Icarus Signal New Entries For Today

Daily update on share prices and consensus price targets.

By Rudi Filapek-Vandyck

Vitamin producer and marketer Blackmores ((BKL)) is a strong manufacturer with a solid looking growth outlook. Management has successfully tapped into the Asian growth story and forecasts are for double digit advances, year-in, year-out. That's a very appealing proposition, just not at every price. This is why Blackmores turns up on Icarus' radar every once in a while, only to disappear again. Amidst struggling industrials and manufacturers in general on the Australian stock exchange, Blackmores has a lot on offer to whet investors' appetite, which ultimately ends with "popularity leads to overpricing".

Icarus' warnings are self-explanatory. Earlier this year, towards the end of the first quarter, the share price ran up above $31 and that caused all sorts off bells ringing for Icarus. Investors got the message. They sold down the shares to the mid-20s before market meltdown pushed the share price as low as $24 in August. A solid financial report in reporting season re-ignited buyers' interest and the share price swiftly recovered to $30. Not surprisingly, from this point onwards further upside seemed limited and it has been a wobbly performance in September thus far.

My personal thoughts are that Blackmores has rapidly lost a lot of its appeal, even though the fundamentals remain among the strongest in the market. This is based upon the view that limitations set by consensus targets in the past have worked quite reliably, and there are tons of companies around who -on a return to "risk on" sentiment- offer a larger upside potential. Whether investors should ignore Blackmores, or instead keep the stock on their radar, depends on what exactly they are looking for.

I note that, as the share price weakens, the implied forward looking dividend yield creeps up ever so closer to 5%. Remember that dividends should increase alongside the projected double digit improvement in earnings in years ahead.

Blackmores has now disappeared from the selection of stocks trading near consensus target, together with ConnectEast Group ((CEU)). Three others also disappeared but they all went the other way carried by share price strength; Monadelphous ((MND)), Murchison Metals ((MMX)) and Treasury Wine Estates ((TWE)). In their place came five newcomers, of which four resources related plays and Austar ((AUN)). The latter occurred on the back of a drop in target. A detail best not ignored.

There are now nine (9) stocks trading close to target and another 22 above target, including Amcom Telecoms ((AMM)) – see yesterday's update.

With both Hutchison Telecom ((HTA)) and Service Stream ((SSM)) joining the Bottom 50 the conclusion that investors still don't like telecoms in Australia is once again reconfirmed. Also, have a thought about the following observation: average dividend yields on telecom operators in Europe has now risen to in excess of 10% – the highest of all sectors in the world.

Investors should consider the information and data are provided for research purposes only.

Stocks <3% Below Consensus

Order Symbol Current Price($) Consensus Price($) Difference(%) 1 AUN $ 1.19 $ 1.20 0.67% 2 RRL $ 2.92 $ 2.97 1.82% 3 WDS $ 0.83 $ 0.85 2.41% 4 KZL $ 0.61 $ 0.63 2.46% 5 QRN $ 3.29 $ 3.38 2.83%

Stocks Above Consensus

Order Symbol Current Price($) Consensus Price($) Difference(%) 1 SDG $ 0.71 $ 0.70 – 0.71% 2 BPT $ 1.15 $ 1.13 – 1.66% 3 MND $ 19.39 $ 18.98 – 2.11% 4 TWE $ 3.45 $ 3.38 – 2.14% 5 CAH $ 1.80 $ 1.75 – 2.51% 6 MMX $ 0.58 $ 0.56 – 2.61%

Top 50 Stocks Furthest from Consensus

Order Symbol Current Price($) Consensus Price($) Difference(%) 1 OTH $ 0.43 $ 1.50 248.84% 2 PPX $ 0.10 $ 0.34 237.00% 3 CVN $ 0.15 $ 0.50 233.33% 4 ACL $ 0.35 $ 1.06 207.25% 5 KAR $ 3.08 $ 9.18 197.92% 6 PLA $ 0.21 $ 0.62 195.24% 7 NCR $ 0.28 $ 0.78 183.64% 8 RES $ 0.55 $ 1.45 163.64% 9 SLX $ 2.91 $ 7.54 158.93% 10 IFN $ 0.24 $ 0.60 151.67% 11 TXN $ 0.56 $ 1.33 137.50% 12 WEC $ 1.85 $ 4.30 133.06% 13 SMR $ 0.88 $ 2.03 130.68% 14 BTA $ 0.89 $ 1.98 122.47% 15 NXS $ 0.24 $ 0.51 116.17% 16 RFX $ 0.98 $ 2.04 108.16% 17 IPD $ 0.55 $ 1.14 107.27% 18 HST $ 0.11 $ 0.22 104.76% 19 BND $ 0.88 $ 1.80 104.55% 20 TIS $ 0.47 $ 0.95 102.13% 21 IVA $ 1.54 $ 3.10 101.95% 22 BOL $ 0.25 $ 0.49 100.00% 23 KGL $ 0.11 $ 0.22 100.00% 24 GNM $ 0.26 $ 0.50 97.25% 25 IAU $ 1.32 $ 2.60 96.97% 26 TSM $ 0.52 $ 1.02 95.19% 27 AVG $ 0.30 $ 0.58 93.33% 28 LNC $ 2.01 $ 3.75 86.57% 29 QRX $ 1.28 $ 2.38 85.94% 30 HFA $ 0.85 $ 1.56 83.53% 31 MPO $ 0.63 $ 1.15 82.54% 32 HZN $ 0.24 $ 0.44 82.50% 33 AQP $ 3.47 $ 6.20 78.67% 34 AJA $ 2.20 $ 3.93 78.64% 35 TAP $ 0.67 $ 1.19 76.87% 36 DTE $ 0.68 $ 1.20 76.47% 37 BSL $ 0.78 $ 1.37 76.03% 38 PEM $ 0.60 $ 1.05 75.00% 39 PGA $ 0.04 $ 0.06 71.43% 40 GBG $ 0.66 $ 1.12 70.53% 41 HGO $ 0.26 $ 0.43 68.63% 42 RQL $ 0.51 $ 0.86 67.65% 43 AWE $ 1.08 $ 1.80 67.04% 44 GRR $ 0.54 $ 0.89 64.44% 45 KGD $ 1.57 $ 2.55 62.42% 46 CSV $ 0.85 $ 1.37 61.54% 47 MAQ $ 8.50 $ 13.51 58.94% 48 GNS $ 0.21 $ 0.32 57.56% 49 HTA $ 0.06 $ 0.10 57.38% 50 SSM $ 0.44 $ 0.69 56.82%

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