Equities Commentary

Growth Focus: Bingo Industries Ltd (BIN)

by Patrick Taylor




Date of Data Capture:
11/5/2018
 
Name:BINGO INDUSTRIES LTD (BIN)
      
Classification:Waste Management
 
Current Price: $2.88
 
Market Capitalisation: $1.20B
 
Forecast EBITDA Growth: 25.00%
 
Yield Estimate: 1.68%
 
Consensus Price Target: $3.13
 
# Covering Analysts: 4
 
Discount at Current Price: 8.68%
 
Price Target Trend: Increasing-Flat
 
Signal Timeframe:Monthly-Weekly-Daily
 
TrendBias: Up-Flat/ Medium-Short

Indicators:
Short-term:Positive-Neutral
Medium-term: Positive
Long-term:Positive-Neutral

Recommendation:Buy
 
Focus:Capital Growth
 
Set up Notes:
·    Strength should be an easy thing to buy but it usually isn’t – here we are looking at a strong combination of fundamental performance and growth combined with a strong technical setup.
·    Performance has been very good since listing early in 2017with strong sales, margins and earnings set to drive forward through to 2020 with aggressive growth set to continue.
·    Technically robust BIN has been cycling higher through a major medium-term uptrend, increasing value by around 60% in the last year.
·    Analyst sentiment is strongly positive with increasing price targets aiming above $3 resistance overhead, with good support layered down to $2.50 from here if needed.


Growth Focus: Bingo Industries Ltd (BIN)

Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index

We normally avoid rubbish stocks... except when they have excellent growth potential like Bingo Industries Ltd (BIN) which is when we take a “waste, yes/want, yes” approach.

Starting out as a family business in 2005 with 4 trucks, BIN has grown into a $1.2B company with over 250 trucks operating a diverse and integrated waste and recycling company. Based in Sydney with a strong NSW focus, Bingo services the building and demolition industries as well as catering for domestic, commercial and industrial operations and has been making some early stage moves into Victoria and Queensland.

Performance has been strong in the last year with revenue growing by 43% and earnings by 40%. BIN carries forecasts for earnings growth of 25% this year and strong expectations for continued growth out to 2020. A great deal of this growth has been organic, though Bingo have also done the rounds to pick up some strategic acquisitions. With a growth strategy targeting cross-border markets in Victoria and Queensland there should be plenty of room for further growth through either trash or treasure with favourable sector forecasts and opportunities to consolidate a fragmented market.

Of particular interest is the potential shift to own-state processing in NSW that would halt transporting rubbish into QLD, something Bingo has been preparing for through the purchase of the Paton’s Lane site which could be developed into a processing site within NSW. This combines well with the other acquisitions of NRG, Konstruct Recycling, Resource Recovery Victoria and AAZ Recycling as they look to build their national exposure and brand.

Pricing history shows a strong 12 months and 60% rally from their listing date of May 2017 and initial float at $1.80. The uptrend playing out in the medium timeframe has good tracking correlation in the short-term and shows a constructive rally unwinding within a cyclical uptrend. There are no sell signals present as yet and while we do see major structural resistance setting in at the obvious psychological level of $3.00, we also think Bingo have it in the can to continue lifting the lid off expectations.

 We see good momentum building here with buy signals being indicated the over the long-to-medium-term, even though we do see some extension and overreach in the short-term daily timeframe. This means there could be short-term pullback, but this could easily be swept up and away by the longer-termed positivity. Overall we think this is an exciting opportunity that brings together a strong fundamental outlook and an exciting technical viewpoint that makes us not want to curb our enthusiasm.

Growth Focus: IVE Group Ltd (IGL)

by Patrick Taylor



Date of Data Capture: 26/4/2018

Name: IVE GROUP LTD (IGL)

Classification: Advertising & Marketing

Current Price: $2.23

Market Capitalisation: $321M

Forecast EBITDA Growth: 37.50%

Yield Estimate: 7.31%

Consensus Price Target: $2.77

# Covering Analysts: 3

Discount at Current Price: 24.22%

Price Target Trend: Increasing-Flat

Signal Timeframe: Monthly-Weekly-Daily

Trend Bias: Up-Flat / Long-Short

Indicators:
Short-term: Positive
Medium-term: Positive-Neutral
Long-term: Positive

Recommendation: Buy

Focus: (Dividend Income &) Capital Growth

Set up Notes:

·    Prone to making strong rallies and then grinding lower through drawn out consolidations, IGL is an attractive stock if you can catch it at the beginning of a new rally, we think that is now.

