Buy Hold Sell: 5 low P/E stocks with top management teams

First up today, we have Nine Entertainment. It boasts Peter Costello as its chair and Mike Sneesby as its CEO, who formerly led Nine's video-on-demand business. Jason, I'm going to start with you today. Is it a buy, hold or sell?

Nine Entertainment (ASX: NEC) 

Ally Selby: It's been a volatile ride for shareholders over the past year. It has beat the market though - its share price is up 7%, Steve, over to you. Is it a buy, hold, or sell?

Steve Johnson (HOLD): It's a hold for me, Ally. We have this stock on our watch list and it's quite clear that we've missed two very good opportunities to buy it in the past couple of years. Maybe too greedy is the answer to that. I love the management team, I love the business. I still think that there is a lot of margin retraction to come here for Nick Scali. It probably should go back to pre-COVID levels of margins and I think there's just a little bit too much optimism still in the price for me now, but I want to own it.

Jason Kim (HOLD): It's a hold for us as well. It's a great business, with a great management team. They made a great acquisition not that long ago, but you have to go against the cycle to do well and it's going to be very tough. And the other thing that holds us back as well, besides the cycle for the consumer, is that it would appear they might be looking to make offshore acquisitions and that's tough. But given the quality of the business, it's a hold.

Jason Kim (BUY): It's a buy and that's a great question, Ally. SkyCity has had a lot of challenges over the last several years, most of them beyond their control. The management team has done a great job over the last few years. So, if we look at what's held it back, it's been a combination of light rail infrastructure that's been built around its key casino in Auckland, it's had the International Convention Centre that caught on fire. We had COVID and more recently had regulatory scrutiny, which arguably is partially their fault, but certainly, the whole casino industry has faced that. That said, we look at it right now and it's trading at 10 times earnings. When we look ahead, it has a new hotel popping up, and the International Convention Centre will be opening up as well. It's currently trading at an EBITDA not too far away from pre-COVID. With those two new things coming on board, you can see that EBITDA growing tremendously and once we get over this regulatory uncertainty, it should be at least a market multiple stock. So, we see significant upside from here.

Steve Johnson (HOLD): It is a hold for me, Ally. We've owned stocks in this space. We owned Crown before it got taken over, we owned Star (ASX: SGR), and we actually owned SkyCity out of COVID as well. So, it's not a space that we're unwilling to invest in. Those other two experiences for us though have me thinking that there probably is bad news to come out of this review. There will be real financial consequences for SkyCity. What I like about it is it's got less competitive threats than those Australian casinos have. You've got two right next to each other here in Sydney now - SkyCity doesn't have that problem. The one other issue I've got with the industry is I think the younger generation all have a potential casino on their phone. The actual casino part of these assets is going to get more and more difficult, but the entertainment piece is quite interesting - the infrastructure, the hotels - you can put some pretty attractive numbers on some of those assets without even needing the casino to be there. So, it's getting closer and closer to an attractive price, in my opinion.

Ally Selby: Over to you Jason. What's your low P/E stock with an awesome management team and why?

Ally Selby: Well, that's all we had time for today. I hope you enjoyed that episode of Buy Hold Sell as much as I did. If you did, why not give it a like? Remember to subscribe to our YouTube channel. We're adding so much great content just like this every single week.