A bullish day for Aussie stocks to start the week

James Gerrish

Market Matters

A bullish day for the Australian market to start the week with a strong rally in the healthcare sector underpinned largely by CSL which added +3.53% thanks to a UBS upgrade with the broker putting it on a buy and $295 price target – clearly bullish. The rally in CSL accounted for around 12 index points in the 200 while there was also support from the banks (ex-ANZ which traded ex-dividend for 80cps), NAB the best on ground adding +1.4%, WBC put on +1.31% to close at $27.78 before trading ex-dividend tomorrow while CBA edged +1.11% higher. On the flipside, resources were under pressure, Fortescue (FMG) the standout dropping by -5.53% on weakness in the Iron Ore price – RIO also traded down -2.36%.

The higher value growth stocks had a good session today, Appen (APX) the best of them adding +5.02% while Afterpay (APT) was up +4.56% on a broker upgrade – ditto for the traditional yield names like Transurban (TCL) which added + 1.49%. All in all, a day where those well entrenched trends such as buying expensive growth and yield were in favour while the trend we’ve been pushing of late – buying cheaper cyclical growth had a tough day at the office.

US Futures were in the red all day while Asian markets were also lower – nice to see some money flow into Australia while other markets were soft.

Overall, the ASX 200 closed +48pts/+0.72% higher today to 6772 – testing recent highs. Dow Futures are trading down -80pts

ASX 200 Chart

ASX 200 Chart


Bingo (BIN) +1.61%: Have their AGM on Wednesday and has now confirmed they’ll include a conference call in terms of their FY20 guidance before that. We’ve been concerned about a potential miss to market expectations here in terms of their guidance, hence why we cut our long in the stock. As we’ve said on numerous occasions, we like this stock and if there’s a negative reaction to their guidance on Wednesday, we’d be likely buyers. BIN has around 10% of their register short sold, or around 66m shares which is big. Those shorts at the moment are hurting however the move in the last few days could be a result of some covering ahead of the result. In any case, we’ll review post result , but ultimately we’re looking to buy this stock.

Consensus at the EBITDA line for FY20 is $160m, however the range is from $136m to $179m – huge – you could drive a Bingo truck through it. We like BIN into weakness.

Bingo (BIN) Chart

Broker moves;

Broker moves turned the dial on a few stocks within our radar today. CSR on the downside from Macquarie although the stock held up pretty well, CSL the obviously mover after UBS upgraded their price target by 11% - they also put out a positive note on APT.

CSL Chart

• CSR Cut to Neutral at Macquarie; PT A$4.80
• Freightways Raised to Outperform at Macquarie; PT NZD9.51
• Xero Raised to Overweight at Wilsons; PT A$81.97
• CSL Raised to Buy at UBS; PT A$295
• REA Group Cut to Underweight at JPMorgan; PT A$90
• REA Group Cut to Underperform at Credit Suisse; PT A$90
• Amcor GDRs Raised to Outperform at Credit Suisse; PT A$15.50
• Afterpay Touch Raised to Buy at Citi; PT A$31.10

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James Gerrish
Portfolio Manager
Market Matters

James is Portfolio Manager & Primary Author at Market Matters, a daily investment report with over 2500 subscribers that offers real market insight. He is also Senior Portfolio Manager within Shaw and Partners heading up a team that manages...

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