It is the time of year, in Christmas past, that I began to get excited about what presents would be under the tree. My parents would tend to keep me guessing. Was Father Christmas coming this year? Had I been naughty or nice?
These days, it seems that Christmas comes early. Will Santa be coming to town this year? The 'Santa Rally'. You have to believe after all.
With the stock market too, you need a wishlist. A list of stocks that you may want to add to your portfolio.
So, here are three stocks to add to your Christmas wishlist:
#1: CSL Limited (ASX: CSL)
Source: Marcus Today
It’s a market favourite and has been for years. Every adviser and analyst recommend this one. I watched one well-known talking head speak about how he understood CSL, and so was happy to recommend it. You know what, he doesn’t know CSL. It's not an easy story. It's easy to boil it down to ‘pay people to donate blood’, and then spin it into high-margin effective drug treatments for various illnesses. It sounds so easy. But it is really complicated.
I am not sure that the well-known talking head was across all the drugs, the vaccines, the science, and now, the implications for Vifor, which was a company-transforming acquisition. Just not for the good.
So, how much do you know about these my friend?
Factor X Deficiency? Factor X11 Deficiency? Fibrinogen Deficiency? Hemophilia A and B? Von Willebrand Disease? Perhaps these are more familiar: Chronic Inflammatory Demyelinating Polyneuropathy (CIDP)? Guillain-Barre Syndrome?
How much demand is there for these drugs?
Or for some of the Vifor treatments? Ferinject or Venifer? Maybe Maltofer?
Yes, we all know CSL so well!
Groupthink wisdom is contagious. Everyone is an expert on CSL. Flu jabs and plasma? It is not that simple.
My point is that we simplify this company, and, to some extent, brokers and talking heads extrapolate its past performance to predict how great it will be in the future. It is not always so, and the world of pharma changes quickly. The Vifor acquisition did change things. It increased the risk.
The stock has fallen hard. Really hard, considering every man and his dog is a buyer. Every broker a fan. No short position either. Who would dare short an icon after all? Less than 0.4% shorted. It is un-Australian to short CSL. So, who has been selling? There must be someone!
Part of the negative narrative has revolved around Ozempic and its sister drugs for diabetes and weight loss (GLP-1s). This seems overdone. The other issue has been a downgrade. The unthinkable from the company. Like shooting a reindeer. Rudolf?
Here are some potential catalysts for a return to ‘greatness’.
CSL is talking growth in hemophilia B, influenza, iron deficiency products, and speciality products.
Record volumes expected in plasma collection in FY24. Better optimised fee structure.
A slowing US economy may help, with plasma collections at reduced fees.
PE back to 24. Not cheap, but a long way down from historical highs.
If you are looking for an out-of-favour Christmas stock, this is the one for your wishlist.
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The next one to think about is a software logistics business:
#2: Wisetech Global (ASX: WTC)
Source: Marcus Today
Another stock that let us down. Last year's AGM was disappointing on a number of fronts. Margins subdued, cost out program was a little ephemeral. Guidance was weak, and the large acquisitions (Blume, Envase, and Shipama) had diluted margins.
Global roll-out continues.
Guidance for EBITDA margins to return to 50%+ in FY26 may be conservative.
The question is: are market expectations too high? Much like my own every Christmas morning! I did get that bike eventually. Caught my dad putting it under the tree.
WTC has suffered, but the 2023 AGM will clear the air a little. It could be a catalyst.The last stock on my Christmas wishlist:
#3: Mineral Resources (ASX: MIN)
Source: Marcus Today
A two-pronged story. Iron ore and lithium. Everyone hates lithium stocks at the moment. At least the producers - the ‘dreamer’ stocks with a rock chip sample and some money to go drilling - that is another story. Swarms of pegmatites, tick. Off to the Boxing Day races. Plenty of punters are willing to suspend disbelief and scepticism, and pile in. Plenty of billionaires are doing that too.
