The S&P/ASX 200 is in recovery mode today as the US market experienced a stock surge to close off March 26 trading which saw the index at home up 32.4 points at the time of writing. But irrespective of overall market movements, Fairmont Equities managing director Michael Gable has two stocks on his sell list this week for investors to consider. Mortgage Choice Limited (ASX: MOC) Australian mortgage broking company Mortgage Choice Limited opened up again today at $1.88 at the time of writing following a volatile 12-months of share prices and a significant slide from its mid-February high of…
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The S&P/ASX 200 is in recovery mode today as the US market experienced a stock surge to close off March 26 trading which saw the index at home up 32.4 points at the time of writing.
But irrespective of overall market movements, Fairmont Equities managing director Michael Gable has two stocks on his sell list this week for investors to consider.
Mortgage Choice Limited (ASX: MOC)
Australian mortgage broking company Mortgage Choice Limited opened up again today at $1.88 at the time of writing following a volatile 12-months of share prices and a significant slide from its mid-February high of $2.54.
Gable has slapped a sell rating on the stock, after Mortgage Choice Limited broke through its 2016 low of less than $1.80 and believes “the peaks seem to be rounding out”.
Mortgage Choice is undeniably affected by movements in the Australian housing market and has long been tailed by ASIC who have warned they will pounce on brokers handing out interest only loans in vast numbers.
ASX cousin and lenders mortgage insurance provider Genworth Mortgage Insurance Australia (ASX: GMA) has suffered in terms of share price slides in the last 12-months, up marginally today at $2.27, but down 29% from a $2.94 share price at this time last year.
Investors have historically seen players like Mortgage Choice and Genworth as a method of investing in the housing market without having to buy into big bank lenders like Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group (ASX; ANZ) or National Australia Bank Ltd (ASX: NAB), but its risk profile is certainly higher than its banking brothers.
Mortgage Choice delivered a solid interim result in late February with NPAT up 7% to $12.5 million, from $11.7 million in the previous corresponding period and its total loan book up 3.2% over the same timeframe to $54 billion – up from $52.5 billion.
Those holding onto Mortgage Choice at the moment should weigh up Gable’s advice with possible gains from the company’s push to diversify and grow its retail shopfronts with the launch of a new broker platform over the second half expected to increase broker productivity.
Starpharma Holdings Ltd (ASX: SPL)
Shares in biotechnology player Starpharma Holdings Ltd are up 2.46% at the time of writing to $1.25 a boost of 81% from its 69c per share price at this time last year.
Starpharma develops dendrimer products for pharmaceutical, life science and other applications, with three core development programs on the books.
Gable believes Starpharma is a current sell given its “textbook example of a trend reversal” after rallying strongly at the end of 2017 before it “formed a shooting star reversal”.
Gable said Starpharma would likely enter a downtrend soon, at least for the short-term as price action “continues to look weak”.
Starpharma announced in February it had entered into extensive global licensing negotiations for its VivaGel BV product which will soon be marketed in Australia by Aspen for the treatment of a common women’s health complaint.
One to consider drawing some profit from if you are holding.
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Motley Fool contributor Carin Pickworth owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, and National Australia Bank Limited. The Motley Fool Australia owns shares of National Australia Bank 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 Scott Phillips.