Most Eureka Report subscribers will know of ResMed, the Australian sleep device manufacturer that has taken on the world and served as a very strong stock for most of the last decade. But less will be familiar with David Burton – he is the long-time chief executive and founder at Compumedics, an ASX-listed manufacturer of… yes… sleeping devices, which has also built a reputation in global export markets. David is one of the unsung heroes of Australian business and Compumedics remains an intriguing player in the small cap sector – make sure you don’t miss Alan Kohler’s live interview with Burton on Tuesday at noon.
Also in the studio this week we’ll have the remarkable Stuart McAuliffe from Henry Morgan Ltd. McAuliffe is one of those fund managers who shoots out the lights and few beyond a limited circle of investors ever hear the name until there is a new plan afoot. Well, guess what? McAuliffe has some new plans for retail investors and he will be in the studio to answer your live questions with Mitch Sneddon on Thursday at 1pm.
On the webcast front we have two events on the calendar this week: On Tuesday at 1pm our colleagues at brightday will host Building Blocks: Infrastructure Investing with Mitchell Sneddon and Kirstie Spicer. Later in the week on Wednesday at noon James Samson will be updating everyone on the performance of his Income First model portfolio. James has been very impressed with trading in his pick DWS, upgrading the stock in our edition today. To read more click here.
And don’t forget Alan Kohler will be back in the studio with Andrew Vlahov, the chief executive at Enerji, the Perth-based green power utility company, on Thursday at noon.
Meanwhile, here’s what our analysts have been up to during the last week:
Growth First model portfolio
There are no changes this week to the Growth First model portfolio. In another tough week for stocks when the S&P/ASX 200 dropped by more than 3 per cent, the stocks in the portfolio continue to outperform, finishing the week in positive territory. The Growth First model portfolio has now brought investors a total return of more than 10 per cent less than five months from inception – a period in which the market has dropped by more than eight per cent.
A positive trading update propelled DWS to new heights (you can read more on DWS here), while Ridley Corporation (RIC) rose on selling a chunk of its substantial land bank. Asciano (AIO) granted due diligence access today to the consortium led by Qube Holdings (QUB). The Australian Competition and Consumer Commission (ACCC) is studying Qube’s bid and will have a big say in the battle for Asciano, but gaining access to due diligence was an important step for Qube. We continue to like Qube’s prospects with or without Asciano’s container terminals business.
Today we have lowered our estimates on GWA Group (GWA) in the wake of a trading update which revealed weak sales growth and shrinkage in market share. We still see value in the renovation market exposure that GWA brings to the Growth First portfolio, but reiterate our hold rating and trim our valuation from $2.60 to $2.34 per share. You can read our update on GWA group here.
-- Tim Dohrmann
Income First model portfolio
The Income First model portfolio performed well despite a depressed equities market in the last week. The All Ordinaries (XAO) fell 3 per cent for the week, but the Income First model portfolio was aided by some stronger stock performances.
Of particular note was the performance of DWS Limited (DWS). The company provided a strong trading update at its AGM, indicating that there is strong momentum in FY16 earnings and I have upgraded my valuation for the company (click here to read more).
This week will see Arena REIT (ARF) and Automotive Holdings (AHG) hold AGMs on Thursday and Friday respectively, so investors should be aware of the potential for price sensitive news.
-- James Samson
LIC model portfolio
The LIC model portfolio is splashing some cash in this market pullback. BKI is allocated a further 5 per cent to increase the portfolio’s large cap exposure. WAX has also had an additional 5 per cent added to it and so has the Asian focused PAF. The underlying NTA performance in PAF has been incredibly strong with the last announcement on November 6 stating the NTA is at $1.1778. It is trading at a large discount and if performance continues the market cannot ignore it for too much longer.
Meanwhile I have downgraded my call on Magellan Flagship Fund from buy to hold due to the strong run in the stock. Read more here.
-- Mitchell Sneddon
International model portfolio
There are no changes to the International model portfolio this week.
-- Clay Carter