Australian Stock Market Report – Coles, Kogan, Afterpay shares & more

Australian Stock Market Report Coles Kogan Afterpay shares more

Market Brief and Stock Tips - 30 November 2018

Highlights

Market sentiment on the rise -  Afterpay Touch – quite a growth story  – Coles – running solo – Kogan – moving into credit cards - Harvey Norman – come on, Gerry! – are banks on the come-back trail?

U.S. sharemarket – not slipping on the oil slick

Over the past week, oil prices have continued to slide by another 9 per cent to their recent low of US$50.03. But on the other hand, equity markets managed to buck the trend this week and lifted 4.3%. How does this work you say? Well the most likely suspect was US Federal Reserve boss Jerome Powell, hinting at a potential slow-down in U.S. interest rates. And if that’s so, and if the proverbial ‘Santa Rally’ actually eventuates, we may well see the sharmarket’s favourite son ‘Mr. Bull”, again show us who the ‘real boss’ is.

Afterpay Touch – hello “buy now, pay later” – good-bye “layby – pay later”

Following an upbeat AGM this week – profit up 390 per cent over the year - It was only a matter of time before the regulator – ASIC - was going to emerge from the deep. In a nutshell, they say they will continue to police the sector and that could be a headwind for the company. But looking ahead, the growth-story for Afterpay Touch still appears promising. The uptake in the U.S. has been particularly strong, and penetration into the UK market is in-progress, which should add firmly to the company’s bottom-line.

Wesfarmers and Coles – separated at the hip

Completion of the demerger yesterday means that Coles shareholders should receive their holding statements within a few days (one Coles share for each Wesfarmers share.)   As I have previously mentioned, now that the two businesses are more focused and in control of their own destinies, each of them are likely to perform better. 

Kogan – and now its Credit Cards

At its 2018 Annual Meeting, Kogan reiterated that their business is moving in the right direction. The company had previously expanded its offering into insurance and internet and now set to launch is “Kogan Money” a credit card backed by Citigroup. While its share price has fallen by over 70 per cent this year, a bumper Christmas and the company’s new initiatives should place Kogan back in the watch list category.

The banks - beaten up but off the canvas

Over the past weeks and month our major banks’ share prices have steadied, stabilised and started to move ahead. If one takes the view that the Royal Commission’s impact has already been largely factored into their share prices – then for investors who do not have large proportions of their portfolios in the banks already, the banks could well now be worth another look. Their dividends continue to remain very attractive. Macquarie and CBA stand out for consideration but the others are also in the frame.

Harvey Norman – strike one

Gerry Harvey was not a ‘happy camper’ at its 2018 Annual Meeting, with over 50 per cent of shareholders rejecting the retailer’s remuneration report. (Called Strike, if it gets another one next year the Board goes!) - While its past year’s results were satisfactory (Australian sales only down 0.2 per cent, and international sales actually up 3 per cent), competition within the sector remains fierce from the likes of JB Hi-Fi, The Good Guys, and Amazon.

Stock tips - Please phone Michael for details on 03 8633 9925

australian stock market weekly report 

Stop press

Seek

Delivered healthy results at its AGM, continues to capture the vast majority of job seekers who look for employment on-line.

Collins Foods – results “Finger Lickin’ Good”

This owner of KFC, reported profit up 25 per cent to almost $22 million for the half-year ended in October, and interim dividend (fully franked) also up 12.5 per cent to 9.0c per share, and sales momentum is looking ‘mouth-watering’.  Dual-lane drive throughs are also on the horizon.  

Kathmandu

The adventure gear retailer reported a 7.1 per cent rise in sales across Australian stores. Looking ahead, sales growth over the near term is expected to be firm - lifting the medium term outlook for the company.   

Aristocrat

Delivered a quietly impressive result, but some question mark about the strong future profit growth hovers about. However it still looks a sound investment.

Next week

In Australia:

Tuesday: Cash Rate and the RBA Rate Statement.

Wednesday: GDP.

Thursday: Retail Sales.

In the U.S.A:

Important data will be released on Non-Farm Employment and the Unemployment rate.

 

Disclaimer: This publication has been prepared solely for the information of the particular person to whom it was supplied by Phillip Capital Limited (“PhillipCapital”) AFSL 246827.  This publication contains general financial product advice.  In preparing the advice, PhillipCapital has not taken into account the investment objectives, financial situation and particular needs of any particular person.  Before making an investment decision on the basis of this advice, you need to consider, with or without the assistance of an adviser, whether the advice in this publication is appropriate in light of your particular investment needs, objectives and financial situation.  PhillipCapital and its associates within the meaning of the Corporations Act may hold securities in the companies referred to in this publication.  PhillipCapital believes that the advice and information herein is accurate and reliable, but no warranties of accuracy, reliability or completeness are given (except insofar as liability under any statute cannot be excluded). No responsibility for any errors or omissions or any negligence is accepted by PhillipCapital or any of its directors, employees or agents. This publication must not to be distributed to retail investors outside of Australia.

 

About Michael Heffernan

+61 (3) 8633 9925 Email Profile

Michael Heffernan has over 30 years’ experience in the finance and securities industry and is currently a Senior Client Advisor and Economist with a leading Australian Sharebroker Phillip Capital after having been Chief Economist/Lawyer with the Australian Stock Exchange for 13 years, and an Economist with Commonwealth Department of Employment and Industrial Relations for 11 years.
Most recently Michael topped the poll of the Australian Newspaper's Criterion column of his expert tipsters for 2014 with an average increase of 26% over the year. Also Michael was named Stock Picker of the year 2013 and 2016 at the Australian Stockbrokers Foundation Annual Awards Charity Dinner.

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