In this week’s likes and dislikes is an insurance company, a building company and a popular energy company.
Michael Wayne of Medallion Financial likes Steadfast Group (SDF). “It is Australia and New Zealand’s largest general insurance broker network, consisting of over 360 brokerages with over 1300 offices in Australia, New Zealand and Singapore,” says Wayne.
“Commissions revenue offers the real upside for this business albeit the most susceptible to competitive pressures. Increasing commission’s leads to greater revenue and expanding margins given costs tend to be fixed.
Steadfast Group (SDF)
Source: ASX
Wayne says he doesn’t like Fletcher Building Limited (FBU). “The company has been experiencing falling market share which comes in the face of emerging macro headwinds indicated by falling NZ dwelling approvals. The board has indicated that they are completing yet another strategic review after flagging further losses in the construction segment,” he says.
“With the business facing operational issues at the same time as the sector appearing to have reached a cyclical peak is concerning and for that reason we feel it’s best to avoid this company until an element of certainty returns.”
Fletcher Building Limited (FBU)
Source: ASX
Michael McCarthy of CMC Markets likes taking some protection by buying February XJO 5800 put options. “Investors can buy protection for their portfolios until 15 February 2018 at a cost of around 1.4% of an index portfolio,” says McCarthy.
“Holding the put options will allow investors to continue to enjoy dividends and the benefit of any further market rises, while knowing that if a ‘black swan’ appears they have an asset that will rise in value and potentially offset portfolio losses”.
February XJO 5800
Source: Market Index
Santos (STO) is a stock McCarthy doesn’t like. “The surge in share price on reports of a potential takeover bid looks to me like a ‘get out of jail card’ for long suffering shareholders.”
“Declining core assets, higher debt levels and regulatory risk are just three possible reasons to jump out of this stock”, he said.
Santos (STO)
Source: ASX
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