·    Earnings rose 29% in 2016, 37% in 2017 and further strong growth is forecast across sales, margins and earnings out to 2020, with a current 24% discount to rising consensus target prices.

·    Pricing shows cyclical rallies of 20-30% before slowly pulling back and then running once more - fresh positive signalling is coming through again here across multiple timeframes.

·    Resistance targets sit at $2.25, $2.30 and $2.45 with good support layered down from $2.20, $2.15 and $2.00 if needed.


Growth Focus: IVE Group Ltd (IGL)

Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index.

Communications services provider; Ive Group Ltd (IGL) has been a strong performer for the last few years and has seen their share price cycle upwards, but here we believe the print and promotions specialist could be about to press forward once more.

Opening doors in Sydney 1997, IGL is a leading marketing and print communications provider operating in Australia through four businesses brands; Kalido, Blue Star Group, Pareto Group and IVEO. Growth has been steady to strong over the last few years with 2017 delivering almost 30% earnings growth with positive forecasts in place through to 2020 backed by strong sales and steady to increasing margins. In addition to consistent organic expansion the company has an active acquisition strategy in a sector open to consolidation.

While we normally don’t pay too much attention to dividend yield for our growth stocks, here it is worth mentioning as it is forecast to come in at around 7% which is a significant level of income on a growth stock. Further growth is expected with forecast showing elevated sales and earnings through to 2020, supporting a majority positive consensus sentiment with target pricing showing a current discount of around 25%.

Pricing history shows two major medium-term rallies since listing in late 2015, with each rally consolidating back over time before rallying again. It is happening here again and we see positive momentum signalling across multiple timeframes as the price works off support after breaking linear resistance in December and since successfully tested $2.00 support. 

Some minor structural resistance remain overhead at $2.25 and $2.30 but the main attractive resistance target from here would be the zone between $2.45 and $2.50 that was established in 2017 and 2018, and we have decent structural support layered beneath at $2.15, $2.10 and $2.00. The technical model shows good correlation and looks very promising here, particularly in the medium-term/weekly frame which is on the cusp of turning green right now and should combine well with positive signalling we see in longer and shorter timeframes.

With a strong combination of technical setup and strong fundamental performance and forecasts we like IGL for an entry here on the view that they are likely to continue distributing good news to shareholders.

Growth Focus: Independence Group NL (IGO)

by Patrick Taylor




Growth Focus: Independence Group NL (IGO)

Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index.

Some opportunities are worth waiting for and we have been doing just that with Independence Group NL (IGO), though now might be the time to take a closer look at the integrated miner as it breaks through major technical resistance, backed by strong fundamental performance and forecasting.

Founded in 2000 and headquartered in Perth, IGO is a miner and producer operating in WA, NT and Victoria with assets spread across nickel, gold, silver, copper, zinc and lithium. The company combines steady organic growth with a reasonably active acquisition strategy that has built a well-diversified exposure to a commodity basket that is performing well and has strong growth expectations going forward to 2020.

After sales and earnings decreased in 2016 the company has seen fundamentals steadily increase throughout the last year, with earnings lifting by 9% in 2017 alone. Analysts expect a return to strong growth in 2018 with sales set to double and earnings forecast to jump by around 160%, with further strong growth set to continue into 2019. This mirrors rising consensus target prices as set by analysts, which even though current pricing is running at a 10% premium, these aggregate valuations have risen by more than 15% in the last three months alone.

While IGO is a large company, with a market cap over $3B, it has had a volatile pricing history defined by large and long-running price trends. The share price has wound its way through three major price cycles over the last 15 years and has seen booms of more than 500% and 600% followed by busts greater than 70% and 80%, but when in trend it tends to stay in trend for years. Above even this dynamic is the current fascinating situation where the whole of the history just described is contained underneath one 11 year linear resistance line… which broke in January 2018.

