Date of Data Capture: 7/6/2018
Name: LIFESTYLE COMMUNITIES LIMITED (LIC)
Classification: Real Estate: Aged Care Living
Current Price: $5.85
Market Capitalisation: $595M
Forecast EBITDA Growth: 18.57%
Yield Estimate: 0.70%
Consensus Price Target: $6.17
# Covering Analysts: 2
Discount at Current Price: 5.47%
Price Target Trend: Increasing-Flat
Signal Timeframe: Monthly-Weekly-Daily
TrendBias: Up-Flat/ Long-Short
Set up Notes:
· It may not seem like it but LIC just went through a significant pullback and should be entering a new leg on its five-year 500% long-term uptrend.
· The last two times this happened was in 2016 and in 2013 and in both occurrences the stock returned to renewed growth and further gains.
· A strong performer for years, LIC had earnings growth of 40% last year and has increasing sales, margins and profits forecast out to 2020.
· The price has been running hard in recent weeks and we could see some volatility before cracking $6 resistance overhead, so there could be some useful dips coming for opportunistic entries.
· No further resistance levels remain above $6.00 and there is good support layered down between $5.50, $5.00 and $4.50 if needed.
Growth Focus: Lifestyle Communities Limited (LIC)
Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index.
When we search for good investment opportunities we often look for strongly performing companies offering favourable entries off fresh growth signals, but they don’t always look like bargains at first. This is sure to be the case here as we take a closer look at Lifestyle Communities Limited (LIC), currently priced just beneath all-time highs but looking like it has plenty of life in it yet.
Starting out in 2003, Lifestyle Communities develops and operates secure, gated and low-maintenance resort-style retirement villages catering to the over 50 across Victoria and is based in Melbourne. Lifestyle Communities has grown to become one of Australia’s largest aged care property operators, currently managing 16 communities with over 2,800 homeowners, and also have around 1,600 homes being developed and remain wide open for further organic expansion.
General strong growth is expected in this sector catering to Australia’s expanding retiree population and more specifically the aging Boomer demographic. It is this large age group that has defined so many investment trends over the decades and it is now feeding a growth phase in this industry expected to continue for at least the next few decades.
Our positive view is bolstered by LIC showing improved earnings guidance this year, up more than 20% so far in 2018 with analysts majority positive in sentiment. This broad-based aged-sector strength is reflected in forecasts with strong gains seen across sales, margins and profits through to 2020. This is in addition to the current 5% discount to sharply rising aggregate price targets, and should see a steadily increasing dividend yield add to an already vigorous fundamental outlook.
Pricing history tells a happy tale of expansion with the price rallying by over 500% since 2013 and looks set to travel further with a successful test of support near $5 after a sharp 23% fall from recent highs just below $6. Signal correlation in the monthly-frame is good and the signal we are following here has been seen twice before now, in 2013 and 2016 with the third coming this month as pricing rallied hard off $5 support after failing to crack $6 on the first attempt. We view any dips back from this resistance level as ideal for favourable entries.
With aggressive forecasts in front of them and a cresting wave of an aging population behind them we think LIC is still firmly on the growth path and should offer further gains before this long-term uptrend reaches its full maturity.