Australian Stock Market Report – Telstra, NAB, CSL
Market Commentary and Stock Tips
Will Trump be eating turkey on Thanksgiving day – This week it’s raining reports and many companies break the profit drought – CSL, its blood’s worth bottling – Some whinge about the economy but not the 300,000 who have found a job in the last year – Telstra, could it be Tel-star – NAB, three days in the Royal dock, but its share price survives intact.
Trump – or has he already had turkey for dinner?
Our ever quixotic Donald and his tweets have put Turkey through the economic mincer to secure the release of pastor Andrew Brunson held captive in Turkey since the aborted coup in 2016. But Trump’s use of tariffs as weapons to solve non-military sovereign country issues is not kosher, and in fact can be self-defeating with unpredictable collateral damage. Simply put if my economics degree has taught me anything, it is that economic tools should be used to address economic issues and economic issues only. Otherwise see Germany post WW1-- League of Nations exacts huge monetary reparation----- then Weimar Republic, hyperinflation, Hitler, WW2.-- Collateral damage can be untold.
CBA – despite it all dividends were actually up
Despite the $1billion of fines and compliance costs, CBA delivered what can only be described as a workman-like result this week - with underlying profit and dividends up compared to this time last year. All this when some had been looking for a decline. In response CBA share price has firmed. While the future remains challenging (a hoary old overused expression), the fact is that our economy is chugging along quite nicely which is of direct benefit to our banks.
It’s not a Charles Dickens novel – But it’s a Tale of Two Banks
One of Australia’s major second tier banks Bendigo, also delivered a quietly impressive set of numbers with its profit and dividend also up nicely and outlook upbeat. On the other hand, NAB delivered its trading update which was nothing to get excited about. Nevertheless its share price responded positively, probably because it is recovering from its proverbial share price battering over the recent past, and a realisation that the worst of the Royal Commission fusillades at financial targets may well be in the home straight.
CSL – it’s not Dracula, but it knows more about blood
This iconic company which listed in 1994 at an adjusted price of about 80cents is now reaching new heights at over $210. If my arithmetic is correct that translates to a rise of 3500% in 25 years. But not only that, it just keeps on keeping on. Its continual research and development to find new and better ways to treat debilitating illnesses, sets it on a path for continued stellar performances. It’s a key plank for any blue chip portfolio.
It’s Out of Coals, then Coles, now Tyres and its trim taught and terrific
One thing about Wesfarmers is that it learns its lessons quickly. It was figuratively blown apart with its UK Bunnings adventure, which cost it about $800million, largely because it is was not cutting the hardware mustard, with the good burghers of England. But it’s now moved on. Clearly it adheres to the maxim of “sell your losses and stick with your gains”. Wesfarmers is now ‘cashed up” (following sales of its coal assets, divestment of Coles and selling its K-Mart Tyre business) and more likely than not to give some bonuses to its part owners (that’s us as shareholders) in the near future.
Telstra – out of intensive care, but still in the high dependency ward.
It’s not so much that it delivered a good report, it’s more that it was not as bad as some may have thought. My question about Telstra is that I am not sure where its future growth lies given the increasingly completive telco market. My view: - there are better options available.
Computershare: delivered an impressive report and its future profit growth buoyant.
Seek: a reasonable result, solid future profit growth.
Breville: a bit better than expected and share price responds in spades
Treasury Wine: a pretty good report, but again not as good as some expected, but its share price rebounded and it looks good.
ASX: a satisfactory result and if current share market momentum continues, this should be good for the owner of the market the ASX.
Cochlear: a respectable result, but not in the CSL class
Domino’s Pizza: an acceptable result, but again some were looking for something better. I wasn’t and Domino’s future looks good, just like its pizza’s.
Stock Tips - Please contact Michael on 03 8633 9925 for details
Next Week in Australia…
Tuesday – Reserve Bank Minutes of August meeting
Wednesday – Westpac Leading Index, Skilled Vacancies and Construction Spending.
In the USA ….
Home sales data, surveys and hard data of the Services and Manufacturing sectors.
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