FYI | Jul 26 2011
Daily update on share prices and consensus price targets.
By Rudi Filapek-Vandyck
Two disappointing market updates from mid-tier oil and gas companies AWE ((AWE)) and Horizon Oil ((HRZ)) have continued the rather nasty track record for the sector over the past five years, and that is that shareholders haven't had much fun for putting some of their faith in these companies in the light of crude oil trading well above US$100/bbl these days.
My favourite observation regarding the sector remains that five years ago share prices were higher than where they are today, and that observation also applies to the bigger players in the sector, Woodside ((WPL)) and Santos ((STO)). While short term traders can have a lot of fun with these stocks, it has been a tough and disappointing road for shareholders.
AWE and Horizon have now again made their presence known in the Bottom 50 of the Icarus Signal. As often pointed out, while this implies both stocks are trading well below intrinsic valuation, it also signals the market refuses to show any faith given the long legacy of disappointments. Beware for value traps, it is a real and present danger. On the other hand, this is where a lot of sudden volatility can be found and some market participants like it.
Joining AWE and Horizon in the Bottom 50 after yesterday's price action are Watpac ((WTP)), Challenger Infra Fund ((CIF)) and Cockatoo Coal ((COK)). In all cases the market will have big question marks, enough to price the shares at a large discount. In Cockatoo Coal's case, wet weather has caused havoc and earnings estimates have come down considerably, but will it all be enough? And what about extra funding needs? Investors should always remember there is a very good reason why stocks trade at discounts of 40% and more to price targets – it's called risk.
Meanwhile, among stocks that are faring much better, no less than nine (9) stocks disappeared from the list trading close to consensus target yesterday, and only one did so on share price strength: Treasury Wine Estates ((TWE)). It's clear part of the market cannot let go of the company's corporate appeal, but why does this translate into yo-yo-ing in between Icarus tables on a regular basis?
These nine were replaced with only four newcomers, so the total number of stocks trading in the vicinity of target now counts 15 names. Newcomers are Charter Hall Retail REIT ((CQO)) and Charter Hall ((CHC)), probably indicating part of the market is having a lot of fun with the ongoing saga at the retail trust, as well as Metcash ((MTS)) and Aston Resources ((AZT)). Metcash is a high yielding supermarket operator in conflict with the ACCC over the acquisition of Franklins operations. Aston Resources has put on a big rally recently, but for now, with consensus price target in sight, it would appear investors are getting a little bit more cautious.
It has been a big run for Aston, with the share price rallying from below $9 to above $11 – and it all happened this month!
There are now 28 stocks trading target and as said above, only Treasury Wine Estates rejoined, with Metcash and the two Charter Hall securities dropping back to the list of stocks trading close to, but below target.
In an interesting twist to the upcoming reporting season, it has been observed recent ASIC shorts data signal investors are getting shorter on QR National ((QRN)) and on Boral ((BLD)). Something to keep an eye on?
Investors should consider the information and data are provided for research purposes only.
Stocks <3% Below Consensus
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Stocks Above Consensus
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Top 50 Stocks Furthest from Consensus
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To see the full Icarus Signal, please go to this link
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