Over the past week, the S&P/ASX 200 Index (ASX: XJO) (Index: ^XJO) slid 1.2% down to 5,531.
Further iron ore price weakness kept BHP Billiton Limited (ASX: BHP) relatively flat and Rio Tinto Limited (ASX: RIO) was up just less than 1%. Commonwealth Bank of Australia (ASX: CBA) was down 1.3%.
However, there were three stocks that shook off the gloomy funk, surging about 4% for the week.
TPG Telecom Ltd (ASX: TPM), the internet service and telecommunications provider, rose 3.92% over the week to $6.36. Competition regulator the ACCC stated it will allow the company to operate its high-speed broadband network system. Its fibre-to-the-basement network would connect businesses and residences in urban areas. That could put it in direct competition with the proposed national broadband network (NBN) in areas where TPG already has existing infrastructure.
Controlling its own network rather than only being a user of the NBN could give it marketing and pricing advantages. That will help grow its subscriber numbers, as well as maintain its attractive earnings growth rate.
Toll Holdings Limited (ASX: TOL) popped up 4% to $5.98, hitting a new 52-week high of $6.08 along the way. In mid-August, it reported a remarkable surge in free cash flow that pushed full year reported net profit up to $293.1 million. The stock jumped from that result, which was partly due to cost cutting and improved efficiencies and has kept rising until now. The company expects to save another $40 – $50 million in FY2015.
The global integrated logistics and transport operator could improve more if domestic retail trade and consumer sentiment improve. Look for signs of retailers' sales firming up. If sales rise, then goods transport should increase.
QBE Insurance Group Ltd (ASX: QBE) ended the week gaining 4.2%. The insurer is orchestrating a business restructuring. It plans to sell off its US agency business and partially float its mortgage lenders insurance business. It also completed a capital raising of $650 million.
The overseas business was hanging heavy on the company's results for some time. Scaling back the company to a level where profit margins could improve may be a big step in turning the company around. Investors may be positioning themselves now after seeing the big improvements in earnings and share prices that Insurance Australia Group Ltd (ASX: IAG) and Suncorp Group Ltd (ASX: SUN) had by reorganising and simplifying their business structures.
Gains from one week can change in a short time, but it's good to watch for them because they may be signalling that companies like the ones above are making changes that will have long-term significance. I would prefer QBE of the three because it originally was a high-performing company and could be again if the important decisions are carried out.
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