Coca-Cola Amatil and Carsales

Could you give me your thoughts on how you see the future for CAR and CCL please.

I currently hold both these stocks in my portfolio within my SMSF which is in pension mode. CAR appears to have been going sideways for some time now. Do you see much growth in this stock?

Also, in your latest ‘Buy, Sell, Hold’, CCL has been upgraded by Credit Suisse and downgraded by UBS. Your thoughts please.

Thank you.

A: Thanks for the question.

 

I hold CCL (Coca Cola Amatil), but can’t get excited about the company. Too many headwinds with sugary drinks. Even after the most recent share price fall, still looks somewhat expensive. According to FN Arena, it is priced on a multiple of 17.5 times FY17 earnings, and 16.9 times FY18 earnings. Broker analysts are neutral, target price of $9.62 – about 0.5% above the current share price. I don’t see much growth with this stock.

 

Carsales (CAR) is a different story, although I think that growth is largely going to have to  come from offshore (rather than onshore), and  this presents a different level of challenges/risks. The stock is not cheap – trading at a multiple of 24.4 times forecast FY17 earnings and 21.8 times FY18 earnings. Broker analysts have a consensus target price of $12.05, about 2% higher than the current price. On balance, I would back management and hold – but not sure whether I would be buying at these levels.

 

Hope this helps


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