 60% of the main index rally while importantly there was an absence of any meaningful aggressive selling across any of the 11 sectors. Its early days but stocks are positive for the month following the carnage experienced by equities through June, the market feels well supported at the moment which coincides with the…
PNI +7.63%: a very strong day for the investment manager, announcing they expect $10m in performance fees to come their way from the 2nd half. Performance fees for FY22 across their suite of affiliate funds is expected to hit $57m for the previous financial year, a very strong result given the weakness across most asset classes. The market had all but written off the chance of any performance…
Electronic design automation software (EDA) business ALU has managed to bounce 18% from its panic June low but like other quality tech stocks it remains significantly below its late 2021 high. We like this quality business which already pays a ~1.5% fully franked yield but it’s priced for growth trading on an Est P/E valuation of 53.7x for 2022 making it likely that sellers will re-emerge in the low to mid $30 region.
MM hasn’t significantly altered our stance towards XRO, we like this online accounting business but we remain mindful of further value compression if / when bond yields again start to rally in the months ahead. It all comes down to valuation and its expensive on many metrics as they continue to invest heavily for future growth.
MM likes this investor platform but as we’ve all learnt through 2022 we must continue to ask what’s the fair price for growth – HUB remains a great business growing FUA faster than the competition while growing margins. The first quarter of 2022 saw inflows of $2.6bn up 36% year on year which is needed to justify an Est. P/E valuation of 57.9x for 2022 i.e. it’s hard to envisage HUB roaring above $25 in today’s interest rate environment.
Bizarrely it felt like a positive day for the ASX200 on Wednesday even though the index ended the choppy day down -0.5%, most stocks managed to rally but the weakness for the index came from one very specific and influential sector of the market i.e. the heavyweight resources which were hammered following steep declines across commodities markets on Tuesday night as fears…
The world has changed, technology is driving all businesses and underpinning that is data. Snowflake (SNOW US) is a very interesting US-listed data business that came to market when technology was running hot in late 2019. The IPO had the who’s who of investors and it did spectacularly well, doubling in short succession. Since then it has fallen away on the broader tech sell-off, however, this is a business…
