When new information comes to light on a company it can often be an opportunity for investors to revisit their investment thesis on a stock.
This information can come from many different sources. It could be official company announcements released to the ASX, listening in on a conference call, the release of new stock broker research, or your own analysis which provides fresh insights on a business model.
Last week two blue chips, Brambles Limited (ASX: BXB) and Wesfarmers Ltd (ASX: WES) released their respective third quarter trading updates to the ASX.
Here are some key takeaways from the Brambles announcement.
- Brambles reported sales revenue growth of 8% in the first nine months of financial year 2016 on a constant currency basis but a flat result at actual exchange rates
- The constant currency growth reflected new business wins, sales mix improvements, volume growth in pallets globally and expansion with both new and existing retail clients in the European Reusable Plastic Crates (RPCs) business
- Brambles reaffirmed full year guidance for 8% to 10% underlying profit growth on a constant currency basis. This guidance corresponds to underlying profit in the range of US$1.015 billion to US$1.035 billion at 30 June 2015 exchange rates
Wesfarmers provided market updates for both its Coal division and its Retailing businesses.
- The Coal update noted that there was no significant development or exploration activity during the quarter at either of its mines
- Coal production at the Curragh mine was 25.5% lower than the previous quarter due to "a number of significant wet weather events that restricted operations at the mine, with in excess of 500 mm of rainfall received in the quarter"
- Meanwhile, coal production at the Bengalla mine was 6% above the prior quarter thanks to operations occurring in a more productive section of the mine
- Turning to the Retail Sales Results and the Coles business reported solid quarterly growth of 5.9% in Food and Liquor compared with the previous corresponding period (pcp)
- The Bunnings Home Improvement division reported quarterly sales growth of 11% on the pcp
- The Department store division which incorporates Kmart and Target reported quarterly growth of 11.4% on the pcp
- The Office Supplies division which includes Officeworks reported quarterly growth of 7.8% compared with the pcp
Given the size of these two companies, the growth rates achieved are to be commended considering they are already growing off large bases.
Both Brambles and Wesfarmers still look like good long-term bets, but they're not the only enticing investment opportunities out there…
