At Livewire we’ll cheerfully admit that we’re a little obsessed with analysing data and using algorithms in various ways to serve you the best and most relevant content. One feature we’ve seen explode in popularity is the ‘Search Livewire’ function (up there, at the top). If you punch in a stock code, you’ll find the latest wires and contributors discussing those companies.
In this week’s Buy Hold Sell, we’re going to examine the stocks Livewire users have been searching for most over the last 30 days. They include: 1) A company that traditionally forms the bedrock of equity income portfolios; 2) A healthcare giant stuck in a rut, 3) A biotech hopeful, 4) A mining stock that’s been left out of the gold rally, and 5) A payments business whose share price is languishing.
And while Livewire users have a solid nose for opportunity, do the experts believe they are heading for a dead-end? We bring James Gerrish of Market Matters and Henry Jennings from Marcus Today on the show for their views.
Notes: Watch, read or listen to the discussion below. This episode was filmed on 26 August 2020.
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Vishal Teckchandani: Welcome to Buy Hold Sell brought to you by Livewire Markets. My name is Vishal Teckchandani, and today we're going to talk about the five most-searched stocks on Livewire Markets dot com. To set your curiosity on whether these companies are buy, hold or sell, we've got Henry Jennings from Marcus Today, and we've got James Gerrish from Market Matters. James, let's start with you. We'll reverse the order here. The fifth most searched stock on Livewire is Telstra. Buy, hold, sell?
James Gerrish (Buy): I'll go buy below $3, I know it's going ex-dividend today, but you think the Telstra Thematic about work from home, that it is a big Goliath of a technology company who is going to benefit from this Thematic. I get that it's had a very tough 12 months, or two years, but they've made some tough decisions. So, I think those tough decisions, in time, will bear fruit. So, Telstra's a buy for me.
Vishal Teckchandani: Henry, you've made very clear your feelings about this fuddy-duddy.
Henry Jennings (Buy): The duddy-duddy. I think though, as James says, below $3, they're probably a buy, even though they've gone ex-dividend. 5G is still the big white hope for Telstra, getting through this period ... I think if we can get an Apple 5G phone, that is going to be a big driver in the centre. When I looked at the Telstra website today to see what plans they got for 5G, the phones are pretty dull. I think we need an iPhone, whatever it's up to now, 13 ... I've got an iPhone 5, so I'm way behind the times. But an iPhone 12 or 13, 5G, that could be Telstra's sort of saviour. So, it is a buy, but it's boring, defensive, fuddy-duddy stock.
Vishal Teckchandani: Well, something more exciting is CSL. The fourth, most searched stock on Livewire. Its rally did fizzle out after it reported earnings. What's going on with CSL. Buy, hold, sell?
Henry Jennings (Hold): I don't know. I'm puzzled. I'm perplexed about CSL. They got down to $270, and it looked like a screaming buy there, and it did bounce there. $280 was the previous level where it sort of bounced up from. The results were good, and the collection centres that we thought were going to be an issue in the U.S., people were talking about down 20%, was only down 5%, but they just seem to have missed out on the, kind of, the hot vaccine trend. Even last night, there was some news out of the University of Queensland, in terms of their vaccine that had been pretty safe, proved safe in about 120 patients. So, that was very positive. So, it's a hold. It's un-Australian to sell it. You can't possibly sell CSL, but it's just a little disappointing. It hasn't been at the pointy end, the Moderna end, the AstraZeneca end, the Glaxo Smith Kline end, of the vaccine talk. Maybe they've just got something up their sleeve. But of course, if we do get one and they're producing it, especially if they've got to produce it multiple times, like the flu vaccine, because we keep needing booster shots, it could be good for them long-term.
Vishal Teckchandani: James, is CSL's range trading pattern increasing your blood pressure. Buy, hold, sell?
James Gerrish (Hold): Yeah, I've got a hold on it. I don't think it's been range trading. It's been pretty all one-way traffic on the downside in the last three months or so. I've always been taught that a stock that can't rally on positive news is got some underlying weakness, and I think that's what we're seeing in terms of CSL. As Henry made mention of, collections were better. The FY21 guidance was softer than where the market was sitting at, about a 5% miss in terms of guidance. So, I'm a hold. I'd be a buyer if it went down to $250, and that's not out of the question. So, this is a stock that can move a long way, and it needs a tweak in the P that the market is prepared to pay for it, and that could be a catalyst from higher interest rates, or whatever it is, and then it will be a buy.
Vishal Teckchandani: Okay. Speaking of stocks that can move a really long way, number three, Mesoblast. Buy, hold, sell?
James Gerrish (Hold): Yeah, it's a hold with low conviction. Obviously, the Oncology Committee that gave it the tick of approval is a good precursor to FDA approval moving forward. I'm not smart enough to know enough about this business to have a high conviction on it. It could do anything. So, I've got a low conviction. Hold on it, Vish.
Vishal Teckchandani: Henry, what do you reckon about Mesoblast? Those clinical trials are really binary in nature. Its fate is really tied to a couple of blockbusters.
Henry Jennings (Hold): Hold tight for a fast ride as they say at the fun fair. It has been a massively volatile stock. That news that they weren't going to get approval from that committee, and then they did get approval, I mean, that was just head-spinning in some respects.
