06 December 19
A big weak wraps up with a positive move
06 December 19
A big weak wraps up with a positive move
06 December 19
Are the Resources on track for MM? (WBC, FMG, OZL, WSA, AWC, S32)
05 December 19
Markets rebound as RBNZ releases revised capital requirements (WHC, MFG)
05 December 19
Panic equals opportunity 9 times out of 10 – what to buy? (SVW, WSA, CWY, IVC, ASB)
04 December 19
ASX200 now down 4.4% from recent highs (APT, NCK, RIO, OML)
04 December 19
Income Report: Reviewing IVE Group after they make a timely acquisition (IGL, NBI)
04 December 19
Overseas Wednesday – International Equities & ETF Portfolios (GDX US, TTD US, OZL, IEM US, 700 HK, TBF US)
03 December 19
Stocks hit as Trump targets Sth America – RBA holds rates (NCM, CTX)
03 December 19
The Santa Claus Rally “Truth or myth?” (CPU, RWC, SVW)
02 December 19
Stocks up but close well below session highs – Sydney house prices on a tear (WBC, NWH)
The ASX200 made fresh all-time highs yesterday in an almost stealth like manner, the index finally closed up just 13-points at 6864. A very strong performance in our opinion when we consider the US futures dipped aggressively during our day session as President Trump stirred the “trade war” pot by signing a bill supporting the Hong Kong protestors, not a particularly conciliatory move towards China at this important period in the ongoing trade negotiations.
The anticipated interest rate cuts for 2020 by the RBA continue to fuel the longest bull market in history, stocks feel very comfortable climbing their wall of worry and we believe the “worry” is rapidly being transferred to 2 very different groups of investors:
1 – Stock market players who moved to cash way too early in 2019 who continue to “hope / expect” a major pullback to buy back into equities at cheaper levels.
2 – Investors who rely on the income from fixed interest to live day to day, very scary considering term deposits look set to fall below 1% next year.
MM can still see a test of the psychological 7000 area in 2019, hardly a big call now it’s less than 2% away. Unfortunately too many people keep asking when the market will crash / fail etc but in our experience tops are usually formed during periods of optimism / euphoria, not when lots of people are expecting them. Perhaps when / if we soar to fresh all-time highs ~7000 the risks will increase on the downside i.e. People need to be long for a market to meaningfully correct.
Following yesterday’s fresh all-time high by the ASX200 the market remains a buy technically with stops under 6800 – less than 1% risk.
Overnight US markets were closed for Thanksgiving and Friday will be a half day, however the SPI futures are calling the local market to open up ~30-points, probably enjoying the US futures not following through on the downside after Trumps actions around Hong Kong.
This morning MM has followed on from Wednesdays look at the largest 5 fast food businesses with our promised look at the players occupying spots 5-10.
Has Telstra (TLS) turned the corner?
Telstra (TLS) has enjoyed a strong week rallying 30c, or + 8.4% as it embraces a number of broker upgrades courtesy of a reduction in long-term capex estimates however with targets now around the $4 only ~4% away this particular tailwind is likely to diminish. Overall the lack of any bad news for Australia’s largest Telco and comments this week citing potential NBN concessions for the company is good news, plus of course they are well positioned with their 5G expansion since TPG Telecom pulled out of the area.
Lastly the market has been re-rating equity valuations higher for solid / reliable dividend paying stocks and TLS has been left behind, it simply feels like time for some catch up. TLS is trading on an Est. P/E for 2020 of 18.7x while its forecast to yield 4.14% fully franked. To give some context here, over the past 5 years TLS has oscillated between a pessimistic P/E of just 8.9x while the market’s optimistic multiple has been 19.1 times, clearly at 18.7x there is now some decent optimism baked into the TLS cake. The last time Telstra demanded such a high multiple was in March of 2015 when the stock was trading ~$6.50 before tracking down to a $2.60 low. Importantly, in March of 2015 the RBA cash rate was 2.25% versus 0.75% today – if there’s a time that TLS can handle an elevated multiple, it's now!
The stock looks good technically with stops below $3.60 – not exciting risk / reward after this week’s move.
MM is now bullish TLS, initially targeting another ~8% upside.
Telstra (TLS) Chart
Westpac (WBC) $24.70 – Share Purchase Plan (SPP)
The WBC SPP pricing period closes on Monday afternoon with stock being issued at a 2% discount to the volume weighted average price (VWAP) during the pricing period, which opened on the 26th November & will close on the 2nd December. Obviously two questions to ask here. What’s the price going to be and should we participate?
