Village Square - February 2023

3rd Feb '23 by Elio D'Amato

7 comments 721 reads

It’s that time of month again, where we welcome our Australasian Stockopedia members into the “Village Square” to share one stock that we can all go off and research over the month ahead.

We understand that last month many of you may have been shy. The good news is our contributors gave us some great stocks to look at and to conduct our own further research into. If you wish to reacquaint yourself with the stocks raised by members, have a look in the comments from last month’s submission here.

However, the Village Square’s success and LONGEVITY will be dependent on the engagement we receive, so now that we have had our first run we look forward to seeing some more contributions this month.

Just a refresher on the rules:

Share a SINGLE stock or a lesson learnt with everyone that we can all mull over for the coming month (JUST ONE EACH PLEASE!)
You are not required to write a dissertation about the business (unless you want to) - one sentence is sufficient.
We (Chris and I) are NOT going to be conducting analysis on these companies - nor will we be recording their performance.
This monthly exercise is purely done in the spirit of sharing and should NOT BE TAKEN AS ADVICE in any shape or form. Obviously stocks and views raised in this forum are not the shared views of Stockopedia.
Please don’t be judgemental of anyone’s selection and please don’t provide specific advice to anyone - even if you are trying to help them. Specific advice will be flagged and removed from the system. Giving a "Thumbs up" however is fine.
Remember to place a “@” (eg @bhp) in front of the code you wish to share. That way we can all access it quickly in Stockopedia
You can put a stock forward that has already been nominated. More the merrier. Just remember to state why you are putting it forward.

The idea of the Village Square is to generate a list of companies that each of us can conduct our own research into over the coming month to determine for ourselves whether they align with our own investment objectives and tolerance to risk.

As I did last month, I have provided an example of what is…

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Elio D'Amato

3rd Feb '23

Altium (ASX:ALU) provides printed circuit board (PCB) software, but it is also expanding into other electronic solutions as well such as Altium 365 an IT Hardware workflow management system. The StockRank is hindered somewhat by the low Value score, but Momentum and Quality are strong. At its AGM it reaffirmed their revenue and margin guidance. They will report Monday 20 Feb which will prove useful as they don’t say much in between. (I hold)

Stephen Croft2

4th Feb '23

Incitec Pivot (ASX:IPL) are a fertiliser and explosives company. It ranks highly on stockopedia and is currently sitting above some nice support technically. Yesterday the company announced a 400m share buy back that starts in a week.

Aislabie

5th Feb '23

Mader (ASX:MAD) £MAD is a service and maintenance business for heavy machinery, such as that involved in mining, rail construction and equipment maintenance, drilling support, and power generation.

P/e at 21 is quite high (for Australia) but the ROE at 38%, and revenue growth (CAGR 26.7%) suggest that the rating is well supported. Their operations are mainly in Australia but a fast growing part of the business is in North America (20% in Q2 '23 to 31 Jan 2023)

This is a classic "picks and shovels" business and looks well placed to benefit from several resource trends

Sagie5

@FBU. Fletcher Building.

Delivers building products, construction materials and services across Australia, North America, Europe , New Zealand and Asia.

Q89 V89 M67 ( momentum has been increasing in the past 30 days). As such relative momentum denotes this accordingly).Just gotten above the 200MA after a long while. Has triggered an entry for me but I may wait until they report in a few weeks . FY24 EPS looks promising.

Recently announced that they are making two investments . building a new wood panels plant and a combination of a wood processing plant and a timber treatment plant . Seems that synergies from both these businesses would be advantageous.

On a recent update with the progress of works on the fire damaged Intenational Convention centre, it was said that costs have exceeded the insurance cover and ultimately the company has decided to fund the completion with Capital funds (150Mil). The costs are not immediate and expected to flow through to FY23 and FY 24.

However, they reconfirmed their FY23EBIT target of $855mil + . Revenue from current projects would be skewed to the 2nd half FY23.

Institutional shareholder has been increasing their holdings over a the past few months .

Grandslam

6th Feb '23

Great suggestion! I wish I'd picked up on this one earlier. They've been growing Net Profit at 25% per annum which is impressive.

OzzieTom

PWR Holdings (ASX:PWH) - First of all, I second your interest in Altium (ASX:ALU). I am a long term holder there and think they have an exciting roadmap and future. What I like about both Altium and PWR is that they are both founder lead and management take a long term view and have interests aligned with shareholders. Pro Medicus (ASX:PME) and TechnologyOne (ASX:TNE) also fall into this category and I hold all 4.

Getting back to PWR. These were originally focused on cooling systems for racing cars, F1 mainly. This then extended to high end road cars. These still make up the majority or revenue. However, the more exciting part is that they are using the IP and expertise they have built up to broaden their revenue base into, what they categorize as Emerging technologies, which is primarily EV's and defence.

It was set up by a former racing drive Paul Weel and his father Kees, who is CEO. Kees is not as polished a presenter as some of the other CEO's, but more than makes up for it in terms of his passion, pragmatism and knowledge of the industry. They are also very careful about how they deploy capital. They are very much pro-growth, but will only get involved in deals which have a high Return on Capital. Their ROE is consistently around the 30% mark. They treat their employees very well e.g. breakfast and lunch provided free and as a result tend to hold on to alot of their talent, which is fairly specialised.

Their Stockopedia Quality and Momentum figures are both 97, but overall stock rank down at 73, due to low value rank. Their share price has had a run recently (although down over 4% today). However, while I think it is probably about fair value at the moment, I don't think it is too overpriced given the growth rates and potential.

PS: Be careful not to get confused with Peter Warren Automative holdings which has a ticker PWR.

Might be one for the patient, but ASX:SLH (Silk Logistics) seems be be an attractively-priced, growing business. It's in the logistics game, and has been growing revenue and EPS steadily for several years now. It's only on a PE of 10, suggesting it's cheap, however it's been stuck in a trading range for the last 9 months. Seems to be one where the chart doesn't reflect the fundamentals.

Village Square - February 2023

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Elio D'Amato

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