It was only two weeks ago that the WAAAX stocks were almost universally beloved amongst ASX investors. Sure, there were hiccups here and there – but 2019 has delivered a huge windfall for the owners of WiseTech Global Ltd (ASX: WTC), Appen Ltd (ASX: APX), Altium Limited (ASX: ALU), Afterpay Touch Group Ltd (ASX: APT) and Xero Limited (ASX: XRO).
But could the WAAAX party finally be over? Over the past two weeks, confidence in several of the WAAAX stocks has been substantially shaken, and investors accustomed to seeing their favourite WAAAXer in the ASX ‘biggest gainers’ category have gotten a nasty shock.
Let’s go through each WAAAX stock’s 2019 journey.
WiseTech started the year off at $17.03 and rose throughout 2019 to reach an all-time high of $38.80 in early September. This was before a set of explosive short-seller allegations penned last week sent the shares crashing to their lowest levels since June. WTC shares are going for $26.30 at the time of writing – a full 32% drop since September.
Appen shares started the year at $12.80 before climbing to their current all-time high of $32 in late July. However, a lot of steam has blown off of Appen’s momentum since and its shares are now available for $21.94 today.
Altium shares have been essentially flat since a huge spike in February put this company on investors’ maps. ALU shares began 2019 at $21.64 but had shot up to more than $34 by February. Although the stock made its current high of $38.49 in late July, the shares have been bouncing around the $30–37 range since February’s spike and are going for $33.14 at the time of writing.
Afterpay kicked off the New Year at $12, but saw a surge in interest after it reported its successful US and UK expansions. APT shares topped out at $37.41 just last week. However, a series of bearish broker notes and reports of further government investigation into the BNPL sector had cratered Afterpay shares – today you can pick some up for $28.66.
Last but not least, Xero is perhaps the only WAAAXer that shareholders would be cheering about today. After starting off the year at $41.95, Xero shares have consistently been raising the roof since. The accounting software company made a new all-time high of $70.80 only last Thursday and closed trade today at $68.70. Xero’s YTD gain is now sitting at 63.8%.
Although all of the WAAAX stocks are still substantially higher than their January levels, I think there are signs that many of these ‘highflyers’ are stalling. All five WAAAXers have share prices that are lofty at best and dangerously overvalued at worst – so I think a correction was inevitable.
Where to from here, I’m not sure. But I still think all of the share prices are frothy and not based on fundamentals, and I’m concerned there is more risk to the downside than up at this point.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, Altium, WiseTech Global, and Xero. The Motley Fool Australia owns shares of Appen Ltd. 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.