Category: Insights

February 19, 2024

Tue Feb 20, 2024

US markets were closed overnight so no leads from there for our market today. . Our futures are pointing to a 2 points gain at the start of trade. It is expected there will be a lot of companies reporting 1HFY24 results today. Here is a list of potential candidates.

Let’s look at some results and see if we can find any really good ones.

AUB Group (ASX:AUB) 1HFY24 Results

https://www.aubgroup.com.au/

First company, AUB Group (ASX:AUB). Rising insurance premiums has seen them in a purple patch for some time now.

No percentages is interesting. Perhaps they want all the attention to be on their guidance upgrade. Nevertheless it looks like a strong result having had a quick look at the financial statements.

Mader Group (ASX:MAD) 1HFY24 Results

https://www.madergroup.com.au/

Next we have Mader Group (ASX:MAD) who updated the market in January (and fell) ahead of these results. The update looked ok but Mader Group (ASX:MAD) has had strong couple of years and perhaps the market just felt it was a bit overdone. Anyway, let’s see if anything has happened between now and January.

That as good a set of numbers as you would want to see. But will the market like it? I’ll check but I’d say they’re the same as they flagged back in January. If so, it will be all about the all important outlook.

Yes they are identical.

They have reaffirmed their guidance so it looks to me like there is absolutely nothing new here since their most recent update.

Megaport (ASX:MP1) 1HFY24 Results

https://www.megaport.com/

Next stock of interest is Megaport (ASX:MP1). This stock soared on the back of it’s quarterly report last month. You would think there wouldn’t be too much new in this report but if there is it could be another wild ride today.

I think all of the above should be known to the market already. Some of those percentages are enormous as the company has recently transitioned from loss-making to profitable.

What really matters today for this company in my view, is their outlook statement.

Guidance restated and results pretty much already known should result in a calm day for Megaport (ASX:MP1) today. But with this company you really never know! It should be noted that they have run hard into this result though. The market may have been hoping for an upgrade. It will be disappointed if that’s the case.

HUB24 (ASX:HUB) 1HFY24 Results

https://www.hub24.com.au/

Ok who should I look at next. HUB24 (ASX:HUB) has been a great performer, let’s have a look at them. I’m pretty sure they updated the market ahead of this so there shouldn’t be any real surprises.

Not the best summary but you get the gist. They’re always battling with Netwealth (ASX:NWL) for top spot in inflows and they’re winning at the moment. Outlook less important (or harder) for companies like this when they’re making money off FUM (Fund under management) and that is at the mercy of the markets.

Netwealth (ASX:NWL) 1HFY24 Results

https://www.netwealth.com.au/web

Incidentally, (ASX:NWL) are also reporting there results today, let’s have a look.

They’re the big dog but I suspect HUB24 (ASX:HUB) is catching them. Truth is though, they’re taking market share away from just about all of those bigger competitors hand over fist. The runway for both of them remains long and if the trend remains, very fruitful.

Bravura (ASX:BVS) 1HFY24 Results

https://www.bravurasolutions.com/australia/

In the pre-market, it looks like Bravura (ASX:BVS) will be the stock of the day (projected to open up 9.4%). Let’s have a look at what they have to say.

I guess that point 5 says it all. A nice big UPGRADE!

Disclaimer: This information is provided purely for educational purposes. It takes no account of an individual’s personal financial circumstances and hence can in no way constitute financial advice. The above data may be subject to errors or inconsistencies for which the author takes no liability. It is imperative that all investors do their own research or if they need advice, seek it from a qualified financial adviser.

February 18, 2024

Monday 19/2/24

AFTER THE OPEN

10:13am

So far the market is loving the The A2 Milk Company (ASX:A2M) numbers and their slight upgrade.

Boral (ASX:BLD) is up a little on their takeover offer as you would expect.

Cochlear (ASX:COH) had already flagged their result to the market prior to today so you wouldn’t expect there to be too many surprises.

Imdex (ASX:IMD) is the star. Having a had a bit more of a read of their announcement, it seems the acquisition they made is doing very well for them. They seem quite optimistic although I didn’t see any numbers in their outlook.

Lend Lease (ASX:LLC) clearly continues to disappoint. How the mighty have fallen.

Nuix (ASX:NXL) delivered pretty much what I they said they would but the ramp up in price prior to results showed the market was expecting more. It’s a volatile stock though so it could finish anywhere today.

Reliance Worldwide Corporation (ASX:RWC) must have put out a good set of numbers. It’s a very up and down kind of stock though.

BEFORE THE OPEN

The first thing I do every morning is look at the announcements and put any stocks that look of interest into a watchlist.

Takeover for Boral (ASX:BLD) from Seven Group (ASX:SVW). ASX:BLD has been having a great run of late and now shareholders will get a nice bonus to top of that today.

The A2 Milk Company (ASX:A2M) and ASX:NXL are two stocks there that I’m particularly interested in.

