Buy Hold Sell, by Livewire Markets

Buy Hold Sell: 6 small cap dividends stocks with big yields

Investors in traditional ASX 200 dividend stocks are expected to receive chump change over the next 12 months as companies "deny, defer or diminish" payments, as Nikko AM alludes in this recent wire. The fall in income expectations, combined with a spike in share prices, has seen yields compress across the broader market towards 3%.

But this situation provides investors an opportunity to fish for income in the world of small caps, where select companies offer a perfect mix of good income, durable business models and attractive valuations.

Here, Simon Conn or Investors Mutual and Dean Fremder of Perpetual Investments discuss 6 stocks with yields from 3.5%-6.5% (fully franked in most cases), with Dean pointing to one business growing earnings at over 10% annually, trading on a forward P/E of only 9x and the scope to boost its yield to ~11% given its surplus franking credits balance.

Please note: This episode was filmed on 17 June 2020. Access the full transcript and podcast for this episode here.

Where is the value in small caps?

The S&P/ASX Small Ordinaries Index has staged an extraordinary comeback, lifting 50% in value since the 23 March COVID trough. For Simon Conn of Investors Mutual and Dean Fremder of Perpetual Investments, the surge in prices means the sector is fully valued. The strategy now is all about finding hidden gems that have been left behind, and luckily for investors there's plenty where that came from.

As Fremder says: "There's lots of profitable companies out there that are probably under the radar because everyone's really focused right now on the sexy, conceptual tech companies and whatnot." In this extended interview, they expand on their views on valuations and what they're looking for in companies in this environment. Dean and Simon also share their secret "fishing spots" for value and three small caps they like right now.

Note: This episode was filmed on 17 June 2020. Access the transcript and podcast for this episode here. 

Buy Hold Sell: 5 quality small caps at a reasonable price

Amid one of the direst economic environments since World War 2, ASX small caps are living up to the spirit of Australian ingenuity. Through hard work and creativity, quality management teams are finding ways to survive and even thrive in adverse conditions. For investors, the question is which great businesses are still available at a reasonable price given the market rebound?

In this episode, Dean Fremder of Perpetual Investments and Simon Conn from Investors Mutual enter a red hot debate about the following stocks: 1) Nanosonics, one of Livewire's most-tipped small caps; 2) Service Stream, whose management remains upbeat on the company's earnings and dividend prospects; and 3) InvoCare, which in April undertook a placement to strengthen its balance sheet and support growth plans.

Dean and Simon also each bring along two under the radar quality small caps trading at attractive discounts to intrinsic value.

Please note: This interview was filmed on 17 June 2020. Access the edited transcript and video for this episode (as well as more valuable investing content) here.

 

Buy Hold Sell: 5 emerging leaders from the crisis

After every stock market bust and boom there tends to be a changing of the guard. Think back to after the GFC, when commodities and financial stocks faded from glory and gave rise to stellar gains in health and tech names.

Behavioural and societal changes arising from COVID-19 are expected to shake up the financial world order again. In this episode, Catherine Allfrey of WaveStone Capital and Matt Williams from Airlie Funds Management opine on who the winners could be.

They discuss 1) Kogan - which has tripled since its March low and seen its P/E skyrocket to above 60x; 2) Resmed - whose business didn’t hit snooze during the pandemic; 3) Ansell - benefiting from a boom protective equipment demand; 4) Xero - a tech stock poised to become a future hero, and 5) Mineral Resources - which is riding a rejuvenated commodities boom.

Access the video and edited transcript here. Note: This interview was recorded on 3 June 2020.

Making sense of this stunning rally

Livewire readers have so far nailed their bullish call on the market. Since we published those survey results, the ASX 200 train is full steam ahead (up +21.50% to be precise). The three critical questions for investors now are: 1) Is there much gravy left? 2) Where are the next sector rotation opportunities? 3) What can make the locomotive stall or potentially go backwards?

In this extended interview, Catherine Allfrey of WaveStone Capital and Matt Williams from Airlie Funds Management address those questions. They also suggest how investors can structure their portfolios and call out companies that have what it takes to survive and thrive in this environment.

Please note: This interview was recorded on 3 June 2020. Access the video and transcript for it here.

