Category Archives: Articles

New Hope Corporation – Hope for Commodities

New Hope Corporation Limited (ASX: NHC) is a coal producer that operates two coal mines in Queensland. The company has a 60 year history.

New Hope triggered a buy for me this week. Here is why….

New Hope Fundamentals:
1. Profitable coal producer
2. Aussie Coal is the cleanest in the world
3. Asian coal demand forecast to double by the year 2035
4. Coal mines are closing despite demand increasing = higher coal prices
4. New Hope is cash flow positive even at low coal prices
4. Good manager (Robert Millner) – He is an excellent long term investor
5. $1.21 cash backing per share (over $1 billion in the bank)
6. Fully franked dividend payer

Ethical Consideration

I have spent a lot of time considering the ethical aspect of this investment.
My rationale:
1. Shareholder or not, this business will still be digging coal out of the ground.
2. Hypocrisy to suggest this unethical if using electricity at home or work.
3. No economically sustainable electricity generating substitute in Asia.

New Hope Technicals:
1. New Hope this week broke a four year downtrend.
2. The probability of good things happening for the share price have increased.

Weekly chart - click to enlarge

Weekly chart – click to enlarge

Daily chart - click to enlarge

Daily chart – click to enlarge

Macro counter-intuitive play
1. Aunty Janet Yellen (Fed Reserve Chair) will raise rates before too long.
2. Raising rates is an inflationary move in the context of the business cycle.
3. This is likely to be good for commodities.
4. Not in love with the downside for commodities from here (that trade is done).


11 December 2015 Update

Well that was a ‘Hope-Less’ call. Probability of good things happening reduced today (Friday) with a breach of the trendline back at $1.90 area. My system dictates I close this for a loss which I have done and see what happens. Faked out on this one but got to stay in control.

The information provided in this article is intended for general use only. The article is intended to provide educational information only. Please be aware that investing involves the risk of capital loss. The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information herein.

Navitas – Education is the Key

Navitas Limited (ASX:NVT) is a global education provider with 120 colleges across 31 countries servicing 80,000 students.

I have been waiting a couple of years to buy Navitas shares at a reasonable price at the right time.

Here is why Navitas was a buy for me the week before last at $4.20.

Fundamentals:
1. Consistently high return on equity
2. Little debt
3. Amazing cash flow
4. Good long term manager – well run business
5. History of growing earnings
6. Good dividend payer

Plus a bonus
On 30 October, that evening after I bought China’s 5th Plenum was announced.
Key outcome (4) from the 5th Plenum said that China will “Promote tuition fee exemption; Fully subsidise students with financial difficultes” (righto)

Technicals:
1. Navitas broke an 18 month downtrend four weeks ago and lingered above the downtrend for a few weeks.
2. From there, the probability of good things happening has increased further enhanced with a positive share price this week.

click to enlarge

click to enlarge

The information provided in this article is intended for general use only. The article is intended to provide educational information only. Please be aware that investing involves the risk of capital loss. The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information herein.

Perth Property Prices

The Australian Bureau of Statistics yesterday released their quarterly Residential Property Prices Index for Eight Capital Cities for the June 2015 quarter.

Perth Property Prices quarterly chart

Perth Property Quarterly Chart click to enlarge

click to enlarge


Perth Property Peaked December 2014 quarter

If this was a share trading on the ASX it would be a sell in my opinion.
Sorry Perth !!!

Tide is going out
Prices in Perth are now falling even with record low interest rates.
Property price declines will likely accelerate in this city once interest rates eventually begin increasing.

When the tide that is low interest rates goes out we will see who is swimming naked!!

Silver lining
Perth property will probably throw up some great bargains in five-to-seven years time once the interest rate cycle has played out.

The information provided in this article is intended for general use only. The article is intended to provide educational information only. Please be aware that investing involves the risk of capital loss. The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information herein.

Regis Resources – out of a downtrend

Regis Resources Limited (ASX: RRL) is one of the few fundamentally sound material/mining stocks on our market. And it certainly doesn’t have much company at the moment in the gold mining space.

Regis Fundamentals:
1. Profitable gold producer (at current gold prices)
2. Three separate mines
3. Australian domiciled producer (ie no sovereign risk)
4. Net cash on the balance sheet
5. Well managed
6. Proposing to restart paying dividends for the 2015 financial year
7. Announced share buy back which may start shortly

And, if having gold exposure is good enough for Stanley Druckenmiller and Ray Dalio, than it is good enough for me.


Regis Technicals:

1. Price has come out of a two and a half year downtrend
2. The chart is as good as it gets from a risk/reward probability perspective
3. Gold loves trouble in equites although price will guide from here

click to enlarge

click to enlarge

Regis was a buy for me this week ending August 21.

16 October Update
Money Flow doesn’t lie!!
Regis closed the week at $2.12 which is a 50% gain to date (plus dividend & franking) on my $1.41 entry from eight weeks ago.

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click to enlarge

The information provided in this article is intended for general use only. The article is intended to provide educational information only. Please be aware that investing involves the risk of capital loss. The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information herein.

Oil Companies way Smarter than the Public

Remember when petrol prices dipped under $1 a litre at the start of the year?

As this Crude Oil chart shows, Oil is currently trading below prices set at the start of the year yet I filled up at around $1.40 a litre today.

Crude Oil Full0915 Future

So why isnt petrol sub $1 now?