The A2 Milk Company (ASX:A2M) 1HFY24 Results

https://a2milk.com.au/

The A2 Milk Company (ASX:A2M) chart has been in a down trend since the last quarter of 2021. Incredibly it hit $20 at one stage. Recently it has caught my eye as the share price has been trying to stage a rally coming into results. Bets have been placed that this result will a good one.

Drum roll …

Looks like things are moving in the right direction for The A2 Milk Company (ASX:A2M). A slight increase in guidance never hurts. Exciting set of results? Let’s see but they’re certainly not model portfolio sort of numbers.

Nuix (ASX:NXL) 1HFY24 Results

https://www.nuix.com/

Let’s move on to Nuix (ASX:NXL). They disappointed the market back in January with an update on what they expected their results would be today. The shares fell but have since recovered into the official result announced today. They had been going along nicely prior to that.

The Statutory numbers are due to one-off legal expenses. The market will look through those.

The $199.6 ACV is above the top end of guidance given in January of 196-199M.

Outlook is positive while rather vague.

The above numbers aren’t amazing but need to be seen in context. It wasn’t that long ago that this stock was over $10. Being a tech stock, its valuation lags that of many of its peers. From a growth perspective, this stock would have to be considered middle of the road. From a value perspective it may be more attractive. From what I understand about their products, the company has significant potential.

Imdex (ASX:IMD) 1HFY24 Results

https://www.imdexlimited.com/

Imdex (ASX:IMD) is another company with results out today. Looking at the chart the market isn’t too excited about the prospects for this company.

These numbers look ok. There’s a big one-off item in there that has hurt their statutory profit.

This shows the importance of looking beyond the headlines. This company has increased their revenues impressively. However on closer inspection, it looks like the may have made an acquisition and the revenues have only increase because of the addition from the new business. That could still be ok but the next step would be to look at if they issued any shares for the acquisition and if they did determine what the increase in revenues are on a per share basis.

All of the numbers in my database reduce the figures provided in the company reports back to a per share basis. It’s the only way to know if a company is increasing value for shareholders or not. Imdex (ASX:IMD) does have a history of issuing shares.

Monday 19/2/24

February 16, 2024

After the close – Friday, Feb 16

Today we have a look at the market after the close and some stocks that experienced significant announcements or moves.

Neuren Pharmaceuticals (ASX:NEU) $19.78 down 14.2%

https://www.neurenpharma.com/

Was a stock that did great for the model portfolio until it’s last quarterly report where it seemed some growth rates were a bit slower than expected and cash flows were meagre. Today they are down due to a short-report on their distribution partner Acadia (NDQ:ACAD). The short report brings into question if the drug Daybue, that Acadia is distributing for Neuren is as good as we’ve all been told. Time will tell but the risks have increased somewhat for Neuren Pharmaceuticals (ASX:NEU) for the time being.

Model ranking n/a down from 1 after recent quarterly report.

Pro Medicus (ASX:PME) $87.24 down 7.2%

https://www.promed.com.au/

The price hit $111.88 on Monday. The stock had had an amazing run into results. From what I can tell, the numbers were a few percent off expectations when the price was suggesting the market was expecting a beat. When I say the result was a few percent down on what the market was hoping, it was still a fantastic result and all the elements that make it a great company remain in tact. Having said that, investors would be nervous because this company still has a crazy valuation and sentiment has played a large part in it achieving that.

My valuation model shows how ahead of itself, Pro Medicus (ASX:PME) had become. As we can see this also happened back in 2021. It’s falling back to earth and if it could somehow find its way back to $60, history suggests that would be a great entry point.

Blue line – price high for the year | Red line price low for the year | Light green zone – fair value range | Dark green zone – deep value range | White zone – overvalued range

Model Ranking 32 down from 20 after yesterday’s results

Data#3 (ASX:DTL) $7.69 down 9.53%

https://www.data3.com/

Similar to Pro Medicus (ASX:PME). Price peaked at $10.01 on Tuesday. For some reason the stock rallied hard into results. It had me scratching my head. The results seemed roughly what the market expected maybe a percent or two shy and the stock has been smashed back down to where it was in November 2023. Steady company but certainly not worth the valuation it had when priced at $10.00.

Model Ranking 104 down from 85 after yesterday’s results Data#3 (ASX:DTL) has had me scratching my head for a while. The market has clearly been rerating it for a while but by my calculations things got euphoric at $10.

Just for an example, this is my valuation model for the stock Codan (ASX:CDA). As you can see it was extremely hit back in 2021. After that peak it had an almighty fall back to earth. Not saying that will happen with ASX:DTL or especially ASX:PME – but it can happen!

Stocks that reported or had significant events today

RPM Global (ASX:RUL)

https://rpmglobal.com/

Results came out after the close last night. Stock plunged at the open and recovered through the day like so many we see during reporting time. There was no issues in the announcement that I could see with them reiterating guidance. Will be interesting to see if it can continue to recover on Monday.