Buy Hold Sell: 5 stocks to ride the financials rebound

Elon Musk's SpaceX rocket isn't the only thing that's shot through the stars in recent days. ASX financials are having their own out-of-orbit moment, with the sector up over 15% this past fortnight. But not all companies have shared the spoils equally, with some stocks running too far and others lagging behind.

In this episode, Matt Williams of Airlie Funds Management and Catherine Allfrey from WaveStone Capital join Matthew Kidman to opine on five names and their prospects for further gains. They include one often-overlooked company that cracked through a record high this week, and one of the ‘most-tipped’ big caps from our 2020 annual reader survey. Plus, Cath also brings along a Big Four bank that's a good trading buy, while Matt offers a value laggard that could finally see its "day in the sun".

Note: This interview was recorded on 3 June 2020. You can access the video, stock codes and transcript for this episode here.

Buy Hold Sell: 5 stocks for income and growth

There can often be pitfalls in pursuing a 'one or the other' strategy in equities. Hunting income can lead to yield traps. Chasing growth may result in overpaying for assets and being left with a thin margin of safety.

In this episode, Dr Don Hamson of Plato Investment Management and Chris Hall from Ellerston Capital discuss stocks that can provide a fine balance between both. Up for debate are 1) Aristocrat Leisure - the pokie machine manufacturer on a losing streak since COVID-10 lockdowns, 2) Coles - the supermarket operator seeing a bump up in sales, and 3) Link Administration Services - Trading at half-price following profit warnings.

Don and Chris also bring along two ex-20 stocks with strong prospects for capital price appreciation and growing dividends.

Notes: This episode was filmed on 20 May 2020. Watch the video or access the transcript here.

Rewriting the rules on income

Retiree investors have borne significant financial pain as a result of the COVID-19 crisis and measures to stop its spread. Analysis by JPMorgan predicts that dividends, rental income and interest payments will drop by $135 billion in the 2020 financial year.

Income investing experts Dr Don Hamson of Plato Investment Management and Chris Hall of Ellerston Capital say that factors including COVID-19 have rewritten some of the rules around dividend investing.

Rather than haphazardly relying on the Big Four Banks, investors need to broaden their mindset and consider businesses and sectors where favourable structural shifts are supporting profits and ultimately, shareholder payments. Here, they make the case to consider non-traditional stocks for income and point to mining companies as the "new banks".

Notes: This episode was filmed on 20 May 2020. Access the video and edited transcript here.

Buy Hold Sell: 5 big-caps for reliable dividends

Dividend cuts are a hot topic for income investors. The team at Plato Investment Management expect ASX 200 payouts to fall 30% on aggregate this year. While some big payers have cut or deferred payments, not all companies are giving shareholders grief.

In this episode, Dr Don Hamson of Plato Investment Management and Chris Hall from Ellerston Capital discuss 5 ASX big-caps with strong balance sheets that can be relied on for yield. They include: 1) A finance company with a defensive earnings profile; 2) Australia’s best-capitalised major bank; 3) A conglomerate benefiting from lockdowns, 4) An A-REIT in the right part of the property market, and 5) A mining stock with a growing cash pile. Watch, read or listen to our first show back in the studio since lockdown and get the full story. 

Notes: You can watch and access a full transcript of the interview here. This episode was filmed on 20 May 2020.

Buy Hold Sell: 2 fundies clash on these stock ideas

For two fund managers to disagree on all stock ideas is pretty rare on Buy Hold Sell, but this happens to be one of those moments.

Matthew Kidman hosts a discussion with Simon Shields of Monash Investors Limited and Anthony Aboud of Perpetual Investments about uncorrelated stocks; companies whose earnings are detached from the prevailing economic situation. They include 1) Woolworths, the supermarket giant trading on 23 times earnings; 2) GrainCorp, which just demerged its malt business to try and unlock shareholder value; and 3) A2 Milk, the infant formula “ball-tearer” powering to record highs.

After politely agreeing to disagree on their prospects, Simon and Anthony each bring their favourite uncorrelated stock idea to the table before Matthew wraps up the debate with a sizzling punchline.

Notes: This episode was filmed on 6 May 2020. You can access the video or edited transcript for this Buy Hold Sell episode here.