This week, one company with a delicious outlook is Collins Food Limited. Stock Selector Elio D’Amato from Lincoln Indicators says the company has satisfactory financial health and delivered a positive move last week, confirming the acquisition of 13 KFC restaurants as the business moves into NSW and Victoria.
“The business has flagged the closure of underperforming Sizzler restaurants, as the business directs focus to the strategic expansion of KFC,” D’Amato says.
But Flight Centre has flown into D’Amato’s dislikes list this week.
The Australian travel agency and provider of global travel services for leisure and business travellers recently produced a trading update, which flagged underlying FY16 profit before tax (PBT) to come in below the initial target.
“Challenges arising during the seasonably stronger second half include pricing competition and falling domestic travel,” D’Amato says.
Another travel related stock – Qantas Airways – doesn’t look in good shape, according to our technical chartist, Gary Stone. He says the share price, which fell below a significant support zone between $3.10 and $3.25 (with higher than average volume traded) could head for levels around $2.50.
Spotless Group Holdings is in favour with CMC Market’s chief market strategist Michael McCarthy, because it’s out of favour with the market!
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“After the December 2015 downgrade associated with a number of missteps, SPO is out of favour. However, the share price may have bottomed and stabilised, and at a P/E ratio around 9x, looks cheap to me,” McCarthy says.
The performance of Treasury Wine Estates, with a share price that’s doubled in less than 12 months, looks overdone to McCarthy. He’s placed this company in the dislikes column this week.
“Even if I double last year’s earnings, I still get a P/E of well over 30x. Good stock but overbought.”
And MotorCycle Holdings is in the likes list for Senior Portfolio Manager at Prime Value, ST Wong. Despite the decline in its share price, he believes in this company’s growth potential.
“MotorCycle’s share price has declined in the past few weeks, probably due to profit taking after a strong IPO debut. The company’s prospects are underpinned by market leadership in a fragmented motor cycle retail sector,” he says.
“We expect the company to grow sales both organically and by acquisitions.”
On the other side of the token, Wong says you might consider trimming your position and taking some profits in Scotland commercial bank, Clydesdale, after its recent price run.
“The share price has risen 27% so far this month, backed by a better-than-expected result announcement,” he says.
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