Model Ranking 46 down from 35 after yesterday’s results

Inghams Group (ASX:ING)

https://inghams.com.au/

Another solid set of results but a cautious outlook was enough to see Inghams Group (ASX:ING) fold 12.5% today.

Model Ranking 137 down from 96 after today’s results. Could fall further when brokers revise their forward projections.

The market hasn’t been too kind to stocks reporting earnings during the past couple of days. This is in contrast to some great daily gains last week. Let’s hope the mood improves next week.

February 15, 2024

Fri Feb 16, 2024

A good night again in the US.

Source: https://stocksunderthehood.com/free-resources/us-sector-performance/

ASX should have a strong start with the futures up 72 points.

The oil price is trying to break out from it’s downtrend. Not quite there yet.

RPM Global (ASX:RUL) H1FY24 results

https://rpmglobal.com/

Reported results after the market closed last night. This is usually not a great sign. However, in this case, the results look sound.

Tyro Payments (ASX:TYR) H1FY24 results

https://www.tyro.com/

Have won the battle but will they win the war? I think there is a good chance this $10M payout doesn’t cover the damage that has been done to their business as a result of this issue. My understanding of the story is this. Kounta owns Lightspeed. Lightspeed is a POS system used in the hospitality industry. Tyro offered an integration of their payment system into the Lightspeed POS. Lightspeed have developed their own payments system. They are penalising their customers than remain with Tyro. While they can’t solicit does it stop them from making it uncomfortable for their clients to continue using Tyro? I don’t know. Reality is plenty have already jumped ship from Tyro to the the new Lightspeed payments system.

GQG Partners (ASX:GQG) H1FY24 results

https://gqg.com/

Results are out. Things travelling as you would hope by the looks of things.

Looks like just rewards for market beating performance.

Impossible for fund managers to give forecast earnings and revenues. They’re at the mercy of the markets. From these comments I think it’s safe to say that things are expected to continue to go well for them.

Mad Paws (ASX:MPA) H1FY24 results

https://www.madpaws.com.au/

A tiny company with a share price of 10.5c has had a good results and even more interestingly an investment from Seven West Media (ASX:SWM) at a premium of 12c per share.

February 14, 2024

Thu Feb 15, 2024

BEFORE THE MARKET OPEN

US markets reversed most of their losses from the previous session.

Source: https://stocksunderthehood.com/free-resources/us-sector-performance/

The Australian market dropped 56 points yesterday. The Index futures are pointing to a 52 point rise at the open.
Lithium can be a confusing commodity to follow. There are so many prices out there for the various compounds. There’s industrial grade, battery grade, various purities of carbonate, various grades of hydroxide plus it’s hard to find agreeance on price from one site to the next. I suggest, all you need to follow is the Global X Lithium & Battery Tech ETF.

At the moment it’s a pretty sad story. That’s as convincing a downtrend as you will find. With very large short positions in the space, there will be sharp rallies like the one in December. Many have been calling a bottom at various points on the way down. They are all pretty much losing at the moment. What will cause it to spring back up? Who knows? What’s more likely at some point is for it to find a floor and go sideways for an extended period of time. I’d be inclined to want to see that before getting interested. Rises after a period of base-forming are far more reliable than attempted rallies from a downtrend.
One thing that can’t be denied is the strength of Bitcoin. I feel like this is telling the market something but I’m not sure what.

I’ve never paid a lot of attention to the Crypto space. One observation I will make from looking at this chart is that it seems to trade in a very orderly manner. It jumps to a level, consolidates, jumps, trends for a bit. For purely technical traders, you could do a lot worse than focussing your efforts on Bitcoin.
Plenty of good stocks reporting today. Not a great day for me to be on the road. Will have to have a closer look at most of these later in the day.

Viva Leisure (ASX:VVA) H1FY24 results

https://vivaleisure.group/

Results were one I was waiting to see.

Nothing to complain about there. Of course it depends on the outlook and what the market is expecting though.

Promedicus (ASX:PME) H1FY24 results

https://www.promed.com.au/

A market darling (understatement of the day) continues to deliver.

No doubt great growth. Incredible company. But think about this. Revenue is $74M. Market Cap: $11.3B. 100 times revenue is still only $7.4B There is no company on our market that comes close to attracting that valuation. Is it the best company on the market? Probably? Is it worth say 5 times more than the 2nd or 3rd best? I’ll let you decide. Currently the market consensus says yes!

Maas (ASX:MGH) H1FY24 results

https://maasgroup.com.au/

Looks like the winner today. As good as those numbers are though they have only reaffirmed guidance in their outlook. These seems conservative but I’m only guessing. Worth a closer look. I will do a breakdown of ASX:MGH later today. Update: Their financials are rather complicated. I will do this in as soon as my data provided updates their number for MGH.

