The S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) fell 320 points, or 7.3% to close at 4,076.3 for the month of May; the worst monthly fall since May 2010. It was also the sixth worst monthly performance in ten years. These four stocks below – all ASX 200 constituents — trounced the index, rising 7% or more. Takeovers and investors seeking safety in health care stocks was the theme. Industrea Limited (ASX: IDL) rose 29.6% to $1.27, on the back of a takeover offer from US giant General Electric (NYSE: GE) on the 15th May 2012. Shareholders will…
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The S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) fell 320 points, or 7.3% to close at 4,076.3 for the month of May; the worst monthly fall since May 2010. It was also the sixth worst monthly performance in ten years.
These four stocks below – all ASX 200 constituents — trounced the index, rising 7% or more. Takeovers and investors seeking safety in health care stocks was the theme.
Industrea Limited (ASX: IDL) rose 29.6% to $1.27, on the back of a takeover offer from US giant General Electric (NYSE: GE) on the 15th May 2012. Shareholders will also be entitled to any proceeds of the sale of Industrea’s Mining Services division above an agreed value, in addition to $1.27 offered by GE. If this division is not sold, GE will retain it as part of the proposal and shareholders will receive just $1.27.
The takeover offer looks certain to proceed, with directors supporting it and the bid unlikely to receive any opposition from the Foreign Investment Review Board, Australian Competition and Consumer Commission or the Ministry of Commerce. The acquisition is expected to be implemented in November 2012.
Hastings Diversified Utility Fund (ASX: HDF) also received a takeover offer, rising 15.5% to $2.39, after receiving a bid from Pipeline Partners Consortium (PPC) of $2.38. That trumps the previous bid by APA Group (ASX: APA) of $2.06. With the stock trading at a premium to the highest offer price, it appears that investors are hoping for a further bid from APA, although that appears unlikely at this stage. APA recently extended its offer to the end of July 2012, but that appears hopeful given the higher bid by PPC.
Acrux Limited (ASX: ACR) climbed 8.2% to close at $4.34, continuing its steady rise since December 2011. In six months, the stock has advanced by 41%. Being in the health care sector certainly helps as does having approval for its main drug, Axiron, to be marketed in Australia, and approved for listing on the Pharmaceutical Benefits Scheme. This means patients can now receive government subsidised Axiron medication, which is important to pensioners and other lower income earners. With several other drugs in the pipeline, the likelihood of rising sales and royalty payments suggest that Acrux is a stock to watch.
Ramsay Health Care Limited (ASX: RHC) rose 7.7% to close at $21.57 having traded around $12 just eighteen months’ ago. Another healthcare sector stock, Ramsay appears to have been overbought. Just two analysts have a ‘buy’ rating on the stock, compared to five analysts, just three months ago. The company is currently trading on a trailing price/earnings ratio of 21.2, which appears expensive, given the company has a significant amount of debt ($1.3b), and a profit margin of just over 5%. Earnings per share have grown at a compound rate of 16% over the last 13 years, despite revenues growing at the higher rate of 25%. That is due to the number of shares on issue more than doubling, from 98m to 202m.
Should debt markets dry up, like they did during the GFC, Ramsay could find itself as a patient in one of its own hospitals.
Other stocks that rose significantly during the month included: News Corp (ASX: NWS, NWSLV) up 6.8%, Virgin Australia Holdings Limited (ASX: VAH) up 6.3%, Spark Infrastructure Group (ASX: SKI) up 5.9% and Australian Infrastructure Fund (ASX: AIX) up 5.4%.
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Motley Fool contributor Mike King doesn’t own shares in any stocks mentioned. The Motley Fool‘s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.