With the end of the year in sight, it’s time to check in again on how the Livewire readers’ 2016 stock picks are tracking. The biggest observation is the pullback in the YTD mean performance across the sample, from 18.3% (Oct 19th) to 8.7% (Dec 5th). Only 35% of stocks avoided a pullback over this interval, and the biggest falls were among the rate sensitive stocks. With cyclicals on the up, mining and mining services are at the top of the leaders' boards again, with South 32 still leading the large caps, and lithium producer Galaxy now leading the small caps. We will close the books at the end of December, and report the final tally in early January. Until then look out for the 2017 Outlook Series Q&A before Christmas to make your stock tip for next year. Click below to see our interim update on Livewire readers’ 5 leading large caps, 5 leading small caps, and the ten worst performers as well.
The only new name on the list of five best performing bigcap tips since our last update is Monadelphous, which Marcus Burns, Portfolio Manager at Spheria Asset Management highlighted as a great opportunity in a Livewire interview. He commented that: “Monadelphous screened very well from a cashflow, earnings, balance sheet point of view and was also widely disliked by the sellside community. We saw a business that was well run, great management team, and was well and truly oversold”: (VIEW LINK)
In the smallcaps table, Galaxy Resources has seen the biggest gain of all tips since our last review, after the company recently reported its first production of lithium concentrate. The only new entrant to the top performing smallcaps list is Nanosonics, which jumped on a strong Sept quarter report, showing a third consecutive quarter of positive cashflow.
Unfortunately smallcaps can just as easily halve your money as double it, and market favourite Bellamy’s has done precisely that this year after collapsing last Friday. Steve Johnson of Forager wrote on Livewire: “It joins a growing list of priced-to-perfection growth stocks that have disappointed investors late in 2016 (APN Outdoor, TPG, Vocus etc etc). It still trades at 20 times last year's earnings. That's a multiple that implies growth, and management is suggesting that this year is going to show a decline”: (VIEW LINK)
On iSentia, Roger Montgomery recently questioned whether the pullback was an overreaction: “The drivers of the downgrade appear temporary, the restructure will include the implementation of a new organisational structure and CEO for King Content as well as merging the ISD & King Content sales teams.”More here: (VIEW LINK)
An interesting addition to this list is uranium stock, Paladin, which has fallen yet again in recent months, to put the stock down by 99.4% since it peaked almost ten years ago. It's hard to think of a more disliked commodity that uranium, within what is already a less than favoured sector. But ... then again you could reasonably have said the same thing about coal this time last year, and look what happened there.