For all the talk of the S&P/ASX 200 (INDEXASX: XJO) index struggling, many investors would be hard put to notice the difference in their individual shareholdings.
My personal portfolio is up more than 5% this week, and a number of popular stocks have recently hit their highest point all year. Of course, just because a stock is rising doesn’t mean it presents any value – just ask investors who bought Rio Tinto Limited (ASX: RIO) above $100 way back when!
With that in mind, is there any value to be found in these star performers?
Estia Health Ltd (ASX: EHE) – last traded at $6.95, up 43% for the year
Estia Health is an aged-care facility operator whose shares have blossomed since their launch late last year. Investors have jumped on the ‘ageing population’ bandwagon wholesale, and a strong full-year report came in slightly above forecasts made during the prospectus.
The company plans to triple in size by 2020 and shareholders love it, despite the fact that the company is loss-making and burning through a decent chunk of cash. While a risky purchase and not cheap, I believe that Estia will experience some success in its strategy and I expect shares to move higher over the next 12 months or so.
Treasury Wine Estates Ltd (ASX: TWE) – last traded at $6.65, up 57% for the year
Like Blackmores Limited (ASX: BKL), Treasury Wines has soared in the past 12 months as investors buy into the news of rising Chinese sales, hoping that they presage a major step-change in the company’s earnings. Combine this with the ‘Phase 2’ cost-saving and efficiency measures announced yesterday and it’s no surprise shares are rising.
A focus on lifting Chinese consumption could boost sales, although the prospects of an economic downturn could equally damage them – especially the prestige brands Treasury is focussing on. It is difficult to evaluate where the price will go next, however with Treasury trading on a Price to Earnings (P/E) ratio of 51 (The ASX average is ~15) I think there are better purchases out there.
Scentre Group Ltd (ASX: SCG) – last traded at $3.97, up 18% for the year
Scentre Group’s share price has beaten the market over the past 12 months largely thanks to its dividend and solid performance, even though forecast earnings were not upgraded. Great sales growth at the company’s specialty stores has underpinned growth in rental income, although I feel that Scentre Group is fully valued at the moment.
The company now trades significantly above its Net Tangible Asset value of $3.11 per share and while I expect that shares could rise further in the lead up to the full-year report, I do not believe there is much room for capital growth in the near term.
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Motley Fool contributor Sean O'Neill owns shares of Scentre Group. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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