Bella Kidman: Catherine, Seek just keeps running. It’s up 50 percent in the past 12 months. Buy, hold or sell?
Catherine Allfrey: It’s a sale for us too. I think it’s actually a cyclical one and you have to look at the business in 2022 and take back the investment portion of the business that goes into the market – and you have one business left over, it’s about $ 10 billion in the market capitalization. You have loss-making businesses in South America and Asia is not doing very well. And, as Bruce said, it’s about 45 times the free cash flow, which is just way too expensive.
Goodman Group (ASX: GMG)
Bella Kidman: Well, nothing like naming a company after yourself. Next, do we buy, hold or sell the Goodman Group founded by Gregory Goodman?
Catherine Allfrey:
Look, it’s a hold. I would actually put Goodman in one of these categories – if there’s a market sell-off and there’s one of the top five Australian stocks that you want to buy and own over the long term, Goodman is definitely there. It’s one of those commercial property companies that keeps growing thanks to Amazon and our love of e-commerce and online shopping. And they are the great beneficiary of these industrial buildings and Goodman has done a very successful job for many, many years. But for me it’s a stop.
Bella Kidman: The Goodman Group is up about 40 percent in the past 12 months, surpassing its pre-COVID-19 highs. Buy, hold or sell?
Gregor Goodman. Peter Braig
Bruce Williams: It is a stop for us too. Many of the same reasons for Catherine, but I’d also add: industrial property in general is easily interchangeable. You can set it up relatively quickly. Very low interest rates that I am struggling with. However, the tailwind remains. But it’s a hold for valuation reasons.
Flight center (ASX: FLT)
Bella Kidman: Next, we started Flight Center and headed up by Graham Turner. Still clearly experiencing the wrath of COVID-19. Buy, hold or sell?
Bruce Williams: It’s a buy for us – for the patient investor, I would probably suggest. When the economy gets going again after COVID-19, people can travel, we think it will recover well. We also believe that many of its competitors will no longer be in the same shape as they were before. We have many reasons to like it, but it will still go through the ups and downs until COVID-19 is completely over.
Bella Kidman: It definitely goes up and down, that’s for sure. His shops are still closed. Buy, hold or sell on Flight Center?
Catherine Allfrey: Look, it’s a stop for us. I can see Bruce’s points and they are positive and you will get some positive news, but at the same time these companies are six or seven times overrated compared to what they do for offshore transactions. So let’s look at Flight Centers and only think long-term, no.
Natural resources (ASX: MIN)
Bella Kidman: Next we have Mineral Resources, which are really benefiting from this commodity boom. Buy, hold or sell?
Catherine Allfrey: I get bored again and say it’s a hold. It’s one of those stocks that is going to have a really important catalyst over the next few weeks, and that’s the fact that their iron ore operations are only $ 17 million right now. It looks like the WA government could license them to increase port capacity in Port Hedland – in which case they can increase their iron ore book from 17 million tons to 100 million tons as the whole of West Pilbara opens up. So it’s a really important catalyst for this company over the next several weeks.
Bella Kidman: What an amazing performance the mineral resources have had over the past 12 months, up around 130 percent. Nice little dividend yield. Buy, hold or sell?
Bruce Williams: It’s a stop for us. Really, I think it’s based on the fact that the price of iron ore is unsustainable at its current level. There were supply restrictions and, in the short term, excess demand. We don’t see iron ore staying where it is, so we wouldn’t buy it.
WiseTech Global (ASX: WTC)
Bella Kidman: Our final stock is WiseTech, obviously one of the WAAAX stocks. Buy, hold or sell?
Bruce Williams: For us it’s a buy. It’s building a platform business in a really complicated area. If you look at retailers doing just-in-time warehousing and the like, they need supply chains to work efficiently. It reinvests a lot in its product. It’s a very high quality business. It’s similar to looking at a domain or a seek – creating a platform business in an area that has real benefit to the end user, so we really like it.
Bella Kidman: Catherine, sorry for the pun, but WiseTech stock price has really been WAAAX-ed and flagged over the past 12 months. Buy, hold or sell?
Catherine Allfrey: It is also a hold from us. Look, the CEO keeps selling stocks, the founder keeps selling stocks, which is never a good sign. I think it’s around 40 percent now. But they have actually proven they have organic growth, and the market has had big questions about their organic growth strategy in recent years. They have proven through COVID-19 with CargoWise One that they can continue to grow. However, the evaluation offset means that it is more of a stop for us.
Bella Kidman: The experts are right, good management is a good company, but it turns out that the founders may not be that wise after all.
Buy Hold Sell is a weekly video series produced by Livewire Markets.
Disclaimer: The information contained in this presentation is of a general nature and should not be relied upon as reliable. Before making any financial planning decisions, you should consult a licensed professional who can advise you on whether the decision is right for you. Contributors to this show may have commercial or financial interests in the named companies.
