to Dissect Aussie Growth Stocks
- Growth stocks have again out-performed Value since the start of the year supported by declining bond yields and solid EPS growth.
- In this note, we cast our eye over a selection of 55 Growth stocks constrained by a 12-month forward PE multiple of 18 and long-term consensus EPS growth of 7.5%.
- We then compare each stock using their cash conversion, asset turnover, reinvestment rate, net debt, EBITDA margin and Good Will.
- Within the group of stocks with a high PE and strong earnings growth, WEB, EHL and PNI are more attractive based on their PE: long-term EPS growth ratio.
- In the group of stocks trading on high PE ratios with relatively weak longer-term EPS growth, VOC and ALX look susceptible and WEB, EHL and PNI appear more attractive.
- We will update our model portfolio in a few weeks and will reassess its Growth names.
Alexander's is a real estate investment trust engaged in leasing, managing, developing and redeveloping its properties. The company is managed by, and its properties are leased and developed by, Vornado Realty Trust. The company has seven properties in the greater New York City metropolitan area.
Bellamy's is engaged in the the supply, sale and distribution of organic food and formula products for babies and toddlers. Co.'s products are distributed in Australia, Vietnam, Singapore, Malaysia, People's Republic of China, Hong Kong, and New Zealand. Co.'s products are also available through multiple online retailing platforms.
Bingo Industries is engaged in the provision of waste management solutions for domestic and commercial business, the operation of state of the art recycling centers and the manufacture of bins. Co. has two operating segments consisting of Collections and Post Collections. The Collections segment's primary business is the collection and transportation of building, demolition, industrial and commercial waste from customers to post-collection facilities. Post Collections consists of a network of ten resource recovery and recycling centers located in New South Wales. Co. diverts waste from landfill by sorting and processing mixed waste recieved from customers to be reused or recycled.
Cochlear is a for-profit entity and operates in the implantable hearing device industry. Co.'s implant systems comprise an implant which is inserted during surgery and an external sound processor. As of June 30 2016, Co. sold in over 100 countries and had a direct presence in approximately 20 countries and used distributors and agents in other areas. Manufacturing for the cochlear implant product range is based in Australia. The bone conduction implant product range is manufactured in Sweden. Co.'s supply chain operates with product being distributed from its manufacturing sites in Australia and Sweden to its regional distribution centres in the U.S., the U.K. and Panama.
Computershare is engaged in the operation of investor services, which provides registry maintenance and related services; plan services, which provides administration and related services for employee share and option plans; communication services, which comprise document composition and printing, intelligent mailing, among others; business services, which provides bankruptcy, class action and utilities administration services, voucher services, corporate trust services and mortgage servicing activities; stakeholder relationship management services, which provides investor analysis, investor communication and management information services; and technology services.
CSL is engaged in the research, development, manufacture, marketing and distribution of biopharmaceutical and allied products. Co.'s operations are divided into three segments: CSL Behring, Seqirus, and CSL Intellectual Property. CSL Behring is engaged in manufacturing, marketing and developing plasma therapies (plasma products and recombinants). Seqirus is engaged in manufacturing and distributing non-plasma biotherapeutic products. CSL Intellectual Property is engaged in the licensing of intellectual property of Co. to unrelated third parties. Co. operates primarily in five specific geographic areas, namely Australia, the U.S., Germany, Switzerland, and the U.K.
G8 Education is engaged in the operation of early education centres owned by Co., and ownership of early education centre franchises. Co. operates in Australia and Singapore.
Technology One is engaged in the development, marketing, sales, implementation and support of enterprise business software solutions. Co.'s segments are: Sales and Marketing, which is involved in the sales of license fees and customer support; Consulting, which is involved in the implementation, consulting services and custom software development services for large scale, purpose built applications; Research & Development, which is involved in research development and support; Cloud, which is involved in the delivery of cloud hosting services; and Corporate, which is involved in the aggregation of the corporate services functions' costs and revenue, and corporately-funded projects.
WiseTech Global is engaged in providing software solutions to the logistics industry across more than 125 countries. Co. develops, sells and implements software solutions that enable logistics service providers to facilitate the movement and storage of goods and information domestically and internationally. Co.'s customers range from small and mid-sized regional or domestic enterprises to large multi-national companies.
About us:
- The business is a Proprietary Limited Australian company that is owned and fully operated by Shane Lee from a small office in Sydney’s CBD.
- Shane worked for 17 years in Sydney-based senior research roles (economist, equity strategist and bond strategist) in global and regional investment banks and a domestic commercial bank prior to starting Macro Strategy Advisors. These roles straddled the asset classes making him uniquely positioned to advise multi-asset investors. He worked for the Reserve Bank of Australia (RBA) for 3 years as a housing, commercial property and equity market analyst and a liquidity forecasting specialist. He worked as a structural engineer in Queensland for 10 years prior to his career at the RBA.
Aim of our business:
- To partner with our clients in their aim to maximise returns. We provide timely, independent and thought-provoking research on thematic macro issues that are impacting or could impact financial markets. We aim to produce research that prompts our clients to question their assumptions.
Services:
- A fortnightly research note.
- Regular presentations and data support delivered by understanding our clients interests and investment process.
- We also in work in confidence to investigate, analyse and report on issues at our clients direction. This work is done on a project-by-project basis.
- As an Australian based business, the main focus is analysing how domestic and global issues impact Australian investors. However, our global and domestic insights are also valued by our offshore clients.
Our Edge:
- Our low cost base relative to our competitors allows us to provide a quality product at a reasonable cost.
- We are fully independent and don’t support a banking function or any third party. We have no interests other than providing our clients with the best possible research.
- Our focus is not point forecasting, but providing rigorous analysis and insight. We don’t routinely focus on the top or bottom 10% of likely outcomes to create a headline.
- Shane’s background in engineering has provided clients with unique insights into global infrastructure and domestic housing issues.
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