It’s been a brutal year for many ASX shares.
Sure, the S&P/ASX 200 Index (ASX: XJO) is only down 2.7% for the year. But resources and financial stocks are carrying the load.
For most companies outside those sectors, 2022 has been a bloodbath.
One fund manager had the unenviable job of notifying his clients that 2 of the stocks in their portfolio had fallen around 20% last month.
But Glenmore Asset Management portfolio manager Robert Gregory also explained why he’s keeping the faith that they would rise again:
‘Very comfortable with the earnings outlook’
NBN competitor Uniti Group Ltd (ASX: UWL) saw its share price plummet 21.3% in February.
Gregory reckoned this fall “seemed excessive”, because it reported great numbers that met analyst forecasts.
“Uniti delivered a solid 1H22 result, with underlying EBITDA of $70.5 million, up +9%, despite a fall in construction revenue (covid related),” he said in a memo to clients.
“The company said it was on track for FY22 underlying EBITDA of $145 million, which again was in line with expectations.”
He put down the shocking month to a general selloff of mid-cap growth shares.
“We remain very comfortable with the earnings outlook for the company.”
Uniti shares jumped a massive 10.7% on Wednesday after media reports that Macquarie Group Ltd (ASX: MQG) was planning to acquire the company.
The stock was placed in a trading halt at around 3pm AEDT.
Not a good result, but well-placed for the future
Mineral Resources Limited (ASX: MIN) did not share the joy of its resources peers as the stock price dropped 18.3% in February.
This was due to “lower than expected” realised iron ore prices plus higher operating costs, according to Gregory.
“Interim EBITDA was $156 million, which was well below market expectations and 1H21, which was $607 million,” he said.
“The Mining Services business was the top performer (EBITDA of $282 million), whilst Mineral Resources’ lithium and iron ore mining divisions both reported losses.”
Gregory admitted the financials were “disappointing” but is still bullish on the stock.
“We remain positive on Mineral Resources’ medium-term prospects, particularly the 30mtpa Ashburton iron ore project (targeted to commence in 2H of 2024), which although not yet formally approved, will be a much lower cost source of iron ore production, and hence should be profitable even in periods of lower prices.”