Stock Tips: Never mind the alpha, what's the Sigma play this week?
It's no easy gig analysing share prices and company performance but somebody's got to do it. Every week two experts from our Share Tips columnist pool give us their recommendations.
Sean Conlan – Leyland Private Asset Management
BUY
Sigma Healthcare (ASX:SIG)
We believe SIG will grow into its current PE multiple by refurbishing existing Chemist Warehouse stores, opening 20 new stores per annum across Australia and by exporting the brand offshore.
Judo Capital Holdings (ASX:JDO)
Improved funding costs give us more comfort on the near-term margin outlook. With forecast a~34% earnings CAGR over the next three years, and trading at only 12x FY26 P/E we think the valuation is attractive.
HOLD
Treasury Wine Estates (ASX:TWE)
TWE has trimmed guidance for FY25 earnings growth, citing lower-than-expected wine sales in the US where economic uncertainty is hurting consumer demand.
Austal (ASX:ASB) We remain positive on the long-term outlook for ASB, considering the macro tailwinds and attractive growth profile, however, we are conscious of its current valuation.
SELL
Bank of Queensland (ASX:BOQ)
While BOQ's simplification strategy and pivot towards business is bearing fruit, we think it will continue to struggle to make returns above the cost of capital over the medium term.
Lovisa Holdings (ASX:LOV)
We are concerned about the quality of stores recently opened and think that higher-than-normal rates of discounting may be driving strong LFL sales.
Chris Watt – Bell Potter Securities
BUY
CAR Group (CAR)
Resilient RV sales, solid international operations and strong earnings momentum support continued growth. The company continues to benefit from a scalable global expansion strategy that allows it to replicate its model across international markets.
Treasury Wine Estates (ASX:TWE)
While the US premium wine market is weak, core luxury brands remain strong. DAOU Vineyards synergies and broader international opportunities provide upside despite recent downgrades.
HOLD
Technology One (ASX:TNE)
A strong first-half result confirms the business is executing well, with growing recurring revenue and cash flow. However, recent share price gains limit short-term upside.
James Hardie (ASX:JHX)
Strategy execution in US new construction is on track, particularly in the southern states. That said, macro softness and affordability challenges persist.
SELL
IDP Education (ASX:IEL)
Deteriorating student volumes and shifting global immigration policy have led to significant earnings downgrades. Visibility remains poor, and risks are elevated.
Cettire (ASX:CTT)
Weak margins, US tariff headwinds, and a soft cash position point to a challenging outlook. The path to profitability appears longer and riskier.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
News.com.au
38 minutes ago
- News.com.au
Commonwealth Bank soars past $300 billion value but experts have concerns
Commonwealth Bank shocked the world this week when its value topped an eye-watering $300 billion, dwarfing even Wall Street's biggest banks and outpacing its Australian competitors. For some perspective, the staggering rise of CBA puts it well above the combined value of two of the big four banks in Australia — Westpac and National Australia Bank. It also becomes an outlier as the first ever ASX-listed company to be valued at more than $300 billion and is the most expensive bank stock in the history of the world thanks to a 49 per cent rise in the past 12 months. But experts say not all is as it seems. One says CBA is completely overvalued and the $300 billion figure ignores 'anemic earnings growth'. Share trader author Alan Hull told Commonwealth Bank shares are 'a risky share to be buying'. 'Smart money is not buying CBA,' he said. 'It's seriously overvalued. It's earnings growth is anemic. The current divident yield is 3.74 per cent including tax imputations. 'It's overpriced, which means it's a risky share to be buying and it's only yielding 3.74 per cent.' He credits CBA's exponential rise to a 'popularity competition'. 'The share price is going up simply because the share price is going up. If you look at the price of CBA shares, it's exponential. It's price feeding on price. I buy CBA, I tell you about CBA, price goes up 10 per cent. You buy CBA, price goes up another 10 per cent and you tell all your mates. 'We've also got new money coming in. Dumb money starts coming into the market and what do they buy? All the new dumb money is buying CBA. That's all it is. There's nothing going on here that is a secret.' He said all the major shares are running 'because that's all that dumb money knows'. 'That's the moron portfolio and at the top of the moron portfolio sits CBA.' So what happens now? Mr Hull has a prediction. 