February 13, 2024

Wed Feb 14, 2024

Wed Feb 14, 2024: AFTER THE MARKET OPEN

It’s a red day today. We’ve had a good run and the inflation shock in the US is a good reason for the weaker hands to take some profits today.

Here’s how the stocks that released results this morning are trading at 10:18Am.

Poor old ASX:GUD. Numbers looked ok but the outlook is a bit weak. Bad day to announce bad news with the ASX200 down 1.4%.

I didn’t get to GNC before the open. Weather stock. Weather was exceptional for them now it’s just back to normal.

ASX:GNC and all the agricultural stocks are highly cyclical and unpredictable. Too hard basket for me. If I were to consider them I’d suggest the best time to buy is during a drought.
ASX:DHG continues to show that the difference between being the best at what you do (ASX:REA) and the 2nd best is vast.
ASX:EVN had flagged prior to this result that it’s results would be weaker than the market had thought. If I were to guess, I’d say todays’ results are inline with their update but the price is down due to a fall in the gold price below $2000 USD an ounce. The $2000 level had held for sometime but the fact that it has now been broken will be seen as a negative for gold in the short-term .
ASX:IEL is the star of the day so far though. Numbers looked good but I’m still yet to find a meaningful outlook from them.

Wed Feb 14, 2024: BEFORE THE MARKET OPEN

Inflation dropped at a pace slower than expected in the US overnight, This has had a significant impact across markets as the expectations for when rate cuts may commence have been pushed out.
This has seen the 10 year bond yield jump overnight. This is a concerning chart since by my definition it puts it back in an uptrend. (price is above all moving averages).

Simply put, this makes equities less attractive to bonds / cash in the short-term.
This has resulted in a sell-off in US Markets overnight like the S&P 500, the DOW and the Nasdaq. Nevertheless, this is just a blip on the Nasdaq chart at this stage.
A new feature on the site is the ETFs page. Here you can see a range of Australian and US listed ETFs and compare their performance. You can view it here:
ETF Performance (stocksunderthehood.com)
This is how the US ETFs I track performed overnight. A very red night.

H1FY24 results continue to roll on in Australia, Let’s have a look at some of today’s announcements.

H1FY24 RESULTS

Commonwealth Bank (ASX:CBA)

https://www.commbank.com.au/

Is first cab off the rank. It’s not a stock that interests me so I’ll cheat and see what the Fin Review says:

Doesn’t tell you much. I don’t know what the market was expecting. I do know that ASX:CBA is close to all time highs so a fall in profit doesn’t sound ideal.

AMP (ASX:AMP)

https://www.amp.com.au/

What a dud stock this has been for a very long time. When I first started working my super went into an AMP super fund. I think that was the case for many, many others. What a gift! How did they stuff it up so bad?

The story for ASX:AMP for some time has been that the value of their businesses in more competent hands is greater than what the market values them under AMP’s control. Slowly they’ve been selling off bits and pieces and returning capital to shareholders.

Fletcher Building (ASX:FBU)

https://fletcherbuilding.com/

A perenial underperformer has underdelivered once again sadly.

Charts like this make it easy. Simply move on to the next stock. Think of it like this: just about every person that owns this stock is losing money. It’s a hard cycle to break. Imagine working at that company …

Seven Group Holdings (ASX:SVW)

https://sevengroup.com.au/

Despite their holding in Seven West Media that reported poorly yesterday, continues to deliver good results.

Beamtree (ASX:BMT)

https://beamtree.com.au/

Is an interesting small cap that has often promised a lot but has yet to really deliver. I’m interested to see what this report contains.

Seems ok. Not spectacular but they seem to be executing their plan. As I always say, I’m not sure what the market was expecting but price chart suggests not a lot. I’ll keep watching for now.

GUD Holdings (ASX:GUD)

https://gud.com.au/

Are usually a pretty steady performer that don’t get much market coverage. Let’s see how they’re going.

Steady as she goes continues for ASX:GUD.

IDP Education (ASX:IEL)

https://www.idp.com/australia/

I’m interested to see their report. Leading into this the company numbers look good. Commentary from the company has also been positive yet the share price has been slowly on the slide. Before Covid, this was as much of a market darling as you could find.

If JBH Hi Fi and Nick Scali can rise on profit falls what can this one do on these numbers? Only joking, of course the result is only half the story (sometime much less). It much more about the outlook. Not sure I can find much of an outlook statement in this report. Not helpful!
Perhaps the market was focussing on the potential drop in the IELTS. Nevertheless they seem to have been able to cover for that elsewhere.

February 12, 2024

Tuesday 13/2/24

AFTER THE MARKET OPEN

Market is up a fraction but as you can see more stocks are up than down. It’s just that those that are down are either pretty big companies or they’re down a lot.