1. Price: Current VWAP is $24.75 as per below from 26th – 28th Nov. If the SPP was priced today, shares would be allotted at $24.25 however that will change between now and Monday’s close. We will provide this number on Monday morning & again in the afternoon.
2. Should we add more Westpac? This comes down to position size and risk. If we held 5%, we’d certainly increase our weighting, given we have 9% in the Platinum Portfolio we are not going to participate in the SPP.
Westpac (WBC) Chart
Reviewing 5 more US Food Distribution Businesses
On Wednesday MM looked at the world’s 5 largest fast-food stocks, today as promised we have looked at numbers 5 to 10 and wow what a difference in size. These 5 companies have a combined market cap of under $US40bn, compared to Macca’s which sits on top on the pile with a market cap over 400% larger!
Todays 5 stocks are again mostly household names but their growth profiles, while largely impressive are not on the same scale as the likes of McDonalds and Starbuck’s - but with smaller size comes potential opportunity to grow if the mix is correct.
6 Yum China (YUMC US) $US44.10
Yum China is the fresh listed face in the sector following its spin-off from Yum! Brands (YUM US). YUMC is the largest restaurant business in China with well over 8000 locations already operational with clearly plenty of room for expansion, although they did commence over 40-years ago so don’t get confused that it’s a new operation– while they run the same names as the parent business like KFC and Taco Bell they also have some region specific businesses like Little Sheep and East Dawning.
Pure economies of scale as China’s middle class grows at a phenomenal rate is good news for YUMC and we believe the outlook is rosy assuming management maintains its finger on the pulse of the Chinese consumer.
MM likes YUMC after its 15% correction.
Yum China (YUMC US) Chart
7 Domino’s Pizza (DPZ US) $US295.33
Domino’s has been a huge success on a global scale with annual sales now ~$5bn, that’s a lot of pizza! This is a phenomenal example of a extremely well run business considering the number of small pizza operators on many street corners i.e. there is low cost of entry to compete.
DPZ is simply an ultra-efficient business which employs pinpoint marketing and innovation like its “hot-spot” program to keep ahead of the pack, especially as we said on the delivery front to numerous destinations. Our main concern is what next as the competition learn and copy from the best, keeping ahead of the field by a decent margin is rarely easy but Dominos have proved to be experts to-date.
MM is bullish DPZ targeting fresh all-time highs short-term.
Domino’s Pizza (DPZ US) Chart
8 Dunkin’ Brands (DNKN US) $US76.71
For someone that’s not a fan of the product I’m impressed that DNKN have a store footprint of well over 20,000 venues, a $US7bn business proves my taste buds are in the minority! Approximately half of the venues are in the US showing the Dunkin’ and Baskin-Robbins brands have made a solid footprint globally. However we believe it’s well behind Starbucks on a number of levels making further rapid expansion a tricky business.
Technically a pullback of ~10% is our preferred scenario.
MM is neutral / bearish DNKN.
Dunkin’ Brands (DNKN US) Chart
9 The Wendy’s Company (WEN US) $US21.80
WEN is the 3rd largest of the burger chain restaurants with 7,000 venues compared to McDonalds which has over 36,000, WEN is all about convenience like its rivals with close to 70% of its sales made at the drive through window.
At this stage we can see no clear plan / strategy by the board to take some of the market share from its competitors.
MM is neutral to slightly positive WEN.
The Wendy’s Company (WEN US) Chart
10 Shake Shack (SHAK US) $US62.22
SHAK is the new kid on the burger block pushing “quality burgers” but with just over 70 locations its clearly extremely early days to know if the stock will succeed, or fail.
At this stage there are a number of concerns for the businesses including slow growth for its existing restaurants and margins which are likely to slip as second tier venues come on stream – the share prices recent plunge illustrates the market shares our concerns.
MM is neutral / negative SHAK.
Shake Shack (SHAK US) Chart
Of the 5 stocks looked at today MM likes YUMC and DPZ.
No change, we had given the benefit of the doubt to the post GFC bull market and fresh all-time highs have been achieved as anticipated, a close well under 3025 is required for the S&P500 to switch us to a bearish short-term stance.
MM remains now neutral / positive US stocks.
US S&P500 Index Chart
European indices continue to “climb a wall of worry” at this point in time MM is neutral but we maintain our slight positive bias with a target ~5% higher looking realistic.
Overnight Market Matters Wrap
Have a great day!
James & the Market Matters Team
Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday, or after the session when positions are traded.
All figures contained from sources believed to be accurate. All prices stated are based on the last close price at the time of writing unless otherwise noted. Market Matters does not make any representation of warranty as to the accuracy of the figures or prices and disclaims any liability resulting from any inaccuracy.
