Australian Stock Market

(12-10-2018 05:13 AM)Australia Sucks Wrote:  1) Credit Corp Group (ASX code: CCP). Today's closing share price $18.40 which i have mentioned in another thread already. Australia's largest debt collection company. Today's closing share price was $18.40. I

I put bid in for $20K on CCP for $18.41 just now.

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Whole portfolio down 18% for the last year, not good news, but I mostly in banks so hoping for a spring back.

What do you think of TOE AS? I got a lazy 20K on Uranium going gangbusters in the next five years... Maybe I should have gone for lithium?

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(12-10-2018 06:11 PM)RatInTheWoods Wrote:  

(12-10-2018 05:13 AM)Australia Sucks Wrote:  1) Credit Corp Group (ASX code: CCP). Today's closing share price $18.40 which i have mentioned in another thread already. Australia's largest debt collection company. Today's closing share price was $18.40. I

I put bid in for $20K on CCP for $18.41 just now.

This is a good shift away from banks and mining for my portfolio.

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Another one I like is National Storage (NSR).

it's expanded by acquiring sites, keeps raising the dividend and I don't think the trailing indicators have caught up yet.
I see institutional holders (CBA) increasing their positions in recent announcements.
There should be a dividend announcement by the end of this week and I think the share price will keep rising.
Good for income or to put on DRP and forget about for a while.

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RatInTheWoods in regards to TOE I had a brief look at it, but basically due to my limited understanding of resources companies I must put in the too hard basket. I do not have a strong view on Uranium prices nor a view on how well the company will be managed going forward. If we were talking about resource stocks such as BHP Billiton, Rio Tinto or Woodside petroleum I might have some kind of very basic view/outlook for how things might unfold but for a company like TOE I have absolutely zero idea.

Another stock worth looking at is the listed investment company Long Short Fund (ASX Code: LSF). The team behind it have a good long-term track record but there investment portfolio has been out of favour in markets recently which meant that the listed investment company has performed badly since listing not long ago. I would potentially consider buying if the share price falls another 5 or 10 cents (its currently at $1.33 and trading at a discount to NTA).

Reversion to the mean over next few years will likely see them generate strong out-performance. What I mean specifically if the valuation gap between expensive high growth stocks (e.g. the big Tech names, etc) and the rest of the market (which is at an extreme level currently) will narrow towards a more historically normal level I expect their portfolio will outperform. Why would such a thing happen?

Reason 1 is that mean reversion is a powerful force in the long term. Reason 2 is that many of the very high growth companies are overvalued while many other lower growth companies are undervalued. Reason 3 is that rising interest rates negatively impact stocks on high p.e. ratios more than the rest of the market because a larger percentage of the valuation of such companies is comprised of earnings a long way in top the future and hence mathematically a rising discount/interest rate affects their value more. Reason 4 the global (and U.S.) growth outlook is slowing and when that occurs the highest growth companies often will get hit harder, because when you have a stock on a high p.e. ratio and and it misses earnings expectations, typically it will fall a lot harder than if a low p.e. stock under delivers because a higher percentage of the high growth company's valuation is attributed to the growth factor.

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AS well done you just made me $800 on CCP

But I ain't sold out yet, holding in for a bigger gain

It's the only green in my port which is down 15% last six months (mostly banks though, so dividends still good)

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(12-10-2018 06:35 PM)Mig Picante Wrote:  Another one I like is National Storage (NSR).

it's expanded by acquiring sites, keeps raising the dividend and I don't think the trailing indicators have caught up yet.
I see institutional holders (CBA) increasing their positions in recent announcements.
There should be a dividend announcement by the end of this week and I think the share price will keep rising.
Good for income or to put on DRP and forget about for a while.

I've seen this one recommended by a couple of different places so have decided to take a punt.

One company I'm interested in but haven't seen many talk about is Bravura Solutions (BVS). They've performed strongly over the past couple of years. Their software for superannuation providers is market leading and superannuation is only going to grow over time.

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Well I owe AS more than a beer after I sold out of CCP having made $3200 in a few months.

Thanks mate! Cheers.

Any more tips?

I am looking at ANZ bank, which I really think will recover that 10-15% in the next 12 months after the bank witch hunt dies down... What you think? (the dividends are good too)

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(06-06-2017 05:23 PM)BB1 Wrote:  Out of the companies you have mentioned I own A2 Milk, Xero, and Pioneer Credit.

A quick check-in of my Ozzie stock gains since I disclosed owning these 3 in June 2017. During that period the ASX index is up 7.3%

A2 Milk is up 182%

Xero is up 86%

Pioneer Credit is up 40% (including dividends)

Will probably sell Pioneer next week and redeploy into Xero or one of the hyper growth US SaaS companies I have disclosed on US market thread.

