Credit Corp (CCP) and Downer EDI (DOW) both had upside earnings surprises, which helped them see the best two weekly performances. Seven West Media’s full-year results saw the opposite reaction, with the stock crashing after SWM warned of a 15-20% fall in FY2017 earnings. DOW’s better-than-expected earnings also helped see buying in its competitor Monadelphous Group, which continues to rally despite being the eighth most shorted stock in the index.
NAME
|
5 Day
|
1 Month
|
YTD
|
NAME
|
5 Day
|
1 month
|
YTD
|
CREDIT CORP GRP
|
18.4
|
33.0
|
55.1
|
BWP TRUST
|
-4.4
|
0.5
|
18.6
|
DOWNER EDI LTD
|
13.9
|
27.7
|
37.0
|
BLUESCOPE STEEL
|
-4.6
|
25.5
|
82.9
|
BELLAMY'S AUSTRA
|
12.6
|
29.4
|
-2.0
|
APA GROUP
|
-4.6
|
6.3
|
9.4
|
SEVEN GROUP HOLD
|
11.5
|
37.7
|
43.1
|
HEALTHSCOPE LTD
|
-4.7
|
3.7
|
7.5
|
COVER-MORE GROUP
|
10.2
|
23.8
|
-30.8
|
G8 EDUCATION LTD
|
-4.9
|
-1.4
|
5.5
|
WHITEHAVEN COAL
|
10.1
|
73.4
|
165.0
|
LINK ADMINISTRAT
|
-5.2
|
5.8
|
9.9
|
MONADELPHOUS GRP
|
9.1
|
52.8
|
81.2
|
SAI GLOBAL LTD
|
-5.3
|
-7.2
|
-17.9
|
ST BARBARA LTD
|
9.0
|
6.8
|
130.2
|
SPARK NEW ZEALAN
|
-5.6
|
10.3
|
18.0
|
GENWORTH MORTGAG
|
8.5
|
20.8
|
23.3
|
PROGRAMMED MAINT
|
-7.3
|
6.1
|
-18.2
|
WESTERN AREAS LT
|
8.4
|
43.7
|
32.1
|
IPH LTD
|
-7.5
|
-4.5
|
-28.9
|
INDEPENDENCE GRP
|
7.5
|
35.0
|
70.1
|
REA GROUP LTD
|
-7.8
|
1.9
|
10.0
|
SARACEN MIN HLDG
|
6.4
|
25.9
|
199.2
|
NAVITAS LTD
|
-7.9
|
2.4
|
19.5
|
SANTOS LTD
|
6.2
|
-0.4
|
28.7
|
IRON MOUNTAI-CDI
|
-8.6
|
-0.1
|
#N/A N/A
|
EVOLUTION MINING
|
5.7
|
21.1
|
115.6
|
NINE ENTERTAINME
|
-10.0
|
-6.2
|
-45.5
|
FLEXIGROUP LTD
|
4.5
|
18.1
|
-28.6
|
SEVEN WEST MEDIA
|
-21.7
|
-25.0
|
8.6
|
Market Internals
Market internals have reversed their downward course just as the ASX began to catch some buying again after it dropped below the 5500 level. The percentage of companies above the 50-day moving average continues at an elevated 77.5%.
Sector Performance
Only the energy and materials sectors ended in positive territory for the week. The spot oil price looks like it may have corrected last week after seeing a 20% decline from its recent highs. With the outlook improving for the spot oil price, investors were keen to jump back in and start picking up energy names again.
Sector
|
5 day
|
1 Month Return
|
YTD Return
|
IT
|
-1.8
|
1.3
|
-4.2
|
Utilities
|
-2.1
|
3.2
|
13.9
|
Healthcare
|
-2.7
|
4.9
|
11.9
|
Industrials
|
-1.9
|
3.9
|
12.5
|
Financials
|
-1.6
|
6.1
|
-4.3
|
Consumer Staples
|
-0.8
|
6.8
|
-0.1
|
Telecoms
|
-2.1
|
1.6
|
3.1
|
Materials
|
1.4
|
4.1
|
24.8
|
Consumer Disc.
|
-1.9
|
7.8
|
10.6
|
Energy
|
2.0
|
1.4
|
4.8
|
ASX Index
|
-1.2
|
5.1
|
3.8
|
Factor Performance
Small Caps continue to dominate the comparative factor performance for listed Australian firms. And the factor rotation continues apace with comparatively poor performances in both infrastructure and high yield, which have previously performed quite well.