Reports and other documents published on this website and email (‘Reports’) are authored by Market Matters and the reports represent the views of Market Matters. The Market Matters Report is based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.
The Reports contain general, as opposed to personal, advice. That means they are prepared for multiple distributions without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of a financial advisor. Market Matters or its author(s) accepts no responsibility for any losses or damages resulting from decisions made from or because of information within this publication. Investing and trading in financial products are always risky, so you should do your own research before buying or selling a financial product.
The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports. Market Matters may publish content sourced from external content providers.
If you rely on a Report, you do so at your own risk. Past performance is not an indication of future performance. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.
Financial Services Guide
Date prepared: Wednesday, 22 November 2017
Last update: Friday, 25th October 2019
About this Financial Services Guide (FSG)
This FSG provides you with key information about a range of subscription services offered by:
Marketmatters Pty Ltd (Market Matters) Australian Financial Services Licence No. 488798 ABN (20 137 462 536)
Level 29, Chifley Tower, 2 Chifley Square Sydney 2000
T: 1300 301 868
E: [email protected]
In this FSG, “we”, us” and “our” refer to Market Matters.
Market Matters holds Australian Financial Services Licence No. 488798 (AFSL) and is responsible for any financial services that we provide to you.
This AFSL was issued on 8th September 2016.
The purpose of this FSG is to provide you with information about:
Market Matters operates a website, www.marketmatters.com.au (Website), where customers may, for the payment of a subscription fee, access certain financial information and general advice. In particular, the Website provides:
This FSG relates only to the Website Services.
What financial services we can offer in connection with the Website Services
As holder of AFSL number 488798, in connection with the Website Services we are authorised to provide general financial product advice to both retail and wholesale clients in relation to the following financial products:
The Website Services are comprised of general advice only. That is, none of the advice given on the Website or by provision of the Website Services takes into account any of your objectives, financial situation or needs (Your Personal Circumstances). Before acting on any of the information, advice or Website Services, you must consider the appropriateness of this information in light of Your Personal Circumstances and, if necessary, consult a financial adviser before making any investment decision.
If you are seeking to acquire a specific financial product or security, you should obtain a copy of and consider the Product Disclosure Statement or Prospectus for that product before making any investment decision.
The Website does not provide a trading platform or access to a trading platform. There is no ability to purchase or sell financial products through the Website.
How do I access these services?
You can access these services by going to www.marketmatters.com.au and following the prompts and steps required to sign up for membership. Please read all terms and conditions carefully.
Fees and benefits payable to us and our associates
The Website is a subscription-based service. A yearly fixed subscription fee is payable to Market Matters when you subscribe to the Website which will vary depending on the type of subscription for which you subscribe. At the date of this FSG, the yearly subscription fees are as follows:
Platinum: $1,238 for 12 months
Platinum: $1,993 for 24 months
Subscription fees vary from time to time and are provided on the Website.
The Website does not currently feature third party advertising. Market Matters reserve the right to advertise at a future time for which they may receive remuneration. Any such advertising will be independent of any other content on the Website.
All representatives of Market Matters (Market Matters Staff) receive a salary paid by Market Matters. Market Matters Staff may also receive performance-based bonuses which are based on profitability, the number of subscribers and subscription renewal rates.
Where we refer you to a third party financial services provider, we may receive a referral payment. This referral payment may be a percentage of the fee’s charged by the financial services provider between 0% and 25%, or a fixed amount. These referral payments are made by the financial services provider to Market Matters and are not an additional cost to you.
How do we manage potential conflicts of interest?
Market Matters have implemented policies and procedures to mitigate the risk of conflicts of interest. These include:
Market Matters Staff and Contributors are encouraged to express independent views and opinions on the topics they write about. This is established through ongoing training, external audits and our conflict of interest and staff trading policies. Market Matters Staff are required to serve the best interests of the subscribers, without consideration of any commercial or personal interests.
How is my personal information dealt with?
If you have a complaint about our services, you should take the following steps:
Contact us and discuss the complaint directly. If you do not feel comfortable discussing the complaint with us or your complaint is not satisfactorily resolved within 2 business days, please telephone Market Matters, on 1300 301 868 and ask to speak with the Complaints Officer. We suggest you put your complaint in writing at this time so that the issues are fully documented and understood by the parties. Your complaint should be addressed to:
The Complaints Officer
Level 29, Chifley Tower,
2 Chifley Square Sydney NSW 2000
Market Matters will review your complaint within 45 days and attempt resolution. If you are still not satisfied with the outcome, you may take your complaint to an external dispute resolution scheme. Market Matters is a member of the scheme operated by the Financial Ombudsman Service. You should write to:Australian Financial Complaints Authority Limited (AFCA)
You may also wish to consult ASIC in relation to your complaint. ASIC’s website contains information on complaining about companies and people and describes the types of complaints handled by ASIC. You can contact ASIC on its free call infoline:
Tel: 1300 300 630 or email [email protected]
We maintain professional indemnity insurance to cover our employees and Authorised Representatives (including us) for the financial services they provide, having regard to the following:
If you require further information about these compensation arrangements please contact us.
