Welcome to the last day of 2015, Foolish readers. As you have probably noticed, the S&P/ASX 200 (INDEXASX: ^AXJO)(ASX: XJO) has been soaring lately, and the value of your portfolio ? hopefully ? right along with it.
There weren?t any significant shares at 52-week lows this week, but there were an inordinate number hitting 52-week highs. Here are some of the biggest:
REA Group Limited (ASX: REA) ? last traded at $55.30, up 22% for the year
Shares in REA Group could be expected to be highly valued by the market; because of News Corp?s (ASX: NWS) significant shareholding, the number of…
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Welcome to the last day of 2015, Foolish readers. As you have probably noticed, the S&P/ASX 200 (INDEXASX: ^AXJO)(ASX: XJO) has been soaring lately, and the value of your portfolio – hopefully – right along with it.
There weren’t any significant shares at 52-week lows this week, but there were an inordinate number hitting 52-week highs. Here are some of the biggest:
REA Group Limited (ASX: REA) – last traded at $55.30, up 22% for the year
Shares in REA Group could be expected to be highly valued by the market; because of News Corp’s (ASX: NWS) significant shareholding, the number of shares available for trade on the open market is quite limited. In fact, according to data provided by Nabtrade, usually less than 600,000 shares change hands each day.
Those that do come up for sale are in high demand as investors look to jump on REA’s high-growth bandwagon, which delivered a 20% increase in revenue, a 24% increase in profit after tax, and an expanding profit margin in 2015.
With the takeover of iProperty Group Ltd (ASX: IPP) and ongoing organic growth, I wouldn’t be surprised to see REA shares head higher in the next 12 months.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) – last traded at $17.71, up 29% for the year
Soul Pattinson & Co is an investor with a wide range of interests, including coal, gold, property, listed companies like TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW), and many other ASX-listed and unlisted businesses.
As a result, one of the simplest ways to value Soul Pattinson is in comparison to the value of its holdings, which was – according to the annual general meeting announcement – $5.5 billion as of 31 July 2015.
TPG Telecom and Brickworks (among Soul Patts’ largest holdings) have risen 10% since then, and while prices fluctuate daily it might be safe to say that the company’s portfolio is worth at least $5 billion, a significant premium to the market’s value of Soul Patts at $4.2 billion.
On the downside, approximately $800m of that portfolio is in New Hope Corporation Limited (ASX: NHC), a struggling coal miner, which could be the reason for the undervaluation. It’s difficult to know where share prices will go from here, but I wouldn’t be surprised to see them head higher as investors look for a bargain.
AGL Energy Ltd (ASX: AGL) – last traded at $18.09, up 36% for the year
AGL shares lifted throughout the year as the company announced its decision to transition away from coal and focus on renewable energy. More recently, shares rose again after AGL announced an arrangement to sell its gas products to the Gladstone Liquefied Natural Gas (GLNG) plant owned by Santos Ltd (ASX: STO) and foreign investors.
I remain somewhat bearish on the company as it operates in a mature market with limited potential for growth, plus it generates the majority of its energy from coal power plants which could potentially be legislated out of operation well shy of the 2050 deadline set by management.
Investments in renewable energy are a significant plus, but not enough to outweigh the risks of buying at today’s prices. I do not believe AGL shares will head much higher in the next 12 months.
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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.