Village Square - January 2023

6th Jan '23 by Elio D'Amato

6 comments 890 reads

Welcome to the inaugural “Village Square” for Australasian members of Stockopedia.

In the spirit of community and coming together, this is your opportunity to contribute to our little village, by sharing a SINGLE stock or a lesson learnt with everyone that we can all mull over for the coming month (JUST ONE EACH PLEASE!)

This section is about investors coming together in the square to share a thought, or current stock of interest, with others on the first Friday of every month - starting today.

You are not required to write a dissertation about the business (unless you want to) - one sentence is sufficient. But the idea here 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.

It is important to stress here that 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 to be done in the spirit of sharing and should not be taken as advice in any shape or form. Obviously stocks you raise in this forum are not the shared views of Stockopedia. This exercise is simply a snapshot in time of stocks of interest that have your attention for whatever non-specific reason (eg charts, fundamentals, astrology, tidal changes etc.)

So don’t be shy as we are all friends. Just to prove that there is no shame among friends, in a past life I once had EML:ASX EML Payments Limited as a Strong Buy - How humiliating is that ?!? But we move on, as will the Village Square every month. Your ongoing participation and contributions will govern its success.

Therefore 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.

There are many faiths in this church we call investing, and as they say, variety is the spice of investing life! We hope you enjoy the Village Square!!!

To kick things off and to provide you with an example of what is intended please see an addition from me in the comments section below. Its a short one, but highlights how any…

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Elio D'Amato

6th Jan '23

Polynovo (ASX:PNV) manufacturers Synthetic Dermal Polymer for skin repair. Its now expanding sales rapidly into the US and is being used for more than just wounds from burns which was its original purpose. The new leadership team also seems to be doing well and the price has been rebounding. (I hold)

Grandslam

Great idea Elio.

One which I think flies under the radar is Xtek ASX:XTE (the @ search isn't currently working for me sorry).

Xtek is a supplier of defence equipment (think body armour/drones etc). They have a market cap of $65 million and cash of $36 million, with a steady pipeline of recent contract wins due to heightened geopolitical risks in Europe and Asia. The PE is about 10 and the chart is in an uptrend. Stockrank is 97.

Aislabie

7th Jan '23

XRF Scientific (ASX: XRF) has been a strong performer for me and I am going to continue holding. It is a company that provides equipment and test materials for assay testing of minerals. Whether mineral prices go up or down or prove to be present or absent in core samples, the testing is a key part of the process and as such I believe represents a long term market for XRF.

With growing sales and profits, ROCE at 18%, p/e at 17, net cash and a yield of 2.5% the company seems set for a solid future and so gets to continue in my portfolio.

Sagie5

9th Jan '23

Praemium (ASX:PPS) Have been holding continuously since July 2020(Covid recovery), however down to 20% of holding for the last few months. Will consider increasing to 60% -pre-report. with appropriate stop loss.

Price is cheap , hence the buy-back. Seems to be shaping up well, post acquisition and sale of international business. Runs it's own race as per charts compared with peers. Director's have been increasing their holdings of late. Q 83 ; M 84 ; Stock Rank 65

Sagie

hugoc

11th Jan '23

I am a UK Stockopedia subscriber. Welcome and Happy New Year to the Australian Stockopedia subscribers’ “Village Square”.

We Europeans have made a real mess of our energy procurement and the chickens have well and truly come home to roost.

The world must decarbonise, which we are not managing well. Intermittent energy has a role to play. German solar, for example, runs at an average annual capacity output of 11% (Arizona 30%) so we need more effective base load capacity, which means nuclear.

Natural Gas is the logical swing and bridge supplier while coal is phased out (NB it is still expanding) and nuclear expanded.

Computer analysis suggests optimum grid utilisation is approximately: -

25% Intermittent, 55% nuclear and 20% natural gas.

I hold LPG shipping shares Dorian LPG (NYQ:LPG) and US gas shares such as @Range Resources and @Cheniere all of which have done well.

My outstanding choice today, which I hold, is Perth based Woodside Energy (ASX:WDS). It stands on a PE of 8.3, yields nearly 9% , with a Superstock rating, a Stock Rank of 96, Quality 94 and Value 84.

Expansion of its Western Australian gas trains is underway and will deliver output growth of 20% odd in two- three years, in the mean time the 1.4 times covered dividend is a comfort and a blessing.

The massive Western Australian reserves are effectively orphan gas and are unlikely to be price controlled by the government, although windfall taxes are possible. (See below).

Long-term, supply contracts are being signed, which underwrite the future and may turn Woodside into a risk-free and regulation-free utility.

The questions I have for Australian Stockopedia subscribers are: -

1. What are the National and State tax and regulatory risks overhanging Woodside and the sector?

2. Are Woodside signing up juicy long-term, take or pay contracts with Far East buyers?

3. Santos appears to be on a higher valuation and has better broker backing. Is this justified?

I plan to buy more Woodside but with turbulence ahead am waiting patiently.

Jonner

6th Apr '23

Cash. Earn 3.75% p.a. +

Warren Buffett on Charlie Munger -

“He thinks of cash differently than the conventional investors. This is one of the most important things I learned from him: the optionality of cash. He thinks of cash as a call option with no expiration date, an option on every asset class, with no strike price.”

'In Buffett’s mind, holding cash is a sound, active, investment decision. It stems from the belief that one or several assets will lose value in the near future and will then become attractive buys. Holding cash is like buying a call option because the only two possible end results are identical: either the investor was wrong, in which case the option expires and the loss is limited to the price already paid for the option, or the investor is vindicated and he or she can now hold the desired asset from an advantageous entry point.'

FOMO a rising index is not a reason to be risk on. Do you think then holding cash is an active investment decision? Or is this more a portfolio management discussion?

I consider myself an investor not a trader.

Disclosure I have some BBOZ. Where would BetaShares Australian Equities Strong Bear Hedge (ASX:BBOZ) stand in a banking crisis re counterparty risk? In that scenario govt bonds would be favoured. Hence I would only comfortably own up to around 15% of portfolio. BBOZ is geared about 2.5x with decay (cost of insurance).

' Volatility and the Alchemy of Risk' by Chris Cole is a good read, but I am unlearned of asx cheap volatility hedging best practice. There are also youtube Chris Cole artemis discussions.

https://www.artemiscm.com/rese...

Not Investment advice.

Village Square - January 2023

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Elio D'Amato

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