Motley Fool Australia

Is there any value to be found in BT Investment Management Ltd, Estia Health Ltd, and Vocus Communications Limited?

questions
Credit: Stefan Baudy

Despite having lost 11% in the past six months, the S&P/ASX 200 (INDEXASX: XJO) index is down just 4% for the year.

Strangely enough, a number of shares continue to reach new heights, including a superannuation fund manager, a recent aged care IPO, and a growing telecommunications giant.

Here’s what you need to know about the latest rises at:

BT Investment Management Ltd (ASX: BTT) – last traded at $12.03, up 98% for the year

Like annuities provider Challenger Ltd (ASX: CGF), shares in BT Investment Management have soared in recent times as investors increasingly twig to Australia’s booming superannuation industry.

The most recent catalyst for BT’s rise was its latest annual report, which disclosed a rather ordinary 2% increase in revenue and 4% increase in net profit after tax. BT is one of the larger fund managers in Australia with $74bn Funds Under Management (FUM) and a majority of its funds are beating 3 and 5- year benchmarks before fees.

However, I expect that the spotlight on investing practices and fees could bring some pain in the near term – as could lower performance fees last year, given that funds under management often migrates to higher performing funds.

BT Investment looks fully valued and I would not buy shares at today’s prices.

Estia Health Ltd (ASX: EHE) – last traded at $7.55, up 53% for the year

Aged care facility operator Estia Health has soared again in recent days after the company announced the acquisition of a further four facilities last week. The company has added 687 places in Financial Year 2016 so far (for a total of 4697), consistent with its stated strategy of adding 500-1000 places per year.

While the stock is experiencing a strong run, it is difficult to see much value given its lack of profitability, elevated price (50 x this year’s forecast earnings) and aggressive expansion strategy. Estia looks likely to deliver growth to shareholders over the long term, but for the money there are better investments available right now.

Vocus Communications Limited (ASX: VOC) – last traded at $6.80, up 16% for the year

Vocus hasn’t shot the lights out with its share price movements this year, but the company has shown significant ambition by gobbling up first Amcom Telecommunications Limited (ASX: AMM) and M2 Group Ltd (ASX: MTU).

Ultimately, the telecommunications sector, Vocus’ assets, and its recent acquisitions are highly likely to deliver market-beating returns to shareholders over the long term. Indeed, Telstra Corporation Ltd (ASX: TLS) may have to start looking over its shoulder.

However, at today’s prices and with a significant period of integration and consolidation ahead of it, Vocus’ doesn’t look like an outstanding buy. I expect profits and the share price will grow over the medium term, but I also suspect interested investors will find a better entry point if they are patient.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. 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.

Related Articles…