This week, our super stock selectors have nominated a food and grocery wholesaler and a healthcare company for their “likes list”.
Metcash releases profit result
Michael McCarthy of CMC Markets is optimistic about today’s profit result from Metcash.
“I like Metcash (MTS). The result this week shows MTS is holding market share, while investing in the business,” he explained.
“It is also a potential takeover target.”
Metcash posted a full-year net profit of $171.9 million, down 21% on FY16.
However, group sales revenue for the year to April 30 rose 5.4% to $14.12 billion.
According to the ASX announcement, this includes $521.5m of sales from the Home Timber & Hardware (HTH) business following its acquisition on 2 October 2016, as well as sales of $253.5m from a 53rd trading week.
Earnings growth in the Liquor and Hardware divisions resulted in a 7.7% increase in Group EBIT for the year, to $296.7m.
The company also announced a final, fully-franked dividend of 4.5 cents.
Source: CommSec
Embattled Ardent Leisure
In the dislikes list for McCarthy this week is the embattled entertainment company, Ardent Leisure (AAD).
Source: CommSec
“The share price is sliding again and major shareholders are revolting”, he explains.
“Concerns remain about the outlook for the Australian operations and the US strategy.”
Ardent Leisure’s share price is currently trading at $1.92, down from its 52-week high of $2.97.
In an update to the market on Friday, Ardent Leisure announced an estimated distribution of 1.0 cent per share for the second half of the year 30 June, 2017 – which brings the full-year dividend to 3 cents.
That compares to last year’s total of 12.5 cents.
Full-year core EBITDA is forecast to be in the range of $73 -$75 million for the 12 months ending 30 June.
Capitol Health (CAJ)
This week, Prime Value’s ST Wong likes Capitol Health (CAJ).
He says it’s positive that the company is getting back to its core imaging business.
“Management has worked to sell underperforming businesses to reduce costs, with prospects for its underlying business reasonably robust,” he explains.
Source: CommSec
The company recently announced the sale of its NSW radiology Assets to I-Med Radiology for $81.5 million.
He’s nominated QBE for his dislikes list this week following the insurer’s recent profit downgrade.
Last week, the company issued a profit warning due to higher-than-expected claims in its emerging markets business.
“Last week’s profit downgrade was extremely disappointing – it injects credibility issues in QBE as a turnaround [stock], particularly when the downgrade raises the problem of transparency, again”.
Source: CommSec
Our Super Stock Selectors is a survey of prominent analysts, brokers and fund managers. Each week we ask them to name a stock they like, and one they don’t like. We purposely ask for ‘likes’ and ‘dislikes’ instead of recommendations, so it provides an idea of what the market is looking at, rather than firm buys or sells.
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