This is how the stocks that reported today are faring. I didn’t get to Seek (ASX:SEK) pre-market but I’m not surprised to see they have disappointed the market. Have to say most of those look about right to me. Well done to Challenger (ASX:CGF) who are definitely in an upgrade cycle right now. Apparently the Temple and Webster (ASX:TPW) numbers were a beat so that coupled with their outlook should assure them of a good day.

Ansarada (ASX:AND)

This one hurts:

Great little company that I held only until recently. I sold because I felt their quarterly update was a little weaker than I had hoped and I felt there were better opportunities. I always thought this was serious takeover candidate. We’ve seen many small tech companies quietly get taken over by US companies attracted by the currency differential. I’m not only disappointed because the shares have popped 15% today, but also because we keep losing good companies from the ASX. Shareholders in Ansarada (ASX:AND) have weathered the bad times to get to the point where the company is now profitable only to have it snapped away from them.

BEFORE THE MARKET OPEN

Mixed night in the US with the Dow up and the Nasdaq down. The area of interest though was in the Russell 3000 – the US small cap index which had another strong night.

That’s three strong sessions in a row on a chart that is developing nicely. While the headline indices are at highs, the rally hasn’t flowed through to all parts of the market. Many small caps in Australia are down well over 50% from their highs. The improvement in the Russell is good for our small caps and good for the market overall as it suggests that the current rally is becoming more broad-based rather than just being concentrated in the biggest stocks on the market.

ASX Futures are up 20 points pointing towards a positive start for our market.
Reporting season continues in Australia so that’s where my focus firmly lies for the rest of February.

Seven West Media (ASX:SVW)

Results are out. They’re usually not great. Let’s see …

Yep true to form. Hard industry to make money. I’m not saying they won’t rise today though. Who knows what the market was expecting? But my philosophy is simple: do you want to own a business where all headline metrics are in decline? Maybe you would. Maybe you subscribe to the value investing mentality. Perhaps there is value here. Would Warren Buffet buy it? Maybe. If you have a plan and a history of making money from stocks like this then more power to you. Not for me though. I have a plan and that plan is to identify the fastest growing companies on the market and own them for as long as possible. I understand it takes a lot of people to make a market though so each to their own.

James Hardie (ASX:JHX)

https://www.jameshardie.com.au/

I assume these results will be much better.

Mmm, they’re ok. The shares have been going very well so I do wonder if the market was expecting more?

Temple and Webster (ASX:TPW)

I’m interested to see these results. I don’t own and am unlikely to but nevertheless they’re more my type of company. Again, another company that’s been going great so they’d better be good.

Again, my gut says I would want these to be higher if I was a shareholder that’s seen the shares rise from $3 in July 2023 to over $10 today.

Growth of 35% is more like it. That might get them out of jail today.

Macquarie Group (ASX:MQG)

The stock that can do no wrong has their results. I’ve often described them as a “Black Box” company with the commodities trading division etc. I’ll see if I can make head or tail of their results but it always seems to me that they can report anything and the market will just continue to keep the faith.

I don’t know about you but that reads terribly to me. I thought the same of their last report yet the shares have managed to rally recently from $156 to $188 today. Surely they can’t rally on the back of that announcement? I guess it really depends what the market has been expecting. I know I wasn’t expecting much so maybe they’ve delivered a bit more than that?

Make your own judgements. I’m hunting for something to potentially trade or that will qualify for my model portfolio. I’m not going to bother with looking at Macquarie Group (ASX:MQG) numbers now as they’re clearly not great and I only have 20 minutes before the market opens to find something good.

Breville (ASX:BRG)

A quality company with results today. I expect they will be ok but the retail space is particularly tricky here. We’ve seen ASX:JBH and ASX:NCK report falling profits only to see their shares soar in anticipation the worst is over. Maybe it is, maybe it isn’t. I’m not that interested in investing in maybes.

Good company, good result in a tricky retail environment. I always like to see companies reducing their debt. Not enough growth to get me excited but I can understand the appeal of this company for a more conservative, diversified portfolio.

Challenger (ASX:CGF)

Another black box company. These results could be anything. Stock has been going well so the market is expecting big things from you Challenger!

Numbers look pretty good but as I keep saying I don’t know what the market was expecting. They say they expect to finish in the top half of guidance so that’s not a negative – unless the market was expecting an upgrade which is possible but I think unlikely.

CSL (ASX:CSL)

Again too big and slow for me but I am interested to see their numbers. They’ve rallied hard into this result which I have felt has increased the risk for disappointment. Let’s see …

Not bad. I suspect these numbers will be good enough but again I’m only skimming these.
Back to Macquarie for a minute. Just saw this on the Fin Review. This could hurt them more than their results as Nick is highly regarded and has been responsibly for some massive results for ASX:MQG.

Not looking like I will find a trade today. ASX:TPW probably the pick of the bunch.