Could it be that the collective public is getting ripped off and outsmarted by some massive corporations / cartels at the moment?

Medibank Private – is it about to go jogging?

Medibank Private Limited (ASX:MPL) is Australia’s largest health insurer.

The fundamental reasons for buying:
1. It enjoys a demographic tailwind
2. It is the market leader in a concentrated industry
3. It has an opportunity to reduce its claims payout ratio (ie increase profits)

The technical reasons for buying:
The $2.00 area seemed a logical place for some price support given the IPO to retail was $2.00 and institutional investors at $2.15.

Plus, it has formed a pretty good set up on the chart:
1. Breaking the downtrend
2. Retest the break
3. Bounce this week

click to enlarge

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Above about $2.14 should see Medibank start jogging.
Maybe Medibank is trying to get fitter and healthier for summer!!!

Jogging off the start line

I made a start this week on what is likely to be a multi-year process of accumulating some Medibank shares once out of a downtrend and selling a few once it falls out of an uptrend. Multi-year rinse and repeat with the aim to build a long term dividend stream with little capital cost in the long run.

22 August 2015 Update
Medibank delivered its annual report yesterday which showed some great financial metrics and the share price reacted accordingly. In my opinion, there is nothing better than technical analysis on fundamentally sound stocks.

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click to enlarge

Investing is a marathon not a sprint however it helps to be off to a good start.

The information provided in this article is intended for general use only. The article is intended to provide educational information only. Please be aware that investing involves the risk of capital loss. The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information herein.

DWS bounce from oversold?

DWS Limited (ASX:DWS) or “Ddubs” as I like to call it stopped going down in the past week. By my reckoning, this is about the 50th most fundamentally sound stock (out of 2,000) listed. I previously wrote about DWS in 2014.

Bounce towards a $1 is possible after it broke a five month downtrend this week.

Click to enlarge

Click to enlarge

Update 7 August
DWS tagged $1 price target today ahead of time.
That’s plus 36 cents or +56% in a touch over three weeks.

click to enlarge

click to enlarge

The information provided in this article is intended for general use only. The article is intended to provide educational information only. Please be aware that investing involves the risk of capital loss. The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information herein.

Sydney House Prices chart

The Australian Bureau of Statistics (ABS) this week released their quarterly Residential Property Prices Index for Eight Capital Cities for the March 2015 quarter.

Sydney Property Prices showing the collective price movements till March 2015. (click to enlarge)
Sydney Property Prices with EMA's
No opinions needed
Upon putting charts together for the capital cities about a year ago (courtesy of ABS data), it has been joyous to no longer need to listen to any noise, opinions or commentary on house prices, bubbles, interest rates, supply/demand, chinese investors, SMSF buyers etc.

Despite being a basic excel chart updated on a quarterly basis, the index price change and the data captures it all.

The price index and the moving averages will roll when they roll.

The information provided in this article is intended for general use only. The article is intended to provide educational information only. Please be aware that investing involves the risk of capital loss. The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information herein.

That’s my Woolies

Three reasons to buy Woolworths (ASX:WOW) for atleast a bounce to the $30-$31 level?

1. Buy the news – On Wednesday, Woolies annouced CEO retirement and reduced earnings guidance
2. Today (Friday) it closed above the intermediate down trend which begun in February as shown on the daily chart
3. Completed five waves up to the $38’s which I nailed here, possibly completed five waves down this week as shown on the weekly chart

Daily chart (zoom)
WOOLWORTHS LIMITED daily 19 June

 

Weekly chart
WOOLWORTHS LIMITED weekly 19 June

Risk is a weekly close below new green up arrow. Risk less than a $1, Reward about $4 per share.

I suspect this call will be unpopular with the majority.

Update 25 June

Seems the call was unpopular. Price closed today back in the downtrend and below my line in the sand $26.50 as per the daily chart below. This means that the probability of a lower share price for Woolworths is now greater than it was just a few days ago. I closed my trade for a 72cent loss. Atleast groceries are getting cheaper!!!
WOOLWORTHS LIMITED daily 25 June
The information provided in this article is intended for general use only. The article is intended to provide educational information only. Please be aware that investing involves the risk of capital loss. The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information herein.

Aussie Banks stopped going down?

The Aussie Banks may have stopped going down today by breaking their respective intermediate downtrends that started in April. A buy for me on ANZ, CBA and WBC today.

Westpac (ASX:WBC) down over 22% from the top in April to the low of 5 June. Is price wrong at this level?
WESTPAC BANKING CORPORATION 16 June
 

Commonwealth Bank (ASX:CBA) if this can get to the gap fill at $90.57 by mid August, it is going straight to The Pool Room. Notes to self from April looking about right so far…A weekly close however below my uptrend (Green arrow on CBA) will render this wrong.
COMMONWEALTH BANK OF AUSTRALIA 16 June.
 

And, ANZ chart although not shown here is looking about the same with a small break of downtrend today.

Update 25 June
Took profit on 20% of my CBA at $87.40 (+$5.00 per share) to lock in some gains and also in case Greece talks aren’t resolved/concluded. Took a bit of profit off the table for ANZ and WBC too. Risk management is key. Still believe that $90.57 if not higher is achievable on CBA.

The information provided in this article is intended for general use only. The article is intended to provide educational information only. Please be aware that investing involves the risk of capital loss. The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information herein.