Question 1: I bought Santos (STO) at $13. Is it time to sell with gas becoming out of favour to hydrogen, wind and solar in the future?
Answer: I like Santos (it is my preferred oil and gas pick), but the pressure due to ESG concerns is pretty strong. I am not sure this will abate in the short term. As for the brokers, they see upside, with a consensus target price of $8.02, about 25.3% above the last ASX price of $6.40. Range is a low of $7.05 to a high of $8.60. 4 buys and 2 neutrals. I think there is “Buckley’s chance” of it getting back to $13. If you are overweight this sector, take your medicine.
Question 2: I have some carry-forward concessional contributions available and my super balance is less than $500,000. I am planning to use these this financial year. Is there anything I need to do other than make the additional contributions? Do I need to notify the ATO or my super fund, or does this just get worked out at the end of the year by the ATO?
Answer: You don’t have to do anything per se if the contributions are coming from your employer or are salary sacrifice. If they are personal contributions that you intend to claim a tax deduction for, then you will need to lodge (before completing your tax return for that year) a ‘notice of intent to claim a personal super tax deduction’. You lodge this with your super fund (they have a form, or you can use the ATO form). Interestingly, the ATO can now tell you whether you have any carried forward concessional contribution availability – this can be seen in myGov in the ATO portal.
Question 3: Ramsay Health Care (RHC) is considered a high-quality stock yet the performance in the last 5 years hasn’t been good. What do you think of it going forward and would you expect it to outperform the index?
Answer: Ramsay is a high-quality stock, but it is a little out of favour at the moment and treading water. Lockdowns prevent private hospitals from performing elective surgery and admissions fall. There is also pressure on health insurance premiums, which puts pressure on the rates private hospitals can charge. Further, some of its overseas investments have been queried by the market. It has had a failed bid for a chain of hospitals in the UK, and its overall strategy in the highly regulated European market has underwhelmed. The brokers are neutral on the stock. Target price is $68.04 compared to a last ASX price of $67.75. 3 buys, 3 neutrals, 1 sell. Ramsay is due to report on Thursday 26 August. I’d be surprised if it outperforms the index in the short term.
Question 4: What is the best method for calculating the return on my SMSF? I draw a monthly pension plus get franking credits and distributions.
Answer: There is software that can calculate this accurately, but for a fairly close approximation:
- Start with the closing balance
- Add any pension payments or withdrawals
- Subtract any contributions
- Divide this by last year’s closing balance – that should allow you to calculate the percentage return.
If the franking credits for 20/21 (which will be received when you lodged your annual return) are higher than those received for 19/20 (which will have been received in cash in 20/21), then add that difference to the sum above as well.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.