Report

Dissecting 2018 Price Momentum

  • Growth stocks are outperforming Value stock as we expected this year.
  • BSL, SFR, SRX, and BPT are a scarce group of stocks that have made the top 30, remain cheap and have a strong earnings outlook.
  • Our screening suggests investors should remain cautious of XRO.
  • Investors should also be cautious of RWC, GWA, WEB, BAP and MYX.
  • Value investors may find GEM, TLS, PTM, SGR, API, EXC, MIN, RHC, IFL and BLD appealing turnaround-stories based on their earnings outlook.
  • SIG, PTM, MND and MIN made the group of 30 worst performing stocks this year, but they have each seen analyst’s upgrade EPS growth in the past 6 months.
Underlyings
Aristocrat Leisure Limited

Aristocrat Leisure is a provider of gaming solutions. Co. is engaged in the design, development and distribution of gaming content, platforms and systems. Co.'s products and services include electronic gaming machines and casino management systems. Co. also operates within the online social gaming and real money wager markets.

Australian Pharmaceutical Industries Ltd

Australian Pharmaceutical Industry is a service provider to the pharmacy industry. Co. operates two segments, Australia and New Zealand. The Australia segment is engaged in the distribution of pharmaceutical, medical, health, beauty and lifestyle products to pharmacies, the purchase and sale of various health, beauty and lifestyle products within the retail industry and provider of retail services to pharmacies. The New Zealand segment is engaged as a manufacturer and owner of rights of pharmaceutical medicines and consumer toiletries.

Bapcor Ltd

Bapcor is engaged in the sale and distribution of motor vehicle aftermarket parts and accessories, automotive equipment and services, and motor vehicle servicing. Co. has three operating segments. The Trade segment is a distributor of automotive aftermarket parts and consumables to trade workshops for the service and repair of vehicles, automotive workshop equipment such as vehicle hoists and scanning equipment, and automotive accessories and maintenance products to do-it-yourself vehicle owners. The Retail segment consists of business units that are retail customer focused. The Specialist Wholesale segment consists of the operations that focus on automotive aftermarket wholesale.

Beach Energy Limited

Beach Energy is engaged in oil and gas exploration, development and production and investment in the resources industry. Co.'s operating segments include Cooper Basin, which includes oil and gas sales from Australian production; Other Australia, which includes Co.'s interest in all on-shore and off-shore production and exploration tenements within Australia other than the Cooper Basin; and International interests, which includes Co.'s interests in all areas outside Australia and oil and gas sales from Egyptian production. As of June 30 2016, Co. had total proved and probable reserve estimate of 69.8 million barrels of oil equivalent.

Bluescope Steel Limited

BlueScope is a manufacturing technology company. Co.'s segments are Australian Steel Products, which produces coated and painted flat steel products for building and construction customers and commodity flat steel products; New Zealand & Pacific Steel, which consists of New Zealand Steel, Pacific Steel, New Zealand Minerals, and BlueScope Pacific Islands areas; BlueScope Buildings, which servicing the low-rise non-residential construction; Building Products ASEAN, North America and India, which producing metal coated and painted steel building products; and Hot Rolled Products North America, which includes a single site electric arc furnace producer of hot rolled coil in Ohio, the U.S.

Boral Limited

Boral manufactures and supplies building and construction materials in Australia, the U.S. and Asia. Co.'s segments are: Construction Materials & Cement, consisting of quarries, concrete, asphalt, transport, landfill, property, cement and concrete placing; Building Products, consisting of Australian bricks, roofing and masonry, and timber products; Boral Gypsum Joint Venture, which manufactures and sells plasterboard and associated products; and Boral USA, consisting of bricks, cultured stone, roof tiles, fly ash, concrete and quarries. The primary end use markets for Co.'s products include residential and non-residential construction and the engineering and infrastructure markets.

Cochlear Limited

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.

CSL Limited

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.

Exterra Resources

G8 Education Limited

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.

