Latest news with #stockpicking
News.com.au
3 days ago
- Business
- News.com.au
Precision Points: Stockpicking and fundamental value still keys for the patient investor
In Precision Points, Precision Funds Management executive directors Dermot Woods and Andy Clayton draw on insights from two decades on the front lines of equity markets to share their expertise with Stockhead readers. The world is heading increasingly in the direction of passive investing, ETFs and index tracking portfolio management. That lines up the capital held in major institutions, especially the super giants responsible for managing the retirement savings of millions of Australians, more closely to the momentum of the market. But fundies say there is still a role for stockpicking. Precision Funds Management's performance over the past month is a case in point, with portfolio managers Dermot Woods and Andy Clayton pointing to double digit gains, beating the performance post-Liberation Day of the broader market. They say the worm has turned outside the gold space, with a number of long-held conviction bets paying off. "The market's broadening out all of a sudden. There's a little bit of breadth to the rally which is interesting because any time we've had an indicator of that really in the last year or so, that's immediately been murdered," Woods said. "You can sort of smell the animal spirits returning to the smaller cap space and (investors) being a bit more open minded." One of the key triggers has been declining interest rates, with cuts in February and May taking the RBA cash rate to 3.85%, the lowest level since May 2023. "What benefits most from declining rates? All the gold guys will tell you it's gold because everything's good for gold for gold bulls," Woods said. " But what it's really good for is base metals and property and old fashioned cyclicals – contractors and things like that." Success stories Among the key contributors to Precision's performance in May were property sector stocks Cedar Woods Properties and Australian Finance Group (ASX:AFG). They've lifted a respective ~25% and ~22% over the past month. Cedar Woods is a small cap developer with around 9700 lots planned across 37 residential developments in WA, Victoria, Queensland and South Australia. AFG, meanwhile, is a mortgage aggregator, which recorded an 18.5% lift in mortgage lodgments for the third quarter of FY2025, its highest on record at $24bn. Woods said Precision had held the trade for a couple of years. "It's a patient trade really," he said. "Part of the reason we were happy to sit with a patient trade in property rather than say lithium is we're getting paid a dividend. "That's 2 or 3 times cash rate sitting there. And there's proper fundamental asset value that we look at, certainly in the case of Cedar Woods. "We bought it for the two things that are happening now, which is lower rates and stupid government kneejerk policy to bribe the electorate." The other, more recent trade, that has worked out has come in the base metals space, where copper miner Sandfire Resources (ASX:SFR) has quickly returned to all time highs within five weeks of being sold off to 12 month lows in the week of market mayhem following Donald Trump's tariff policy reveal. LME three month copper prices fell to US$8590/t on April 9, when SFR shares hit $8.15, but they've sharply rebounded to US$9635/t by May 8. There's been genuine market tightness behind that run. Copper smelters have spent most of the year paying miners to treat their concentrate because supplies are short compared to refining capacity in China, while at just 83,000t copper metal stockpiles in LME warehouses are their barest in two years. "There's always pockets of overvaluation. There's always pockets of undervaluation. And the one that we spotted two years ago was definitely property. It has taken two years to work to work out," Woods said. "The one we spotted two months ago was copper. We didn't think that would happen (in only) a month and a half." Fundamental value While sectors with strong momentum can make money at the right time of the cycle – gold miners and developers are a case in point right now – Woods and Clayton said they liked to look for stocks that offered fundamental value, which protected downside risk if the market turned. They're wary on gold and view a number of companies in the space as overvalued right now. But those which have long term cashflow generation and production growth in full view, like West African producer Perseus Mining (ASX:PRU), still ring true. "A lot of (gold stocks' prices) is influenced by what happens on the (passive ETFs) GDX or GDXJ overnight," Clayton said. "Which is why Perseus is one of our key holdings. We think ... fundamentally they're cheap." Precision thinks Perseus is unique, given it has two-three growth assets all of which can be funded through internal cashflows. "They're generating US$150 million a quarter in free cash, plus they've got growth," Clayton said. "They bought the Nyanzaga asset (in Tanzania) off OreCorp. They've just done FID on that. And they'll be arguably ... plus 600,000oz by FY28. "They have good, long life reserves at all their key projects. " Compared to the Aussie guys that's, I would say, probably trading 50% less than a comparable 500,000oz producer."