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Well done Australia Sucks and RatInTheWoods on CCP.

Any thoughts on Coles? Thinking about buying a parcel before results are released next week for a long term hold.
Consumer staples will be fine in a recession and expected labor government.

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Better PM AS on that, I am not guru.

I am thinking about the banks (ANZ NAB) now as they 10% down after the royal commision and bad press, but I think they will recover and their dividends are solid anyway.

Could be a great 10% return in 6-12 months, plus 4% franked dividend.

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Well the Coles results were crap, glad I didn't buy!
NSR doing well and looking forward to their results next week, hoping for a good one after the expansions.

NAB is an interesting one, with CEO and chairman stepping down I'm not sure it's a good idea.

I'm looking to buy ~$5k more shares but haven't located a decent investment just yet. I still like CCP but should have bought them around $18

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Anyone been keeping an eye on Galaxy resources? I’ve seen these go from 1.75 to $4.50 and now back around the $2.00 mark. One of the most heavily shorted stocks on the ASX despite having significant cash holdings, producing top grade lithium and soon to have the lowest cost of production.

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Sorry I have not been active on the thread guys. I have been on vacation in Chile the last few months (by the way great country for investment/business). I will still be here for a few more days in Chile.

For anybody who owns Credit Corp (ASX vide: CCP) it’s over $23 (AUD) per share now. If you have a long term outlook you should be holding (but not buying) at these levels. If you have a short term outlook you should be selling to bank profits.

Stay away from Coles. In the long run Aldi, Costco, Lidl and Amazon will eat their lunch.

Galaxy Resources I cannot really comment on that one.

I would stay away from banks for now. Falling house prices is never good for the banking sector and the valuations/prices are not yet low enough considering all the bad news on the horozin.

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Platinum Asset Management (ASX code: PTM) looks like a buy. The share price dropped over 11% to $4.89 just now because the founder Kerr Neilson sold a few hundred million dollars of shares (he still owns over 40% of the company) and still has over $1 billion AUD invested in the stock, plus it’s not like there is a synchronised barrage of director selling so I would not read too much into it as there could be a lot of legitimate reasons why he sold.

Well done on your Australian stock picks BB1 you have been killing it!! I should probably have this thread over to you. Any other Aussie stocks you are looking at right now?

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Hey guys, the federal election has been called on May 18th and Labor are likely to win this.
They have announce some policies such that may impact CGT for shares and also dividend imputation credits.

Considering that I want to add to my share portfolio, do you think it is wise to wait until after the election?
Or would you hold off buying for many months.

Also interested in comments on whether Australia will enter recession under Labor and what sectors perform well during recession.

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Hey Mig,

From the news it seems the word "grandfathered" has been thrown around a lot for these changes Labor has proposed including the negative gearing aspect. That would mean that the changes will be prospective in nature and will apply to purchases after the date that they come into power (but who knows they could back date it).

I would however suspect that the dividend imputation credit changes will be retrospective as they seem to be alluding to using the savings for more social spending. It's hard to tell what will happen as the government in Australia is not the most stable. None of the above applies to a non tax resident by the way.

As far as knowing what's to come for the economy it can't be good, even the IMF is saying that the economy growth rate is slowing at twice the pace than its peers. Throw in changes when Labor wins (good chance of it) and you have the recipe for recession even before America, China and the EU get to that stage (soon enough). That's my personal opinion of course.

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Mig from what I have read although the ALP (Labour) is likely to win the next election, the odds are that when they are in government they will not have the numbers in the senate (they will not get sufficient support from independent politicians) to pass their proposed changes to negative gearing rules, capital gains tax and dividend imputation franking) credits. Of course these changes could happen but the odds currently favour them not occurring. I do not think Australia will see a technical recession in 2019, although it may be a possibility for 2020.

If you want to add to your share portfolio I would not be waiting. If you find something worth buying at a reasonable price you should buy it. The Australian share market is not overvalued. The Australian economy will not go into crises in the next few years (even if their is a mild recession).

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One stock i would currently recommend buying on the ASX is WAM Microcap (ASX Code: WMI).

They last traded at $1.20 per share.

Its a listed Investment Company (LIC) run by WIlson asset management who have a good long term track record. It invests in Autralian Microcap stocks. Its trading around its after tax Net Tangible Assets (NTA) per share (many of the other funds run by the same guys trade at a premium). It pays solid dividends and its currently got less than $200 million of assets in the fund, meaning the fund can realistically double or triple in size before it becomes difficult to outperform (due to poor liquidity its hard to invest in micro-caps when you have too much money).

The stock listed at $1.10 in July 2017 and ran up to a peak of around $1.53 previously. Its now $1.20

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(04-16-2019 06:09 AM)Australia Sucks Wrote:  if their is a mild recession.

If? There is currently a recession in Australia.

