Shares in Seven Group Holdings Ltd Fully Paid Ord. Shrs (ASX: SVW) have been trending upwards for the past 12-months – attracting the attention of brokers.
But is there still time to buy?
Seven Group is a diversified investment company best known for its media interests – specifically its large shareholding of Seven West Media Ltd (ASX: SWM), although its portfolio extends to industrial services and property too, and that’s where the gold is.
According to its FY18 results, Seven Group delivered 32% growth on its FY17 pro-forma EBIT – 20% to 25% ahead of guidance provided in May, with group underlying EBIT growth of 67% to $497 million.
Pushing aside its best-known media interests, much of Seven Group’s recent outperformance can be traced back to its WesTrac and Coates Hire businesses.
WesTrac is the biggest equipment company in Western Australia, NSW and the ACT, while Coates is the largest equipment hire company in all of Australia.
With mining demand strong and the construction industry seeing some resurgence, WesTrac itself saw EBIT growth of 23% with Coates Hire’s EBIT up 21% on FY17, reflecting the operating leverage of the business.
FY18 was a significant year of transformation for Seven Group, and with plans to focus on rationalising cost structures and business-led transformation to enable operating strength, FY19 could be just as successful, if not more successful, than FY18 was.
So should you buy?
Seven Group shares are $22.63 at the time of writing, a 90% increase from its price point at this time last year with very few lags in between.
If the MarketIndex broker consensus is anything to go by, Seven Group will continue to trend higher, and investors can still get in now if they’re quick.
But punters should tread carefully.
While MarketIndex collates broker recommendations to land at a consensus, investors must do their own due diligence on every stock suggested to see what fits in with their own portfolio, diversification and investment plan.
While Seven Group is on the MarketIndex strong buy list, so too is the likes of Afterpay Touch Group Ltd (ASX: APT) and Aristocrat Leisure Limited (ASX: ALL) – the former I would consider as a speculative pick and the latter I think is priced too high right now for a buy-in.
But if you’ve been watching Seven Group for some time, hoping for an in, in the short term you’re unlikely to see much decline in price, and for the medium-term, the upside looks like it will continue.
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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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.