Quote: (12-03-2018 05:46 PM)RatInTheWoods Wrote:
Quote: (12-02-2018 01:19 AM)Australia Sucks Wrote:
Really? Bank shares? There are so many better shares to buy in Australia then the stodgy no growth (earnings per share are likely to go backwards over the next few years) banks!
I think the banks will upswing in the next 12 months.
Fortesque, TOE, wollies all gone to shit.
Pick me a share AS, I'll drop $20K on it.
I'll do better that for you, i will pick 4 shares!
In order of attractiveness (my opinion) I think you should consider the following 4 shares:
1) Credit Corp Group (ASX code: CCP). Today's closing share price $18.40 which i have mentioned in another thread already. Australia's largest debt collection company. Today's closing share price was $18.40. I have been buying in recent months at anything below $19 per share. I forecast (I think they will beat their own guidance) earnings per share of at least $1.50 and dividends per share (fully franked) of at least $0.75 for FY2019. That is a fully franked yield of over 4% and a price to earnings ratio of less than 12.5 times for a company that will continue to grow earnings per share at double digit rates and has a 24% return on equity.
Broadly speaking the company has 3 major divisions:
First division is the Australia and New Zealand debt collection division (primarily the purchasing of defaulted credit card debt, personal loans, utility bills, etc). The second division is Australian consumer lending (e.g. personal loans, car loans, small business loans, etc). The third division is the U.S. debt collection division.
If you break down the 3 divisions the largest division of Australia and New Zealand debt collection will be steady (most likely no or minimal growth). This is due to unsecured consumer lending being largely static in Australia (the credit growth in Australia in recent years has largely occured in the areas of mortgage debt and government debt) and them operating in a highly concentrated and competitive market where they are a price taker. this division can be considered fully "mature" (i.e. low growth).
The consumer lending division will continue to grow at a rate of knots. Other companies operating in the consumer lending sector such as Cash Convertors, Thorn Group, etc are still reeling from the effects of tougher regulations, whereas the products they provide are designed to be more consumer friendly and thus have and will continue to avoid the harsher levels of regulatory scrutiny that other companies in the sector have faced. This means they will continue to gain market share. Tougher regulations that are likely coming through the pipeline will only strengthen their lead over competitors.
U.S. debt purchasing. Dynamics in the U.S.A. debt collection industry are favourable after a number of difficult years. A number of the large companies in the sector are struggling with weak balance sheets (meaning less competition), meanwhile banks are offloading a higher portion of their bad debts to debt collectors. This has resulted in ample supply and attractive pricing for U.S. debt ledgers. It appears these favorable tailwinds will continue for some years to come.
Disclosure: I own shares
2) Platinum Asia Investments (ASX code: PAI). Todays closing share price $1.01 This is a listed investment company run by Platinum asset management (ASX code: PTM) who have a good track record in outperforming the market. It had its IPO in late 2015 at $1.00 per share and ran up to around $1.35 earlier this year before tumbling recently. I would recommending buying at or below $1.00 per share (i.e. if the share price falls further). The shares are around NTA and it represents a good opportunity to benefit from the undervaluation/weakness of Asian stock markets. Disclosure: I own shares
3) Sunland Group (ASX Code: SDG) Current closing share price $1.34. The management and directors own over 30% of the company and it has been around a long time. Its a property developer (and property owner) that is heavily/primarily weighted towards the Queensland property market. They do a mix of residential, retail, office property, etc. The last reported NTA was $2.50 per share (notwithstanding any potential declines due to property price declines which could occur). If it keeps falling I would recommend buying some at anything below $1.25 per share (i.e. half NTA). The current guidance for FY2019 is around 27 - 30 million (AUD) in NPAT. Even if you downgrade it to $25 million NPAT that is more than $0.16 in earnings per share. If you buy at $1.25 that is less than 8 times earnings and half NTA for a well established company. It pays a healthy dividend and if you are willing to look past the current impending property downturn (i.e. take a long-term view) it offers good value.
4) Thorney Technologies (ASX Code: TEK). It today closed at $0.185 per share. I would be buying at these levels. Recent market declines and the rotation out of tech stocks has seen its share price plummet. Its a listed Investment Company (specializing in Australian technology companies) run by Alex Waislitz the clever and successful Jewish businessmen (and also the son in law of billionaire businessman Richard Pratt). Disclosure: I own shares.
If I had to pick only one stock it would be Credit Corp Group (ASX code: CCP).