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Buy Hold Sell: 5 stocks with sparkling New Year's resolutions

Buy Hold Sell

Livewire Markets

In exactly two weeks, 2021 will be behind us. And what a year it has been. New lockdowns, new COVID strains, and an ever-volatile market that continues to push higher. 

As with every new year, comes the lauded tradition of resolutions (New Year, new you - right?). Whether it's continuing on with the good work you put in in 2021 (like investing each month or finally making use of that gym membership), changing that undesirable habit (like, ahem, a pledge to stop ordering Uber Eats), or finally taking a holiday in 2022. 

Just like us, some of our local listed stocks have sparkling plans for the New Year. Think mergers and acquisitions, new product launches, and new CEOs - set to help these Aussie stocks soar over the year ahead. 

So in the final episode of Buy Hold Sell for the year, we invited Tribeca Investment Partners' Jun Bei Liu and Market Matters' James Gerrish to share their thoughts on three businesses with big plans for 2022. 

And just because we can't bear to leave you all in 2021 without a stock pick, Jun Bei and James name two winning stocks with big plans for the year ahead. 

Thanks for watching Buy Hold Sell this year, we hope you enjoyed it as much as we did. 

Note: This episode of Buy Hold Sell was shot on Tuesday 7th December 2021. You can watch, read or listen to an edited transcript below.


Edited Transcript 

James Marlay: Hello and welcome to the final episode of Buy Hold Sell for 2021. My name's James Marlay, it's great to have you with us. It's also great to have James Gerrish from Market Matters and Jun Bei Liu from Tribeca. Now, we're talking about a bunch of stocks that have got big plans for 2022, and we're going to find out from Jun Bei and James if they're a buy, hold or sell. 

Now, Jun Bei, I'm going to start with you. Crown, it's been out of love in the market. They've got a couple of bids. Buy, hold or sell?

Crown Resorts (ASX: CWN)

Jun Bei Liu (BUY): It's absolutely a buy. It is still trading cheaper than the bid price and we expect more contention for its assets. As we have seen in this market, whenever one comes through, they flush out a lot of other bidders, simply because the asset's trading at a very, very depressed level. Its earnings are pretty much non-existent at this point and with the world ready to reopen, its casino and restaurants are expected to experience significant capacity growth. Its asset value is still sitting just around $9 and above. Clearly, there's a lot of issues going on with the regulatory review, but, with one bid already on the table, there's an easy return to be made.

James Marlay: Great. M&A has been a massive feature of this year and there's been a few nibbles at Crown. Buy, hold or sell?

James Gerrish (BUY): It's a buy for me as well. So, Blackstone is the bid you made mention of. It's the third time they've had a crack at Crown. Crown's trading around $11.20, they've bid $12.50. I think that will ultimately, as Jun Bei made mention of, bring out other parties to the table, namely Star. So, they've expressed some interest in Crown. I don't think Blackstone is going to be the bidder to bring it up above that $12.50. They'll need a competitor in the mix for that, but I still think it's a buy. I think the downside's manageable, but there's plenty of upside there.

Link Administration (ASX: LNK)

James Marlay: The next stock we're going to talk about is Link Administration. It's also having all sorts of shots taken at the moment. Is it a buy, a hold or a sell?

James Gerrish (HOLD): I think it's a hold. I mean, it's a lukewarm hold for me. They've obviously had a couple of bids last year that walked away. There was complexity in those bids, given they held a large stake in PEXA, which has now been spun out and is newly listed, so it has simplified the rationale to buy Link. But again, it's in neutral territory. It may happen, it may not. It's a lukewarm hold for me, James.

James Marlay: Hold for James. Jun Bei, Link, buy, hold or sell?

Jun Bei Liu (BUY): It's a buy, I know it's a little bit boring, but it is a buy because it's still trading 15% below the bid price. In the next couple of weeks, we expect to hear more from the bidder. If that doesn't happen, the business is going to split out the PEXA stake and then they will use that to buy back its shares. It's already got a buyback in place, but the other way is they can buy back more shares, for example. 

Also, at the moment, it has another two private equity groups looking at some of its worst operating assets in Europe - they're actually loss-making. They're bidding a good price for those as well. Eventually, in the next 12 months, this company won't be listed. So there's enough interest in there for you to make a good double-digit return.