'It'll get to $200 a share and you'll probably see a correction,' he said. 'Do I think it could go up? Yeah. 'But a big correction is coming. It's literally 50 per cent overpriced. So when it corrects, it's going to be a big correction. It's trading a fair distance away from its underlying fundamentals.' Chief economist at AMP, Shane Oliver, told Commonwealth Bank is benefiting from a number of different factors — one of which being a less hostile US President Donald Trump. 'Its rise lately has mostly been driven by the same factors as the broader market, (including) an easing in concerns about Trump's tariffs and increased expectations for interest rate cuts, which are seen as positive for the banks,' he said. 'That said there also appears to be an element of momentum by which past relatively strong performance appears to be driving expectations that this will continue, resulting in ongoing strong relative demand for its shares.' Mr Hull said CBA is doing nothing different to the other big banks in Australia 'apart from being more popular'. 'It's a popularity competition,' he said. 'CBA is first, ANZ is second and Westpac and NAB are third.' In its latest results, Commonwealth Bank made $9.48 billion after tax, while Westpac made $7 billion, NAB made $6.96 billion and ANZ made $6.53 billion. Kevin Doodney, an Australian housing futurist at the High Yield Property Group, told in April that 'the big four Australian banks make up four of the eight most profitable banks in the world'. 'They are making that money from a population of just 27 million people. There's 8 billion people out there, for Christ's sake. 'What the Australian public needs to ask is, how on Earth can that be possible? Because, I think the Australian people are going to look at that and go, nah, that's not possible.' Mr Doodney said successive federal governments and the Reserve Bank of Australia (RBA) have justified these profits made in the banking sector because they have called for a 'robust banking system'. 'I'm calling bulls**t on that, because my attitude is that, you know, for the first time in history, affordable housing is becoming a serious issue for any government, and you've got to look at who's making the money out of that, between either the government themselves or the banking system,' he said.
ABC News
44 minutes ago
- ABC News
Coalition sticks to defence spending pledge but won't say how it'll pay for it
The Coalition remains committed to lifting defence spending to 3 per cent of GDP but won't detail where the money will come from, as the shadow finance minister suggested the opposition would be open to considering broader tax reform. Prime Minister Anthony Albanese is expected to meet with Donald Trump on the sidelines of G7 summit next week, amid pressure from the United States to increase defence spending from the current level of 2.04 per cent to to 3.5. Trade Minister Don Farrell on Sunday said the government was committed to a "significant uplift in the amount of defence spending". "We're focused on what Australia needs to do and we'll make our decisions based on what's in our national interest," he told Sky News. The Coalition went to the election promising to earmark an additional $21 billion for the military between now and 2030, almost double what Labor had pledged. Appearing on Insiders on Sunday, Shadow Finance Minister James Paterson said the Coalition's target of 3 per cent of GDP in a decade had not changed since the party's devastating election loss last month. "The exact profiling of that increase is something that we'll determine through the policy process and closer to the next election. We'll be completely up front and transparent about that," he said. "But yes, we have an objective of reaching the 3 per cent of GDP because we think it is in our national interest." Senator Paterson said the Coalition had three years to outline where that additional funding would go, but listed some potential areas for investment as recruitment and retention, a munitions stockpile, northern military bases, air and missile defence and drones. "There is no shortage of good things we could spend on that would increase our ability to defend ourselves and safeguard our sovereignty," he said. But he would not be drawn on where the money to pay for the increase would come from, saying that work would occur over the coming years. Senator Paterson did suggest the opposition was open to a discussion about the way superannuation is taxed, despite its rejection of the government's plan to double the tax on super balances above $3 million from 15 to 30 per cent. "We're happy to contemplate tax reform. We're happy to talk to the government about tax reform. But we are not interested