TOL - 30th Aug, 2024
Buy Hold Sell: 5 solid results the market missed
There was a lot of volatility this results season, but these stocks hardly moved at all. Today's guests share why they should have.
We've seen some real whiplash market moves this reporting season. Take Megaport, for instance, which fell 21% in one trading day. Or Audinate, which fell 36% on its preliminary results. Or, on the other side of that, WiseTech, which soared more than 18% on its stellar report.
But what about the stocks that didn't move, or hardly moved at all - despite releasing solid results this reporting season?
In this episode of Buy Hold Sell, Centennial Asset Management's Matthew Kidman was joined by First Sentier Investors' David Wilson and Medallion Financial's Michael Wayne for their analysis of three stocks that did just that.
Plus, they named two solid results that believe could make major market moves in the next few months.
Note: This episode was recorded on Tuesday 27 August 2024. You can watch the video, listen to the podcast or read the edited podcast below.
Other ways to listen:
Edited Transcript
Matthew Kidman: Hello, and welcome to Livewire's Buy Hold Sell. I'm Matthew Kidman, and today we're going to have a look at the companies that delivered very, very solid results in the latest company reporting season. And to talk about these companies, we have David Wilson from First Sentier Investors. Welcome, David. Michael Wayne from Medallion Financial.
David, I'll start with you at the big end of town, Australia's biggest company, Everest-like valuations, but managed to put in a good result. Commonwealth Bank, buy, hold, sell?
Commonwealth Bank (ASX: CBA)
David Wilson (HOLD): It's a hold. I get the high valuations, but this is 15% RONTAs (return on net trade assets), this is 5% EPS growth and a great balance sheet. Just a consistent delivery of earnings, so it's a hold for us.
Michael Wayne (HOLD): It's very expensive, but it's really a cornerstone for a lot of people's portfolios and they are very much ahead of the other big four banks in terms of their investment in technology. So we expect them to keep muddling along without expanding that multiple any further.
Matthew Kidman: So we're not scared about that one. Let's go down to where you really like; high growth, technology, platforms, financial. HUB24, buy, hold, or sell?
HUB24 (ASX: HUB)
Michael Wayne (HOLD): Going with a hold on HUB24. It's one that we actually missed, and have watched with envy as it's ground higher. It's a business that continues to grow its assets under administration. Its margins continue to expand, and we expect those margins to continue to expand in the next couple of years. Our question marks are over the long term. As fee compression continues within the industry, it's going to be more and more difficult for these businesses. But in the next little period, it's going to be okay for them.
Matthew Kidman: All I've ever heard over the last five or six years, is that platforms are financially expensive but they keep going up. HUB24, buy, hold, or sell?
David Wilson (BUY): For us, it's still a buy. As Michael said, the margins are still going up. They've been a bit flat for a while, but we think they're going to accelerate over the next little while. Andrew Alcock and the team have done a great job there, and we continue to expect them to take market share from the incumbents. So for us, it's a buy.
Matthew Kidman: It's been a tough market for oil and gas, Michael. But Woodside had a very solid result and a few acquisitions. Can you give us a buy, hold, or sell?
Woodside Energy (ASX: WDS)
David Wilson (SELL): For us, it's a sell. We were not that impressed with the acquisitions that they announced recently. They still need to convince the market on the merits of what they've done in Texas there. The rest of the business is performing solidly. It's got a well-supported buyer dividend yield. But for us, it's a sell.
Matthew Kidman: It's been a tough market for oil and gas, Michael. But Woodside, very solid result, a few acquisitions. Can you give us a buy, hold, or sell?
Michael Wayne (SELL): In relative terms, we think there are better alternatives in the energy space. Woodside has very low-cost, very high-quality assets, but where's the growth going to come from? The dividends are pushing towards the upper end of that payout ratio. There are a couple of assets that they're looking to sell, which will allow them to maintain that dividend. But energy companies, resource companies for dividend plays, we're not so sure. We prefer others in the area.
Michael's solid result primed for future gains - Light & Wonder (ASX: LNW)
Matthew Kidman: Okay. Now you can relax a bit and get a bit excited. Give us a pick on something that did have a great result and is going to go higher on the back of it.
Michael Wayne: It's a new name on an old business. But effectively, it's competing very strongly up against Aristocrat, and continues to win market share in Australia, mainly from their land-based gaming, but their iGaming as well is something that potentially has a lot of growth for them into the future. They've got a couple of new games in the market that are taking off and have them growing above system growth. So that's a business that we think reported very well and will kick it onwards and upwards into the stratosphere.
David's solid result primed for future gains - AUB Group (ASX: AUB)
Matthew Kidman: David, I got the feeling you're not going to have a name anywhere near as exciting as that. But I think you've got a stock for us that reported nicely but didn't get the reaction straight away.
David Wilson: No, that's right. So our stock is AUB.
Matthew Kidman: I was right.
David Wilson: There you go. But actually, it gave double-digit guidance. It's really refining its UK strategy result. Again, beat expectations slightly, and we expect it actually to upgrade guidance through the year. We also like Light & Wonder as well. We have a slight preference for Aristocrat (ASX: ALL). But in answer to your question, AUB.Matthew Kidman: I can't believe I got three stocks out of you. You were only supposed to give us one.
David Wilson: There you go. Pay rise.
Matthew Kidman: If you liked that show as much as me, give it a like. And also, don't forget, if you want this kind of content, which we all need in markets, don't forget to subscribe to YouTube and listen to our podcast.
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Buy Hold Sell is a weekly video series exclusive to Livewire. In each episode two fund managers give their views 'Buy, Hold or Sell' on five ASX listed companies. Not recommendations, please read the disclaimer and seek advice where appropriate.
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Livewire gives readers access to information and educational content provided by financial services professionals and companies (“Livewire Contributors”). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.
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Livewire Markets
Buy Hold Sell is a weekly video series exclusive to Livewire. In each episode two fund managers give their views 'Buy, Hold or Sell' on five ASX listed companies. Not recommendations, please read the disclaimer and seek advice where appropriate.
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Livewire Markets
Buy Hold Sell is a weekly video series exclusive to Livewire. In each episode two fund managers give their views 'Buy, Hold or Sell' on five ASX listed companies. Not recommendations, please read the disclaimer and seek advice where appropriate.
Expertise
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