It's going to be an interesting week on the ASX this week, with major developments at several big companies.
All are important, but at least two of them are going to be 'sell' or 'hold' signs to my mind.
So should you buy, sell, or hold these stocks?
Myob Group Ltd (ASX: MYO) returned to public life yesterday, and despite many analysts tipping the stock as expensive, shares soared from an offer price of $3.65 to close at $3.89, a gain of 6.58%.
With Myob's earnings per share forecast at just $0.13 for the twelve months to June 2015, shares are trading at a whopping 30 times forecast earnings. If it was one of the fastest growing companies on the ASX, that might – might – be a justifiable premium.
But given the competition between Myob, XERO FPO NZ (ASX: XRO), and Reckon Limited (ASX: RKN), I'm not sure that investors are getting a good deal on Myob.
Myob sits somewhere between a hold and a sell, depending on how bullish you are on the company and if you already own shares or not.
(Find out more on Myob's IPO from Ryan Newman in his article here)
Coming up tomorrow is Woolworths Limited's (ASX: WOW) much anticipated quarterly performance announcement. After the bloodbath that followed February's update and subsequent profit guidance, investors will be watching keenly to see if Woolworths has managed to improve its sales figures.
I'm not so sure that much has changed in three months, and I expect that tomorrow's figures will reveal that Woolworths continues to lag Wesfarmers Ltd (ASX: WES) in supermarket sales growth.
Woolworths is a great company, but I don't think today is the right time to buy given the potential for further discounts to the share price tomorrow.
Woolies looks like a 'Buy…after tomorrow's results release'.
Finally Commonwealth Bank of Australia (ASX: CBA) is also set to release a quarterly update tomorrow, and it will be interesting to see how the market responds.
Shares have cooled off in recent days over talk that the big four banks may need to raise additional capital, which could reduce their total returns.
Not to mention the fact that the risks associated with a super-heated property market and share prices at all-time highs might finally be warning off investors.
Westpac Banking Corp (ASX: WBC) reported yesterday and earnings came in flat, with revenue rising only 2%. Did it suffer from competition with the other banks? Or are bank profits cooling and could there be more of the same in store for Commbank shareholders tomorrow?
Time will tell, but in the meantime bank shares continue to look like a sell.
Many retail investors will remember that it was the banks who lead the ASX rout during the GFC, thanks to their overexposure to risky asset classes.
Given that the big four banks make up more than a quarter of the ASX by size, it's easy to see falls in bank profits dragging the market lower again.
Could the stock market really crash? How would you handle it if it did?