James Gerrish: And they got it nine to one.
Henry Jennings: Nine to one. Yeah. I mean, where was the issue that two days beforehand? So, it was one of my most high convicted stocks when they were a $1.25-$1.50. I had a sort of, $3.20 price target, and it got there, I'm out. Where it goes from here is anybody's guess I think. It is a bit of a binary outcome.
Henry Jennings: The problem that Mesoblast have, and have had throughout their history, is they burn through cash. They're burning through US$20 million U.S. dollars a quarter, and the revenue side is still yet to kick in. And that hurts. If you get delays and you get issues, that does hurt, and in the past, they've had to go to some somewhat less reputable funding sources, should we say? And that's hurt them because it's put a cap on their share price. For me, it's a hold, but you've got to have a strong stomach for this one, and it could be a binary outcome. If they've knocked it back for some reason, you could be back down to three bucks. If they put the tick of approval, we could see $6.50-$7. So it is toss-the-coin stuff.
Dacian Gold (ASX:DCN)
Vishal Teckchandani: Okay. Speaking of needing a strong stomach, have you seen Dacian Gold's share price? Because this company ain't participating in the gold rally. Buy, hold, sell?
Henry Jennings (Sell): I think for me it's a sell. They had some serious issues in terms of debt. They did raise some money. They raised capital, 33 cents, 32, 33 cents at the moment. Mount Morgan is an exploration thing in progress, to be honest, because the mine life isn't huge. They've a hedge book as well, which does take some of the upside out of it. And also, it's not the cheapest thing in the world that they're producing that gold in terms of Aussie ... I think it's $1,200 to $1,400 all-in sustaining costs for them, out of Mount Morgan. So, it doesn't tick a lot of boxes, given that gold's had this huge run and we're starting to see it come off, I think there's few reasons to be there. If you're going to play gold, there's frankly much better places to put your golden dollar in the gold market, I think.
Vishal Teckchandani: Golden dollar, golden opportunity, on Livewire's second most searched stock James?
James Gerrish (Sell): Yeah, it's a sell for me, Vish. I mean, if you want to have gold exposure, you want to have gold exposure, not expose you to a potential turnaround that's had to raise money at deeply discounted levels, that has been really dilutive of shareholders, etc. So, for me, it's a sell.
EML Payments (ASX:EML)
Vishal Teckchandani: Okay, well hold onto your hats and let's get the drum rolling because the most search for stock on Livewire is EML Payments. Share price has gone nowhere in the last one to two months, the gift card business has been smashed. No one's buying presents for their colleagues. Buy, hold, sell?
James Gerrish (Hold): It's a pretty dire outlook on things, Vish. I've got a hold on it. Obviously payments are a hot space, but in terms of EML, I don't think it's simple enough and clear enough what they do and how they do it. So, complexity in businesses, particularly in payments, I don't think is a positive thing. You've seen the simple things work, gain the traction, gain the volume, etc., and I don't think EML has it at the moment. It could get it, but I don't think it has it at the moment.
Vishal Teckchandani: Henry, in their FY20 report, management talked about a lot of growth optionality, banking as a service, salary packaging, collaborating with fintechs. Is this a gift for investors with what the share price has done?
Henry Jennings (Buy): Sounds like a gift for the IR people. Certainly, I think James is right. We like this stock. I like this stock, and it tends to run with the whole buy now, pay later sector, because it's one of those fintechs. But James is right. It is complicated. It is a complicated beast. Preloaded cards in any fashion, whether they're gift cards, and the big run previously was in gaming, because they had this deal in the U.S. with Bet365 so you could preload your gaming cards, that didn't get too much of a mention in the growth story and all those buzz words that we're talking about.
Henry Jennings: I think this is a buy. It's not a strong buy, but it is a buy, I think at these levels. Only because I feel it's been left out. It's not as simple as it could be, and we've seen how not being simple can really hold you back. Flexigroup is an absolute poster child for a non-simple business model, which they've now finally decided to change the name to Humm ... God which genius work that one out because that's an absolute winner, because now we've got a four-letter acronym, little nice cool name, that you can pin your hat on and buy now-pay later. So, I think that's a good move for them. But, EML Payments, still a bit complicated. It's a weak buy, I feel there's something in there that is nagging at me saying, yes, this one could run, but it just needs ... I don't know what the catalyst is going to be. It certainly wasn't the results. It needs something to spark it again like the Bet365 deal it did in the U.S.
Vishal Teckchandani: Well, there you go. Those are the five most-searched stocks on Livewire. Hopefully, that gets your watch list humming.
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Nobody has mentioned the biggest plus of all this week. They are the exclusive supplier of cards to Pointsbet which will be the third or fourth dominant player in the gaming/casino/legal bookmaking player in the USA. And it seems as if there increased exposure in Europe with their recent takeover has had zero impact. Even the annual report had little to say about it.
Agree Garry - I have looked at EML on-again, off-again. Their corporate presentations are terrible and it's hard to get a handle on them which belies the points both James and Henry were making about 'complexity'. One would have thought in the current circumstances that greater clarity was a must-have.
Really enjoy Vishal and his quirky comments... has made the Buy Hold Sell videos even more entertaining! Great work team, thank you.