Factor
|
5 day
|
1 Month Return
|
YTD Return
|
Value
|
-0.8
|
6.5
|
8.7
|
Risk Weighted
|
-1.3
|
5.2
|
15.5
|
ESG
|
-1.5
|
6.0
|
5.4
|
Momentum
|
-1.3
|
3.3
|
22.0
|
Quality
|
-1.1
|
4.8
|
13.7
|
High Yield
|
-0.9
|
2.5
|
4.8
|
Minimum Volatility
|
-1.4
|
5.1
|
14.6
|
Small Caps
|
-0.3
|
6.6
|
22.1
|
Infrastructure
|
-2.0
|
3.2
|
17.4
|
MSCI Australia
|
-1.1
|
5.8
|
9.6
|
Short Positions
Flight Centre and MYOB both have more than 23% of their entire free float of shares taken up by short positions. Even though a number of commodities-related stocks have been rallying of late, investor sentiment in WorleyParsons, Monadelphous, and Western Areas is still very negative, as shown by the still large short positions in these stocks.
Name
|
Percentage of Float
|
Short Interest Ratio
|
FLIGHT CENTRE TR
|
23.8
|
44.8
|
MYOB GROUP LTD
|
23.1
|
49.0
|
WORLEYPARSONS
|
19.1
|
18.5
|
MYER HOLDINGS
|
16.4
|
27.3
|
METCASH LTD
|
13.8
|
26.8
|
COVER-MORE GROUP
|
12.9
|
33.6
|
TPG TELECOM LTD
|
12.8
|
20.8
|
MONADELPHOUS GRP
|
11.9
|
13.6
|
WESTERN AREAS LT
|
11.8
|
17.0
|
BELLAMY'S AUSTRA
|
11.5
|
12.5
|
Price Target Premiums
The materials and energy sector dominates the stocks trading at large premiums to their consensus price targets. Popular shorts, MND, WSA and WOR all make appearances in the top ten.
Stock Ticker
|
Name
|
Percentage Above Consensus Target Price
|
MND AU
|
MONADELPHOUS GRP
|
80.4
|
RRL AU
|
REGIS RESOURCES
|
29.4
|
WSA AU
|
WESTERN AREAS LT
|
24.9
|
WHC AU
|
WHITEHAVEN COAL
|
24.4
|
SAR AU
|
SARACEN MIN HLDG
|
24.1
|
IGO AU
|
INDEPENDENCE GRP
|
23.8
|
FMG AU
|
FORTESCUE METALS
|
22.5
|
SPK NZ
|
SPARK NEW ZEALAN
|
22.1
|
BWP AU
|
BWP TRUST
|
21.6
|
WOR AU
|
WORLEYPARSONS
|
19.6
|
Value Screens
Tobias Carlisle’s Acquirer’s Multiple, which is a firm’s enterprise value divided by EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) minus capital expenditure. While familiar disliked names in the index show up, such as MND, FLT, DOW, Seven West Media (SVM) is now showing up as the third most compelling stock in this valuation metric. When a stock has a massive earnings-driven selloff and begins screening up in the valuation screens, then that is often a strong signal that a 10% rebound in the price could be imminently on the way.
Stock Ticker
|
EV
|
EBITDA-Capex
|
Acquirer's Multiple Score
|
MONADELPHOUS GROUP LTD
|
894.0
|
164.5
|
5.4
|
AUSTAL LTD
|
371.8
|
67.9
|
5.5
|
SEVEN WEST MEDIA LTD
|
1937.5
|
319.7
|
6.1
|
FLIGHT CENTRE TRAVEL GROUP L
|
2071.4
|
340.4
|
6.1
|
DOWNER EDI LTD
|
2276.9
|
332.2
|
6.9
|
METCASH LTD
|
2339.4
|
330.0
|
7.1
|
OZ MINERALS LTD
|
1384.4
|
187.3
|
7.4
|
SANDFIRE RESOURCES NL
|
942.4
|
126.2
|
7.5
|
MCMILLAN SHAKESPEARE LTD
|
1416.0
|
184.8
|
7.7
|
SIMS METAL MANAGEMENT LTD
|
1267.9
|
157.4
|
8.1
|
Momentum Stock Picks
Note: These momentum stock recommendations are based off backtested results looking at a 3-5 day holding period with a 5% stop loss on every trade.
DOW – (Buy)
The very low expectations for Downer EDI’s FY2016 earnings were surpassed last week, and given the still very low valuation metrics on the stock, it looks like it can almost only move higher over the next twelve months.