GWA Group

GWA Group is engaged in the research, design, manufacture, import and marketing of building fixtures and fittings to residential and commercial premises and the distribution of these various products through a range of distribution channels in Australia, New Zealand and selected international markets. Co.'s business segments are: Bathrooms and Kitchens, which includes vitreous china toilet suites, basins, plastic cisterns, tapware, baths, kitchen sinks, laundry tubs, and bathroom accessories; and Door and Access Systems, which includes door locks and levers and supply and maintenance of commercial door systems.

IOOF Holdings Ltd

IOOF Holdings is engaged in the financial services industry. Co. provides a range of wealth management solutions for Australians, including: financial advice and distribution services via its network of financial advisers and stockbrokers; platform management and administration such as superannuation and investment administration platforms for advisers, their clients and employers in Australia; investment management products that are designed for investors; and trustee services, including estate planning and administration, personal trustee services, self-managed super fund solutions and corporate trust.

Mayne Pharma Group Limited

Mayne Pharma is a pharmaceutical company focused on applying its drug delivery capabilities to commercialize branded and generic pharmaceuticals. Co. operates in four business units: Generic Products, which develops, manufactures, markets and distributes generic pharmaceutical products in the U.S.; Specialty Brands, which markets and distributes specialty branded pharmaceutical products in the U.S.; Metrics Contract Services, which provides contract pharmaceuticals development services and analytical services to third parties; and Mayne Pharma International, which develops, manufactures, markets and distributes branded and generic pharmaceutical products globally, excluding the U.S.

Mineral Resources Limited

Mineral Resources is a provider of mining infrastructure services. These services consist of: site services, including remote mine-site accommodation services, remote power services, and aerodrome management or personnel transport; mining services, including mine scheduling and grade control, mining operations and mine site haulage, dewatering and equipment hire; plant or processing services, including crushing and mineral processing, mobile processing services, and pipeline and water solutions; transport services, including road and rail logistics, ownership of locomotives and wagons, and road transport solutions; port services, including port logistics; and commodity sales and marketing.

oOh!media

oOh!media Limited is engaged in providing a range of Out Of Home advertising solution for customers in Australia and New Zealand. Co. operates in four segments namely road, which provides large format roadside billboards; retail, which provides signs in shopping centers; fly, which provides coverage across all domestic airport terminals in Australia, and also provides media to Qantas Lounge, and integrated Wi-Fi site network; and place, which operates in cafes, bars, universities and indoor social sports centers, and also operates Websites. Co. also provides complementary services, such as campaign production, campaign management, creative and digital services, and experiential advertising.

Platinum Asset Management Ltd

Platinum Asset Management is a non-operating holding company of Platinum Investment Management Limited. Co.'s subsidiary, Platinum Investment Management Limited, trades as Platinum Asset Management, operates a funds management business. Co. has two main operating segments: funds management, and investments and other.

Ramsay Health Care Limited

Ramsay Health Care is a global hospital group, which is engaged in providing health care services. Co.'s facilities cater for a range of health care needs from day surgery procedures to complex surgery, as well as psychiatric care and rehabilitation. As of June 30, 2016, Co. operated 223 hospitals and day surgery facilities across Australia, the U.K., France, Indonesia, Malaysia and Italy.

Reliance Worldwide Corp. Ltd.

Reliance Worldwide Corporation is a limited liability company. Co. is principally engaged in the design, manufacture and supply of high quality, reliable and premium branded water flow and control products and solutions for the plumbing industry. Co. manufacturers brass Push-to Connect (PTC) plumbing fittings, sold under the SharkBite brand. Co. operates through the following four product segments: Fittings and Pipe, Control Valves, Thermostatic Products and Other Products. Co. has 12 manufacturing facilities across Australia, New Zealand, the United States of America and Spain.