Tuesday 13/2/24

February 11, 2024

ASX Update 12/02/24

ASX Update 12/02/24 – AFTER THE OPEN

Here’s how the stocks with significant announcements today are trading.

Here’s the market heatmap as at 10:40am. I probably should have CSL (ASX:CSL) in that list above. One of their drug trials hasn’t gone to plan. They were down over 5% at one point which had wiped $7B off the market cap. I highly doubt the drug in question was worth that much. Neuren Pharma (ASX:NEU) has a drug that’s producing substantial profits and a few others in the pipeline yet the entire market cap of that company is $2.9B.

ASX Update 12/02/24 – BEFORE THE OPEN

The Us Market had a strong night on Friday night. However our market is expected to only open flat today.

The main story this month is company earnings. I’ll switch my focus to that.

Audinate (ASX:AD8)

Earnings are out. Everything is moving in the right direction for this company. Of course the market will have its own set of numbers and how these numbers compare will determine what happens with this company today. Nevertheless, companies with this sort of growth profile are the ones you want to own for the medium to long term in my view if you consider yourself a growth investor.

Now to the all important outlook. Sounds a bit cautious and may temper any enthusiasm from the very strong headline result.

Probably should go and look at what they said in their full year results.
First thing I notice is that their EBTIDA this half ($10.1M) is almost the same their EBITDA for the full year 2023 ($11M)
Gross margin this half (71.8%) continues a trend of falling gross margin (of course it’s still fantastically high though).
“Growth in gross profit dollars for FY24 consistent with historical performance” – here is that historical performance. Bit cryptic that one. Clearly recent performance has been better than previous. Perhaps they’ll shed some more light during the briefing which starts at 9.30am.
AD8:ASX is in the model portfolio and this result ensures it remains there until they next update the market.

What was the market expecting? Not sure about half-year numbers but from what I can see 26% revenue growth this year. With 47.7% already banked this half-year. EBTIDA full year of $17.8M with $10.1 already achieved in this half.

Turners Auto (ASX:TRA)

A profit upgrade.. My favourite type of announcement. Not a stock I follow. Maybe I should. Very, very illiquid though.

Synlait Milk (ASX:SM1).

Profit guidance. Opposite news to Turners. Looks a very challenged company in a challenged industry.

Car Group (ASX:CAR)

Strong numbers. Stock has been going well so no doubt the market was expecting good numbers.
Outlook doesn’t contain any numbers but suggests more of the same or maybe a bit less? “Good growth, very strong growth, solid revenue growth”. Bit like the weather report.

JB HiFi (ASX:JBH)

Results out. Revenues and Profits down which is a turn-off for me so I won’t go into it too much here. We’ve seen that in other retailers though like Nick Scali so they could easily rise in anticipation that this is the worst of it. Puts it in a downgrade cycle for me though and will need to prove otherwise until I become interested.

ASX Update 12/02/24

February 8, 2024

AVA Risk & Boral Feb 9, 2024

AFTER THE OPEN

Managed to have a little day-trade in AVA Risk Group (ASX:AVA). Picked up a few at the open for 18c and dropped them off 3min later for 19.5c.
Boral (ASX:BLD) up 10% haha.

BEFORE THE OPEN

A quiet night in the US except in the small cap space where the Russell Index was up substantially.

Source: https://stocksunderthehood.com/free-resources/us-sector-performance/

There was a bit more movement in commodities with the Oil price up but the copper price fell. There’s still more things in downtrends than uptrends in that space at present.
Bitcoin had a strong night. If you like technical trading, I actually think Bitcoin is worth a look at simply because it moves in quite structured ways. I’ll look at what I mean about that in a future post.
Not a lot catching my eye today really. Only 27 significant announcements on the ASX as at 9.45.

Boral (ASX:BLD)

https://www.boral.com.au/

Boral (ASX:BLD) continues to do well lifting it’s EBITDA guidance from $330-350M up from $300-330M. A roughly 10% upgrade may result in a roughly 10% increase in the shares (nah it’s not that simplistic but we’ll see).
That will also be positive for Seven West Holdings (ASX:SVW) which owns a large stake in Boral (ASX:BLD). Positivity could also flow through to someone like Adbri (ASX:ABC).
The news is out for Boral (ASX:BLD). It’s is often better to look for who else it may benefit that is yet to update the market if you want to capitalise on such announcements.

AVA Risk Group (ASX:AVA)

https://www.theavagroup.com/

This is a significant announcement for this little company.

I used to own AVA Risk Group (ASX:AVA) sometime ago. They seem like smart operators. Will be interesting to see if they now kick-on as a result of this.

February 7, 2024

ASX stocks catching my eye Feb 8, 2024

AFTER THE OPEN

As at 10:55am, here’s how the stocks that had significant announcements this morning or after the close yesterday are performing.