Yahoo
6 days ago
- Business
- Yahoo
Investors in SHS Holdings (SGX:566) have unfortunately lost 20% over the last five years
The main aim of stock picking is to find the market-beating stocks. But in any portfolio, there will be mixed results between individual stocks. At this point some shareholders may be questioning their investment in SHS Holdings Ltd. (SGX:566), since the last five years saw the share price fall 25%. It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price. During five years of share price growth, SHS Holdings moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics may better explain the share price move. The modest 1.9% dividend yield is unlikely to be guiding the market view of the stock. In contrast to the share price, revenue has actually increased by 21% a year in the five year period. A more detailed examination of the revenue and earnings may or may not explain why the share price languishes; there could be an opportunity. You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image). If you are thinking of buying or selling SHS Holdings stock, you should check out this FREE detailed report on its balance sheet. When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, SHS Holdings' TSR for the last 5 years was -20%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return. SHS Holdings provided a TSR of 1.7% over the last twelve months. But that was short of the market average. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 4% endured over half a decade. So this might be a sign the business has turned its fortunes around. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 2 warning signs for SHS Holdings you should be aware of, and 1 of them doesn't sit too well with us. Of course SHS Holdings may not be the best stock to buy. So you may wish to see this free collection of growth stocks. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Singaporean exchanges. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 days ago
- Business
- Yahoo
Singapore Exchange (SGX:S68) shareholders have earned a 15% CAGR over the last five years
Generally speaking the aim of active stock picking is to find companies that provide returns that are superior to the market average. And the truth is, you can make significant gains if you buy good quality businesses at the right price. For example, long term Singapore Exchange Limited (SGX:S68) shareholders have enjoyed a 67% share price rise over the last half decade, well in excess of the market return of around 21% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 51% in the last year, including dividends. Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time. Over half a decade, Singapore Exchange managed to grow its earnings per share at 9.5% a year. This EPS growth is reasonably close to the 11% average annual increase in the share price. Therefore one could conclude that sentiment towards the shares hasn't morphed very much. Rather, the share price has approximately tracked EPS growth. The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers). We know that Singapore Exchange has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts. When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Singapore Exchange the TSR over the last 5 years was 97%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence! We're pleased to report that Singapore Exchange shareholders have received a total shareholder return of 51% over one year. Of course, that includes the dividend. That's better than the annualised return of 15% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. Before deciding if you like the current share price, check how Singapore Exchange scores on these 3 valuation metrics. If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation). Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Singaporean exchanges. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
25-05-2025
- Business
- Yahoo
The three-year shareholder returns and company earnings persist lower as J.B. Hunt Transport Services (NASDAQ:JBHT) stock falls a further 7.2% in past week
For many investors, the main point of stock picking is to generate higher returns than the overall market. But the risk of stock picking is that you will likely buy under-performing companies. Unfortunately, that's been the case for longer term J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) shareholders, since the share price is down 21% in the last three years, falling well short of the market return of around 44%. The falls have accelerated recently, with the share price down 16% in the last three months. Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn. We check all companies for important risks. See what we found for J.B. Hunt Transport Services in our free report. While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement. During the three years that the share price fell, J.B. Hunt Transport Services' earnings per share (EPS) dropped by 11% each year. In comparison the 8% compound annual share price decline isn't as bad as the EPS drop-off. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines. The image below shows how EPS has tracked over time (if you click on the image you can see greater detail). It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.. When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of J.B. Hunt Transport Services, it has a TSR of -19% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments! Investors in J.B. Hunt Transport Services had a tough year, with a total loss of 12% (including dividends), against a market gain of about 11%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 4% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid. J.B. Hunt Transport Services is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
24-05-2025
- Business
- Yahoo
Investors in Shine Justice (ASX:SHJ) have unfortunately lost 26% over the last three years
For many investors, the main point of stock picking is to generate higher returns than the overall market. But if you try your hand at stock picking, you risk returning less than the market. Unfortunately, that's been the case for longer term Shine Justice Ltd (ASX:SHJ) shareholders, since the share price is down 36% in the last three years, falling well short of the market return of around 27%. It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement. During five years of share price growth, Shine Justice moved from a loss to profitability. We would usually expect to see the share price rise as a result. So it's worth looking at other metrics to try to understand the share price move. We note that the dividend has declined - a likely contributor to the share price drop. In contrast it does not seem particularly likely that the revenue levels are a concern for investors. The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail). We know that Shine Justice has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think Shine Justice will earn in the future (free profit forecasts). As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Shine Justice's TSR for the last 3 years was -26%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence! Shine Justice's TSR for the year was broadly in line with the market average, at 11%. Most would be happy with a gain, and it helps that the year's return is actually better than the average return over five years, which was 0.8%. Even if the share price growth slows down from here, there's a good chance that this is business worth watching in the long term. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Shine Justice is showing 2 warning signs in our investment analysis , you should know about... We will like Shine Justice better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian exchanges. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