Quote:“The ability of Australia's economy to avoid recession for 27 years is great, but today’s ABS figures show we’ve now entered an effective recession in Australia, with GDP per capita shrinking in both Q3 and Q4 of 2018. Two quarters of negative growth – that’s a recession on a per capita basis – and the figures show a large part of that is consumer spending, growing at only 0.4 per cent in Q4. It’s a huge slice of the economy at almost 60 per cent of GDP, but it has stalled.”

https://newsroom.unsw.edu.au/news/busine...dget-nears

https://www.news.com.au/finance/economy/...f3eaaed3ec

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Cheers for your perspectives TDevil and AustraliaSucks.

I'm looking at adding to my NAB holding. Decided that I'm going to wait until their half year results are announced on May 2nd to see if they will maintain the dividend. Then purchase before it goes ex-div on May 14th.

After that am looking at purchasing Coles, once I save another ~4k.

WMI sounds interesting but doesn't look very liquid judging by the bid and ask queues?

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Tail Gunner conventionally a technical recession in Australia is officially defined as two negative consecutive quarters of GDP growth. The articles you point to are using a non official definition and defining it as being two consecutive quarters of negative per capita GDP growth. Currently solid population growth is keeping Australia out of a technical recession.

Mig my personal view is to stay out of Coles, as long term its a no/low growth company. Aldi, Lidl, Costco and Amazon will slowly chip away at them.

As for the big banks I would stay away from them. A strict regulatory environment and falling house prices will ensure that bank profits are crimped for years to come. By the way its unhealthy to be obsessed with dividends. The main consideration should be the long-term outlook for the business.

WMI might be somewhat illiquid if you are an institution trying to buy $1 or $2 million worth of stock but for retail shareholders like us there is sufficient liquidity.

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I'm not obsessed with dividends, but NAB have announced they will review their payout policy and have had a change of leadership, so before investing more, I need to understand if the dividends are going to continue or be lowered so I can assess it against alternatives.
They also do a fair bit of business banking and have interesting offerings like Ubank for the online space.

That said, my basic strategy is compounding through dividend reinvestment and holding for a very long time.
I'm looking at investing for +10 years and am trying to heave a big enough snowball now so that it compounds as best it can over the coming years in order to produce a stream of divs to form a side income down the line.

I'm looking for large companies that are still going to be around in 20 years.

Fair call on Coles, however I think they have the potential to improve given their recent split from Wesfarmers. I've heard it's a very bureaucratic organisation (opportunity). So once they rationalise middle management and strip costs out it could improve. I also think their partnership with Ocado is promising as they are very capable in automation space.
Basically people hate shopping and are increasingly living alone, meaning they don't have time to shop as they are at work. I think the amount of online shopping and home delivery is going to increase, including the increase of microfulfillment centres and believe that's where they're going to play. Going head to head with Woolworths rather than Aldi/Lidl/CostCo.

Other ones I'm looking at are AIA, GMG, RFF, SKI, SPK, SYD if you have any opinions?

RHC, CCP and CLH are all a bit low on the yield side of things for me right now.

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I really think long term its a mistake to invest in Australian bank stocks. Apart from the regulatory environment being tough for the next 2 or 3 years probably in the long term you will have the big banks being challenged by international fin tech start-ups, crypto, things like Apple Pay, Wechat, google payment services, Amazon, etc. On top of this you have the fact that consumer credit growth in Australia will be much lower in the future because consumers already have a lot of debt. The difference between Australian banks and European, American and Chinese banks is that Australian banks are not big enough (or technologically advanced enough) to compete overseas with the big European/Chinese/American banks. Hence why you see Australian banks usually come back with their tail between their legs when they expand into other countries (New Zealand being the exception). American or Chinese or European banks have the growth option of diversifying/expanding into overseas markets.

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I do not follow any of the stocks you mention closely but at a glance my opinion is as follows:

AIA - Auckland Airports, should do well over time thanks to the booming tourism sector in New Zealand.
GMG - Trading at around 25 times operating earnings. Overvalued for this type of business. Also the residential housing slowdown in Australia could soon spill over into other types of property.
RFF - Rural Funds Group. It has a good track record so far but generally am wary of agricultural investments in Australia as they generally have a poor track record and high risk of blowing up on top of being capital intensive. Also the stock looks a little overvalued. I would not be paying a premium to net assets for these type of agricultural assets.
SKI - Spark Infrastructure. It looks solid.
SPK - Spark New Zealand. I do not like Telco stocks in general and hence would avoid. Capital intensive commoditized businesses with intense price competition and the ever looming threat of technological obsolescence of the infrastructure.
SYD - Sydney Airports. Looks a little overvalued and also would avoid due to the risk of the long-term impact from the second (competing) airport eventually being completed in Sydney.

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