Life360 (ASX: 360)

James Marlay: Interesting. Life360. I had to look this one up. It helps you keep track of your family. Is it a buy, hold or sell? 

Jun Bei Liu (BUY): It's absolutely a buy. Tracking is a big theme going forward. This company previously only tracked family members, but now it recently purchased the Tile business. So, now you can track absolutely everything, whether it's your device or anything else-

James Marlay: Keys.

Jun Bei Liu: Your keys. I can never find my keys. Your dog and everything else. And then it keeps them in the same ecosystem. This is absolutely where everything's going. Apple's got its own ecosystem and this one's already got that. It has already made over a hundred million dollars. They're mainly in America at the moment, but other markets are expected to pick up quite quickly. With the purchase of that Tile business, it's doubled its revenue.

In the future, the growth is phenomenal. The company grew organically during the pandemic. It has been hit by the pandemic, but even despite that, it grew over 40%. Over the next couple of years, just organically excluding the acquisition, it is growing at 40-50%. So, it's a very high-growth business and it is still trading at four or five times revenue. It's not expensive and it's just started to get a little bit of interest. It's still at that early stage of its growth. It's a buy.

James Marlay: I must say, it slid under the radar for me. James, is Life360 on your radar? Buy, hold or sell?

James Gerrish (BUY): It's on our radar. It's a buy. I'd caution it, in terms of - obviously its share price is down from where it made the acquisition of Tile. It raised capital at $12. It's now under $10. On that metric, it's a buy. 

The one aspect I'd be cautious about is the monetization of data. That's going to be a really politically-charged area over the next couple of years. So, that could be a risk for the business in how they monetize data and how they deal with consumers' data on their platform. For me, it's a buy, for all the reasons Jun Bei pointed out, it's a phenomenal growth stock, it's inexpensive for what you get, but there is regulatory risk around it.

Two stocks with big plans in 2022

James Marlay: Have you got a stock you can share with us? Something that you like, that's got expansion plans, a new product, doing something innovative, in your head?

James Gerrish: I think Aussie Broadband (ASX: ABB), is a stock that I'd speak about, in terms of that. I think 2022 is going to be a big transition year for it. They've just announced plans to take over Over The Wire, OTW. That's going to transform ABB into a business with an enterprise value of around $1.3 billion.

It's growing at 30%. They're going to enter the ASX 200 probably on the back of this. That's just going to transform the business. The services it offers, the breadth of the business is going to increase markedly in 2022. It's run by incredible management and I don't think that's going to be the last acquisition that they'll make in the next 12 months. For me, Aussie Broadband is a buy.

James Marlay: Okay, great. Jun Bei, do you have something that can match Aussie Broadband to have a cracking 2022?

Jun Bei Liu: I've got so many. Just kidding. Lovisa (ASX: LOV) is one that I would name, I would call it a big year next year, it's because it's got a new CEO. And also, its earnings are going through a transition - a transition as in this business was impacted significantly by COVID-19. All the shops were shut, even though you can buy trinkets online, but Lovisa's is very much tailored towards events. There were no weddings, no events, pretty much.

In 2022, when the world reopens, this company will have very, very strong earnings. In the first quarter of the year, they have already said that the first 20 weeks of the year, it will be doing over 25%, like for like. And over 40% total sales growth. That's just an incredible amount of growth. With the new CEO, he's brought with him very significant experience across Emerging Asia, China and India. 

So, we think there'll be a lot of focus on those markets and that will continue to grow. The company has such a unique business model and it creates such excitement within its store. It really brings customers to itself. If it can replicate that around the world, their addressable market's enormous. So, Lovisa is the one that I think will do great in 2022.

James Marlay: Well, ladies and gentlemen, after a challenging 2021, our guests have delivered. They've brought a couple of sparkling stocks to get us positive for the year ahead. Thanks very much for watching this year. I hope you've enjoyed it. Hit the subscribe button, because we've got some cracking content coming up over Christmas and new year. All the best for 2022, we'll see you then.


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Buy Hold Sell is a weekly video series exclusive to Livewire. In each episode two fund managers give their views 'Buy, Hold or Sell' on five ASX listed companies. Not recommendations, please read the disclaimer and seek advice where appropriate.

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