FYI | Aug 31 2011
This story features REA GROUP LIMITED. For more info SHARE ANALYSIS: REA
Daily update on share prices and consensus price targets.
By Rudi Filapek-Vandyck
Analyses of past reporting season experiences has taught us, investors, that companies who do genuinely surprise with their financial report during reporting season are usually being rewarded via continued outperformance for weeks, if not months past the event. Another measure for future outperformance is whether a company increases its dividend. Increasing dividends is the opposite of cutting and thus showcases strength and confidence. Investors like that. Those stocks are more often than not rewarded with prolonged outperformance.
Realestate.com ((REA)) has been one of stand-outs in August. Its financial report proved better than what most analysts had been expecting and strong growth was matched with a jump in dividends. That makes two times hurray for loyal shareholders. No surprise thus, the share price has been in a steep climb this month. After touching as low as $10 during the sell-offs in early August, the share price is now approaching $13. Alas, for those investors looking to join the bandwagon, consensus target is at $13.14 and that means the stock is now firmly on Icarus' radar.
Time to become a little more cautious? I think so, certainly. Even if one is not a big fan of the Icarus Signal, the shares are now on a one year forward Price Earnings ratio above 20 while projected growth for the years ahead is for around 17% per annum.
REA has now joined the likes of ARB Corp ((ARP)), QR National ((QRN)) and Sedgman ((SDM)) in trading close but still below target, alongside other newcomers Warrnambool Cheese ((WCB)), Charter Hall Retail ((CQR)), Charter Hall Office ((CQO)) and -believe it or not- David Jones ((DJS)). There are murmurs in the market about the RBA possibly being forced to start cutting official interest rates. Under such a scenario general wisdom has it the retailers, including David Jones, should be key beneficiaries. Others are talking about the Dogs of the Dow theory whereby yesterday's losers have become too cheap to ignore. Whatever the reason, David Jones is now back at consensus target.
There are 17 stocks trading close to target, while 26 others are above target, including Foster's ((FGL)), Lycopodium ((LYL)), Port Bouvard ((PBD)) and Count Financial ((COU)). Alert readers would have picked up that take-over action continues to dominate the Icarus Signal tables. Lycopodium has been one of the stand-out performers this reporting season too. Others, such as Port Bouvard and Warrnambool are only here because of falling targets. A detail best not ignored.
Another stand-out performer this reporting season, Macquarie Telecom ((MAQ)) has now joined the Bottom 50. Which proves it is not always enough to perform well. When you're in the wrong industry, you are simply in the wrong industry. Investors still don't like telecom. Note that CSG Group ((CSV)) has also joined the Bottom, as has Jetset Travelworld ((JET)) and Gindalbie Metals ((GBG)).
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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