in increasing taxes, because I don't think that that is what the Australian economy needs right now," he said. "If the government was genuinely serious about a broad-based tax reform process, then we'd be up for that conversation. Now, the government has to take the first steps there." US Defense Secretary Pete Hegseth asked Defence Minister Richard Marles to increase spending to 3.5 per cent of GDP "as soon as possible" on the sidelines of a dialogue in Singapore this week, according to a statement from the US Department of Defense. Mr Hegseth had previously made similar requests, but it was the first time the administration nominated an exact figure. Negotiations with the United States over Mr Trump's 10 per cent tariffs on Australian exports continue, with the subject likely to dominate the anticipated meeting between Mr Albanese and Mr Trump. Access to Australia's critical minerals has been put forward as a potential bargaining chip as Australia continues to push for an exemption. The Coalition had previously said they would oppose Labor's plan to acquire stockpiles of critical minerals from commercial projects, to be held in a national reserve and made available to domestic industry and international partners. But Senator Paterson told Insiders it "might be necessary" for the government to support the mining and processing of critical minerals. "We're very happy to see what the government is proposing here. I can't commit to it in principle without having seen the details, but we're certainly open to it," Senator Paterson said. "Any sensible steps that represent an economic opportunity for Australia and an opportunity for us to demonstrate that we are a good alliance partner of the United States is something that we would offer bipartisan support to." Mr Farrell said Australia had offered the United States "an expanded arrangement in regards to critical minerals" as part of efforts to secure an exemption from the tariffs, which came into force in April. The trade minister met with his American counterpart, trade representative Jamieson Greer, in Paris last week, where he said he made clear that Australia wanted "all of the tariffs removed, not just some of them". "The position I put to Jamieson Greer is that the tariffs the United States has imposed on Australia are unjustified."
ABC News
44 minutes ago
- ABC News
Thornlie-Cockburn link opens as part of 'unprecedented' investment in Metronet project
More than 18 months of disruption is coming to an end for some commuters as Perth's first east-west rail connection opens this week to service communities from Mandurah to Armadale. The Thornlie-Cockburn link and adjacent rail elevation are part of WA Labor's flagship infrastructure project Metronet. The developments, in Perth's south east, feature a $1.3 billion rail extension with two new stations connecting Thornlie to Cockburn Central, and a $1.6 billion elevation of five stations and rail from Carlisle to Beckenham. The elevation is hoped to address road congestion — with the state government previously saying boom gates were down for up to six hours a day at some level crossings — and open up public spaces around and under the rail line. Transport minister Rita Saffioti said despite cost and time blowouts, the level of infrastructure delivered through the Metronet project was "unprecedented". "Generational infrastructure is hard," Ms Saffioti said. "These projects are really for the public. They're about the future and they're about making transport even more affordable and accessible." The projects were jointly funded by the state and federal governments. Construction of the latest Metronet development did not come without disruption. The Armadale line was shut down for 18 months for construction, and that disruption was set to continue for thousands of commuters due to a delay on the opening of the elevated Armadale and Byford stations. Commuters relying on the Armadale line have been taking longer journeys on replacement bus services, while road closures have left some businesses isolated from their communities. Butcher Matt Budny said at one point, roads on either side of his shop in Carlisle were closed to facilitate the Metronet construction and another roadworks project. "We were close to closing up ... after they closed both sides," Mr Budny said. Mr Budny said the lack of access caused him to lose more than half of his usual business. "Especially if you've got family, who wants to do a 15 minute detour?" he said. "It was devastating [but] I know that things need to be done, the train line is a good thing." A deli on the other side of the Carlisle station also told the ABC it lost about 50 per cent of its usual business when road closures cut off access to their shop.