Sandfire Resources Limited

Sandfire Resources is a mining and exploration company. Co. is engaged in the production and sale of copper, gold and silver; and the exploration and evaluation of mineral tenements and projects in Australia and overseas. Co. has two operating segments: The DeGrussa Copper Mine, a copper-gold mine located in the Bryah Basin mineral province of Western Australia; and Exploration and evaluation, which includes exploration and evaluation of the mineral tenements in Australia and overseas, including exploring for potential repeats of the DeGrussa Volcanogenic Massive Sulphide mineralised system at the Doolgunna Projects and Co.'s investment in Tintina Resources Inc and WCB Resources Ltd.

Seek Limited

Seek is engaged in the online matching of hirers and candidates with career opportunities and related services; investing in early stage businesses and technologies which are in or adjacent to the main online employment marketplace; and distribution and provision of vocational training and higher education courses. Co.'s ANZ Employment, Zhaopin, SEEK Asia, Brasil Online and OCC segments provides online employment and marketplace services. Co.'s Education segment includes the marketing, sale and distribution of education courses. Co. also has an Early Stage Ventures segment consisting of a portfolio of Australian and international investments.

Sigma Healthcare Ltd

Sigma Healthcare is a pharmaceutical wholesale and distribution business in Australia, delivering to pharmacies Australia wide.Co.'s pharmacy-led network includes over 700 retail brand members representing the brands Amcal, Guardian, PharmaSave, Chemist King and Discount Drugstores. Co. also manages and promotes a range of Over the Counter private label products made available to brand member customers, as well as a generic range of private label products under the Pharmacy Care range. In addition, Co., through its subsidiary, Central Healthcare Services, has a presence in the hospital pharmaceutical distribution market.

Sirtex Medical Limited

Sirtex Medical is a global life-sciences company based in Australia. Co. is engaged in developing and delivering effective oncology treatments using novel small particle technology. Co.'s main product is a targeted radioactive treatment for liver cancer called SIR-Spheres® Y-90 resin microspheres. SIR-Spheres Y-90 resin microspheres are a medical device used in interventional oncology and delivered to the liver via Selective Internal Radiation Therapy.

Star Entertainment Group Limited

Star Entertainment Group is a resort company, engaged in gaming, entertainment and hospitality. Co. owns and operates The Star Sydney, Treasury Casino and Hotel, Brisbane and Jupiters Hotel and Casino, Gold Coast. Co. also manages the Gold Coast Convention and Exhibition Centre on behalf of the Queensland Government. Co. segments include: The Star Sydney, which comprises the Star Sydney's casino operations, including hotels, apartment complex, restaurants, bars and night club; Gold Coast, which comprises Jupiters' casino operations, including hotel, theatre, restaurants and bars; and Treasury Brisbane, which comprises Treasury's casino operations, including hotel, restaurants and bars.

Telstra Corporation Limited

Telstra is engaged in providing telecommunications and information services for domestic and international customers. Co.'s operating segments are Telstra Retail, Global Enterprise and Services, Telstra Operations, and Telstra Wholesale. As of June 30 2016, Co. provided retail fixed data services to 3.4 million customers, retail fixed voice services to 5.7 million and domestic retail mobile services to 17.2 million customers.

Treasury Wine Estates Limited

Treasury Wine Estates is engaged in viticulture and winemaking, and the marketing, sale and distribution of wine. Co.'s wine portfolio includes wine brands such as Penfolds, Beringer, Lindeman's, Wolf Blass, Stags' Leap, Chateau St Jean, Beaulieu Vineyard and Sterling Vineyards. Co. also distributes beer and cider under license in New Zealand and provides contract bottling services to third parties. Co. maintains its operations in four regions: Australia and New Zealand, Asia, Europe, and Americas.

Webjet Limited

Webjet is engaged in the provision of online travel bookings. Co.'s business consists of a Business to Consumer division (comprising theWebjet, ZUJI and Online Republic brands) and a Business to Business division (comprising the Lots of Hotels and Sunhotels brands).

Xero Limited

Xero is engaged in the provision of a platform for online accounting and business services to small businesses.

Provider
Macro Strategy Advisors Pty Ltd
Macro Strategy Advisors Pty Ltd

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.

 

Analysts
Shane Lee

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