The ASX:REA result looked strong but their outlook looked weak / conservative.
ASX:PTM and ASX:AQZ both reported after the close yesterday. This is usually not a great sign and clearly today the market is confirming that. Silly.
Yesterday, Cettire (ASX:CTT) had a great day and is continuing to rise today. It is in the model portfolio. I will have a closer look at them for members today.

BEFORE THE MARKET OPEN

Telix Pharmaceuticals (ASX:TLX)

Telix Pharmaceuticals (ASX:TLX) announces a new acquisition. Late stage radiopharmaceutical for primary and metastatic bone cancer. Complimentary to say the least. If you don’t know why I say that, do some reading on Telix Pharmaceuticals (ASX:TLX) – it’s well worth it – for humanity let alone as a potential investment.

It’s been a while since the gold price did anything of note.

Strong night in the US and some good results after the close for ARM and Disney. Yet our futures have had a muted response up just 3 points. Looking at commodities copper and iron ore dropped so I suspect that is the reason. Hopefully the positivity from the US will flow through to other parts of our market today.

Playside (ASX:PLY)

https://www.playsidestudios.com/

Good news and bad news for Playside (ASX:PLY). Good news for them as they no longer need to lodge quarterly reports which means business is good (cash-flow positive for 4 quarters in a row) but bad for me as I really like the more regularity of quarterly cash-flow reports.

Cochlear (ASX:COH)

https://www.cochlear.com/au/en/home

Profit upgrade for Cochlear (ASX:COH). My favourite kind of announcement.

They have been going good though so you would think the market was to some degree already expecting good things. Nevertheless, it should be a good day for shareholders.

February 6, 2024

Feb 7, 2024

AFTER THE MARKET OPEN

Strong day for the market so far with a bounce in resource as suggested this morning.

H1FY24 result from Cettire (ASX:CTT) has been received positively with the stock is currently up 23% to $3.90
Catapult (ASX:CAT) is currently flat although was up earlier on the back of their positive news. While it is good they have won some new subscribers, no dollar values were included so this will always lessen the impact of such announcements.

BEFORE THE MARKET OPEN

Our market futures are up mainly due to falls in the US 10 Year Bond Yield and $USD overnight. The US markets were up a little. Good to see small cap stocks had a good night represented by the Russell Index.

Source: https://stocksunderthehood.com/free-resources/us-sector-performance/

Resource stocks have been smashed in the last few days. They will lead the bounce today. Copper, Iron Ore, Oil, Zinc, Lithium stocks and Gold stocks were all up overnight.

Catapult (ASX:CAT)

https://www.catapult.com/

A positive announcement for Catapult (ASX:CAT). It’s not a game changer announcement but it’s nonetheless another feather in their cap.

Catapult (ASX:CAT) is a story that has been in the making for a very long time. The company has promised that they are finally about to start converting their immense potential into $$$.

H1FY24 result Cettire (ASX:CTT)

https://www.cettire.com/au

Cettire (ASX:CTT) half-year results are out this morning. Here is a retailer growing revenue at 89% Y.O.Y. with revenues of $354M from holding less than $5M in inventory and $100M in the bank! This is what growth investors get excited about.

I can see why they have decided to announce early in the month – they want to stand out from the crowd. Mission accomplished (from the AFR).

February 5, 2024

Nick Scali Feb 6, 2024

Nick Scali (ASX:NCK) 1HFY24 Results:

Nick Scali (ASX:NCK) have beaten their guidance and the market should like that. Nevertheless, a “not as bad as expected result” shouldn’t be confused with a good result. Sales still fell 20% and profits almost 30%. On a positive though, the worst appears to be over with the company returning to growth in January. They also pay a big fully franked dividend. As a growth investor though, 3.6% revenue growth doesn’t fit my criteria.

BEFORE THE MARKET OPEN

US market was down overnight. Our futures point to a 33 point loss at the start. The 10 Year Bond Yield and the $US rose strongly for 2 nights in a row. The downtrend in both of these, is being threatened by the recent move. Ultimately, we want it to remain in place for our market to continue to rise.

Best sector was tech.

Source: https://stocksunderthehood.com/free-resources/us-sector-performance/

February 4, 2024

Feb 5, 2024

AFTER THE MARKET OPEN

Takeover offer: Symbio Holdings (ASX:SYM)

https://www.symbio.global/

Is currently under takeover from Aussie Broadband (ASX:ABB). The offer is valued at $3.01. Symbio Holdings (ASX:SYM) have today announced they will pay a 35c special dividend. The interesting part is attached to that dividend will be 15c in franking credits. The current price of Symbio Holdings (ASX:SYM) is $2.96 so I’m not sure those franking credits are being factored in currently.

2. Ugly start. Market down 1.1%

BEFORE THE MARKET OPEN

Takeover speculation: Lynas Rare Earths (ASX:LYC)

https://lynasrareearths.com/

This looks like being the big story in the resources space today.