Terms and Conditions
This website, www.marketmatters.com.au, is published by Marketmatters Pty Limited (ABN 20 137 462 536) ('Market Matters', 'MM', 'us', 'we', 'our') Australian Financial Services Licence 488798
Financial Services Guide
Market Matters Financial Services Guide (FSG) is located here, and contains important information about the financial services provided by Market Matters. You must read our FSG and consider it in the context of your Personal Circumstances before acting on any advice. By accepting the terms and conditions you are acknowledging that you have read the FSG.
Provision of the Reports
Reports and other documents published on the Market Matter’s website (‘Reports’) are authored by Market Matters. The Reports represent the views of Market Matters based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.
The Reports contain general, as opposed to personal advice. That means they are prepared for multiple distribution without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of a financial advisor.
The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports.
If you rely on a Report, you do so at your own risk. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.
Past performance is not a reliable indicator of future results. Brokerage costs have not been included in the calculation of performance. As financial products rise and fall in value, returns may be negative. Performance figures are not intended to be a forecast. Market Matters does not guarantee the performance of or returns on any investment.
Employees and/or associates of Market Matters may hold one or more of the stocks reviewed on this website.
Subscriptions and Subscription Prices
To access premium content available on the Market Matters website you may initially subscribe through the complimentary trial which provides you full access to all services for the trial period. You are limited to two trials after which you must subscribe to one or more membership categories available on the website or direct with Market Matters before you can trial the service again, three months after the expiry of your second trial.
To subscribe to Market Matters services and access to the website you may go to the Memberships page of the website, provide the information marked as ‘Mandatory’ and select the payment option for the price quoted (at the time of your transaction) or contact the team directly at Market Matters by phone or email. You will then receive a verification email from Market Matters indicating that your subscription and payment have been accepted and you will be able to access the premium content.
Prices published on the Market Matters website are quoted in Australian Dollars (AUD) and are inclusive of GST and/or all other duties and taxes. Market Matters has used reasonable endeavours to ensure that prices for subscription to its services are published accurately on the website but these prices are subject to change and Market Matters reserves the right to change these prices and will notify you of any increase by email (with the price increase to apply from the time the next payment is due).
Marketmatters Pty Ltd (ABN 20 137 462 536) will issue a tax invoice to paying subscribers in relation to any supply that is subject to GST in accordance with A New Tax System (Goods and Services Tax) Act 1999.
Any member is entitled to cancel their membership at any time. In the event a member does wish to cancel their subscription, cancellations must be notified in writing to:
Level 29, Chifley Tower, 2 Chifley Square, Sydney NSW 2000
or by email to: [email protected]
All cancellations of month-by-month subscriptions will be cancelled and not billed again the following month.
All cancellations within 14 days we be entitled to a full refund. Any introductory gifts, such as, but not limited to; iPads, Fitbit watches, Apple watches, Google Homes, must be returned in their original condition before a refund will be made.
All cancellations made after 14 days of subscription commencement will not be entitled to a refund unless in the event of extenuating circumstances, at the sole discretion of Market Matters.
Subscriptions will automatically renew on the expiry date of current subscription. In these instances the subscription will be renewed at the current rate published on the Market Matters web site, using the same credit card that paid for the initial subscription, unless otherwise requested by the subscriber. A subscriber who wishes to cancel after being renewed in this way will have a “14 day cooling off period” in which they can request to discontinue and will receive a full refund for the renewal payment, this can be done in writing to:
Level 29, Chifley Tower, 2 Chifley Square Sydney 2000
or by email to: [email protected]
Market Matters has not reviewed any of the websites which link to this website or to which this website links. Market Matters is not responsible for the content of any other website or pages linked to or linking to its website. Following links to any other websites or pages shall be at the user’s own risk.
Copyright © 2018 Marketmatters Pty Ltd (ABN 20 137 462 536). No part of this website, or its content, may be reproduced in any form without the prior consent of Market Matters.
This Agreement is governed by and is to be construed in accordance with the laws of New South Wales, Australia. You agree to the non-exclusive jurisdiction of the courts of New South Wales, Australia in respect of any proceedings concerning this Agreement. This website is not available to US and/or EU persons and by accepting these terms you confirm that you are not a US and/or EU person.