We have seen price move up through that linear resistance line and work against structural resistance around $5 which broke this month and has successfully converted that old resistance into new support this week. We see good positive momentum across short, medium and long-term timeframes with good support directly underneath and attractive resistance targets stretching far above current pricing.

There is an added point of interest in that there is a significant short interest of over 10% (of market cap) which could provide some extra impetus to an already attractive prospect with high potential for further gains. While volatility should be expected to continue, the technical and fundamental picture is very attractive and IGO looks like it is indeed ready to go.

Growth Focus: Auswide Bank Ltd (ABA)

by Patrick Taylor


Date of Data Capture: 29/3/2018

 

Name: AUSWIDE BANK LTD (ABA)

      

Classification: Commercial Bank

 

Current Price: $5.45

 

Market Capitalisation: $227M

 

Forecast EBITDA Growth: 16.13%

 

Yield Estimate: 6.20%

 

Consensus Price Target: $5.88

 

# Covering Analysts: 2

 

Discount at Current Price: 7.89%

 

Price Target Trend: Increasing-Flat

 

Signal Timeframe: Quarterly-Weekly-Daily

 

Trend Bias: Flat-Down / Long-Medium

Indicators:
Short-term: Positive
Medium-term: Positive-Neutral
Long-term: Positive-Neutral

Recommendation: Buy

 

Focus: (Dividend Income &) Capital Growth

 

Set up Notes:

·    Everyone wants to buy cheap stocks but no one likes what ‘cheap’ looks like… Here we are looking to pick up ABA as it works off a strong support base above $5.00 backed by good performance and an exciting technical set up.

·    Auswide has been steadily growing sales over the last few years, increasing earnings over 26% last year with a strong 2018 expected and good fundamental performance forecast out to 2020.

·    Technically ABA is still working out of a major downtrend with price compressing under falling dynamic resistance, while making good progress with multiple positive signals here.

·    Support is strong here at $5.00 with resistance targets at $5.50, $6.00, $7.00 and $10.00 above.


Growth Focus: Auswide Bank Ltd (ABA)

Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index.


Being able to follow a proven system is of paramount importance when trying to achieve consistently good investment results… this is true even (or maybe especially) when the results go against your own personal bias. We have that here with Auswide Bank Ltd (ABA) and small consumer lender based in Queensland as their strong performance, forecasts and technical outlook practically beckons investors to take a chance on them.

Beginning life in Queensland as the Wide Bay Capricorn Building Society in 1979, it listed onto the ASX in 1994 and expanded via organic and acquisitive growth to become Auswide Bank by 2015. With a growing presence across Central and Northern Queensland the company provides home loans, personal and business banking to customers across Australia. With assets now exceeding $3 billion, combined with improving credit ratings, low and decreasing arrears rates, they look ready to move on with their greater recovery.

Future growth should remain true to form with expectations for further strong organic growth and a continuance of their active acquisition strategy. Performance has been consistently strong over the last few years with improving sales, margins and income driving earnings gains by 26% in 2017 and forecast to jump a further 16% in 2018. Positive expectations continue through to 2020 and support a strong dividend yield estimated around 6.20%, a significant benefit that should have growth investors saying gimme, gimme, gimme.

Pricing history shows two distinct trading periods for the stock with strong gains being made from lows of $2 in 1994 up to $13 by 2007. The fallout from the GFC saw them back at $5 before rallying again to reach $11 by 2011 before beginning a long-term pullback to $5 support from 2013 to today. The trend looks ready to shift again here with positive momentum indicated across multiple timeframes, setting up some very attractive resistance targets to the upside. The first real test will be around the $6.00-$6.50 resistance cluster and from there up to $7.00 and higher, with price support structured around $5.00 if required.

It is often difficult for many investors to pluck up the courage to invest in recovery stocks, but this is often where good opportunities can be found. Here we have just that as ABA looks to combine regional strength, growing domestic presence and strong fundamental performance and forecasts with a very attractive technical outlook. The ability to balance risk and reward is the name of the game here and we think ABA offers an investment opportunity that you may not want to let slip through your fingers.