2.Lynas Rare Earths (ASX:LYC) has been under pressure for a couple of years despite attracting a lot of hype from the investing community.

3. Despite all the hype, the reason for their rise and subsequent fall is pretty easy to explain. Neodymium is the name of the primary rare earth that they produce.

4. I’d say Lynas Rare Earths (ASX:LYC) will jump today on optimism that they are in play as a takeover target. Regardless, in the medium to longer term, there is only one thing that matters for them and that is the price of Neodymium which remains firmly in a well-defined down-trend.

5. Our market is expected to open weaker. The futures are down 54 points. This is despite another strong night in US on Friday night. US 10 year Bond yields rose sharply on the back of strong economic data. Countering the positivity in the US is the US and UK airstrikes in the Middle East.

Trading Update: NextEd Group (ASX:NXD)

https://nexted.com.au/

Update. Curious company to me. Numbers look ok to me but chart is abysmal. Revenue in line with guidance they say but chart says it wasn’t expecting that?

Contract win: John’s Lyng Group (ASX:JLG)

https://johnslyng.com.au/

Strong announcement from one of the better companies on the ASX this morning. Only question I have is how much is it going to cost? Do they already have the team and capacity in place to handle this? I suspect the market will ask that question later, not today.

Feb 5, 2024

January 28, 2024

Quarterly cash-flow BGL and WOW trading update

A lot of quarterly cash-flow reports this morning, They have all month to release them but always leave it until the last few days. It’s really ridiculous!

Quarterly cash-flow: Bellevue Gold (ASX:BGL)

https://bellevuegold.com.au/ | Fact Sheet

A new producer, has released some significant quarterly operating cash-flows this morning as it continues to ramp up its production.

This catches my eye especially as the share price has been under pressure recently on no obvious announcement that I can see. I also notice that they’ve been moving up the rankings on the ASX most shorted stock list. You can see the list here.

Trading Update: Woolworths (ASX:WOW)

https://www.woolworths.com.au/ | Fact Sheet

Perhaps attractive to a dividend investor or value investor but there is nothing of interest here for a growth investor.

January 24, 2024

Short Selling: An explanation

What it means for a stock to be shorted.

A short transaction looks like this:

A short transaction follows this process:
1. Entity A owns shares in a company, such as Pilbara Minerals (ASX:PLS) – currently the most shorted stock on the ASX at 20.2% shorted. Entity A is usually a long-term holder, often an ETF replicating an index. Examples include State Street, VanEck, and BlackRock.
2. Entity B believes Pilbara Minerals is overvalued and wants to short it. Entity B is typically a hedge fund manager or professional trader, not a retail investor. While they can be wrong, they are usually more sophisticated than the average market participant.
3. Entity B borrows shares from Entity A, paying a small, ongoing fee.
4. Entity B sells the borrowed shares on the market at the current price (e.g., $5 per share). They now hold the sale proceeds but still owe the shares back to Entity A.
5. Entity B hopes for the price to fall so they can buy back the shares at a lower price and return them to Entity A, profiting from the difference. However, the cost of borrowing the shares must be deducted from their profits.

Are there any other reasons why a stock may be shorted?

While the primary reason for shorting is a belief that the stock will decline, there are other strategies that involve short selling, such as a pairs trade.

Pairs trading occurs when a trader believes one stock will outperform another. They take a long position in the stronger stock and a short position in the weaker stock.
The strategy works regardless of whether both stocks rise or fall – what matters is that the long position performs better than the short position.
Example: When Amazon (NASDAQ:AMZN) entered the Australian market, a theoretical pairs trade would have been to go long Amazon and short Harvey Norman (ASX:HVN), anticipating that online retail would outgrow traditional retail.
With hindsight, this would have been a highly successful trade.

What happens when the short sellers get it wrong?

Pilbara Minerals has a market cap of $11.9B, with 20% shorted (i.e., $2.4B worth of stock).
Average daily trading volume is ~$94M, meaning it would take 25 days of typical trading volume to cover the short position.
This huge demand for buying shares to close short positions can lead to a short squeeze.

What is a Short Squeeze?

A short squeeze occurs when many short sellers rush to buy back shares at the same time, pushing the stock price sharply higher.

Unlike a long position, where the maximum loss is 100% of the investment, the potential loss on a short trade is theoretically infinite.
Short squeezes have led to some of the most dramatic price spikes in history.

Examples:

Nickel was squeezed in early 2021, causing extreme price movements.

GameStop (NYSE:GME) experienced a historic short squeeze, as seen in the movie Dumb Money.

Final thoughts: Short Selling: An explanation

If I own a stock with a high short interest, I pay close attention:

Why are traders shorting it?
Is there something I am missing?

Short sellers are formidable market participants. However, if my research and conviction remain strong, and I am ultimately correct, the potential upside can be significant and rapid.

Short Selling: An explanation

January 23, 2024

Trading update NAN

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