MIN has revealed soft results recently. Weaker than expected shipment volumes at Wodgina, down 30% QoQ due to unplanned maintenance issues. Might not be a bad thing, given where prices are currently. Port constraints hurt iron ore volumes.
Strong spodumene production at Mt Marion, but soft sales.
Updates recently on the Wodgina ramp-up.
Lithium prices are clearly a big driver of both sentiment and share price.
Quality management. Fingers in lots of pies.
PE of 12 with a 3.3% fully franked yield.
It may take until next Christmas. Remember: a dog is for life, not just for Christmas. And these have been dogs in 2023.
Note the date of this article - 24 November 2023 - it is a topical article, prices and numbers will change.
More about the author – Henry Jennings
Henry Jennings, Senior Market Analyst and Media Commentator atMarcus Today Stock Market Newsletter, has been involved in financial markets since the 80s in London before emigrating to Australia. He first joined Deutsche Bank and then Macquarie Bank as Head of Equity Trading in Sydney. Since leaving Macquarie, Henry has been both an institutional and private client adviser. For the last seven years, Henry has been writing strategy and insights daily and is a frequent media commentator on all things finance on ABC TV and Radio, SBS and Ausbiz. He also hosts a series of podcasts talking to industry experts and the popular live Ask the Analyst session for Marcus Today.
Source: Marcus Today
It’s a market favourite and has been for years. Every adviser and analyst recommend this one. I watched one well-known talking head speak about how he understood CSL, and so was happy to recommend it. You know what, he doesn’t know CSL. It's not an easy story. It's easy to boil it down to ‘pay people to donate blood’, and then spin it into high-margin effective drug treatments for various illnesses. It sounds so easy. But it is really complicated.
I am not sure that the well-known talking head was across all the drugs, the vaccines, the science, and now, the implications for Vifor, which was a company-transforming acquisition. Just not for the good.
So, how much do you know about these my friend?
Factor X Deficiency? Factor X11 Deficiency? Fibrinogen Deficiency? Hemophilia A and B? Von Willebrand Disease? Perhaps these are more familiar: Chronic Inflammatory Demyelinating Polyneuropathy (CIDP)? Guillain-Barre Syndrome?
How much demand is there for these drugs?
Or for some of the Vifor treatments? Ferinject or Venifer? Maybe Maltofer?
Yes, we all know CSL so well!
Groupthink wisdom is contagious. Everyone is an expert on CSL. Flu jabs and plasma? It is not that simple.
My point is that we simplify this company, and, to some extent, brokers and talking heads extrapolate its past performance to predict how great it will be in the future. It is not always so, and the world of pharma changes quickly. The Vifor acquisition did change things. It increased the risk.
The stock has fallen hard. Really hard, considering every man and his dog is a buyer. Every broker a fan. No short position either. Who would dare short an icon after all? Less than 0.4% shorted. It is un-Australian to short CSL. So, who has been selling? There must be someone!
Part of the negative narrative has revolved around Ozempic and its sister drugs for diabetes and weight loss (GLP-1s). This seems overdone. The other issue has been a downgrade. The unthinkable from the company. Like shooting a reindeer. Rudolf?
Here are some potential catalysts for a return to ‘greatness’.
Source: Marcus Today
Another stock that let us down. Last year's AGM was disappointing on a number of fronts. Margins subdued, cost out program was a little ephemeral. Guidance was weak, and the large acquisitions (Blume, Envase, and Shipama) had diluted margins.
Source: Marcus Today
A two-pronged story. Iron ore and lithium. Everyone hates lithium stocks at the moment. At least the producers - the ‘dreamer’ stocks with a rock chip sample and some money to go drilling - that is another story. Swarms of pegmatites, tick. Off to the Boxing Day races. Plenty of punters are willing to suspend disbelief and scepticism, and pile in. Plenty of billionaires are doing that too.
MIN has revealed soft results recently. Weaker than expected shipment volumes at Wodgina, down 30% QoQ due to unplanned maintenance issues. Might not be a bad thing, given where prices are currently. Port constraints hurt iron ore volumes.