Growth Focus: EQT Holdings Ltd (EQT)

by Patrick Taylor



Date of Data Capture: 16/3/2018

Name: EQT HOLDINGS LTD (EQT)

Classification: Investment Management

Current Price: $21.09

Market Capitalisation: $428M

Forecast EBITDA Growth: 15.81%

Yield Estimate: 3.97%

Consensus Price Target: $24.39

# Covering Analysts: 2

Discount at Current Price: 15.65%

Price Target Trend: Increasing

Signal Timeframe: Quarterly-Weekly-Daily

Trend Bias: Up-Flat / Long-Medium

Indicators:
Short-term: Positive-Neutral
Medium-term: Neutral
Long-term: Positive

Recommendation: Buy

Focus: (Dividend Income &) Capital Growth

Set up Notes:
• Moving up within a longer-term uptrend, EQT cleared through linear resistance in September last year and broke through important $20.00 structural resistance in the last few weeks.
• Last year saw sales fall while earnings increased, this year aggregate forecasts predict both to increase and for the price to follow with growth tipped for gains through to 2020.
• Low debt, attractive revenue streams and a decent yield for a growth stock makes this a sort of hybrid growth/yield play.
• Further growth potential is setting up nicely here with positive signalling coming though in multiple timeframes, targeting resistance at $25 and $30 with support layered between $20, $19, $18 and $16.50 if needed.


Growth Focus: EQT Holdings Ltd (EQT)

Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index.

In a market with no guarantees it can be good to find a company you can put some faith in. We are doing that here with financial and trust service provider EQT Holdings Ltd (EQT) as we follow strong performance, excellent forecasts and a strong technical picture that carries a lot of confidence.

Set up way back in 1888 and based in Melbourne, EQT provides a diversified range of fiduciary and financial services across wealth management, estate planning, funds management, institutional services and superannuation. Operating in Australia, with recent moves offshore into Europe and Australasia, has seen good organic growth within an expanding sector benefitting from the ageing boomer demographic. The company has an active acquisition strategy, having completed the takeover of a multiple domestic and foreign companies recently, in addition to a major partnership announced last year, all helping to increase market share and diversity.

Performance has been strong with sales, earnings and profits higher last year after a softer 2016, but also has growth forecast to continue ramping up until 2020. This strong fundamental outlook supports a healthy dividend yield of 3.9% (an added bonus for a growth stock) which is seen increasing steadily in the years ahead. This combines well with their high recurring revenue and low debt as they aim to increase exposure to Asian markets showing a lot of promise.

Technically they look exciting with price pushing past $20 last month and while the current uptrend is 6 months old, if long-term signalling is correct it should have a lot further yet to run. Previous highs were reached way back in 2007 and still remain 30% higher from here, though closer structural resistance at $25 is the next obvious target. With the consensus price target sitting more than 15% above current levels (after this aggregate value forecast rose over 13% in the last 2 months) we should feel secure that EQT’s growth potential is the real deal.

While there are some legitimate concerns regarding its low volume stock liquidity, which could exacerbate dips on poor markets or bad news but could also work in shareholders favour if they continue on their ascendance. Securing a firm combination of strong organic and acquisitive growth both in Australia and overseas, coupled with excellent performance makes forecasts for strong capital growth for EQT very credible. With an exciting technical setup building here with momentum signalling turning positive here across multiple timeframes, the timing seems ready to enter here EQT takes its next leap forward.

Disclaimer

This report was produced by Taylor Securities Pty Ltd, which is a Corporate Authorised Representative (Number 414063) of Bespoke Portfolio Pty Ltd (AFSL 341991). Taylor Securities and Patrick Taylor (Representative number 414064) have made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Taylor Securities and Patrick Taylor does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities or financial products. The securities or financial products recommended by Taylor Securities and Patrick Taylor carry no guarantee with respect to return of capital or the market value of those securities or financial products. There are general risks associated with any investment in securities or financial products. Investors should be aware that these risks might result in loss of income and capital invested. Neither Taylor Securities and Patrick Taylor nor any of its associates guarantees the repayment of capital. WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.