MENU

Why the Vita Group Limited share price rocketed higher today

Much to the relief of its long-suffering shareholders the Vita Group Limited (ASX: VTG) share price has made a notable jump higher in morning trade.

At the time of writing the shares of the operator of Telstra Corporation Ltd (ASX: TLS) retail stores are up 10% to $1.76.

Why are Vita Group’s shares higher?

While Vita Group has gained a reputation for issuing profit downgrades in recent times, on this occasion the company has come out with a surprise upgrade to its guidance.

According to today’s release, the company is expected to deliver earnings before interest, tax, depreciation, and amortisation (EBITDA) of approximately $20 million for the six months to 31 December 2017.

This exceeds the guidance given in October EBITDA in the range $16 million to $18 million. It is, however, still a sharp decline from first-half EBITDA of $35 million in FY 2017.

Management advised that this better-than-expected performance is the result of its rigorous focus on cost control and strong Christmas trading thanks to the earlier than expected relaxation on allocations of iPhone 8 and iPhone X inventory.

In light of this improved performance, management has shifted its FY 2018 guidance slightly. Instead of EBITDA between $36 million and $43 million, management has narrowed this to the range of $38 million to $43 million.

Should you invest?

Although this guidance upgrade is a pleasant surprise, I still wouldn’t be in a rush to buy Vita Group’s shares despite how cheap they look.

Vita Group has been given a big boost from the iPhone 8 and iPhone X release. But this is a one-off and is unlikely to be replicated next year, possibly leading to another decline in earnings.

Furthermore, while the company is trying to diversify its business away from Telstra, only time will tell whether this move is a success.

As a result, I would skip Vita Group and consider retail stars such as Lovisa Holdings Ltd (ASX: LOV) and Premier Investments Limited (ASX: PMV).

But if you want to avoid the retail sector then check out these stellar growth shares today.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited and Telstra Limited. 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.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!