Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
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In this appearance on Your Money Your Call, Roger Montgomery tells investors Atlas Iron scores highly on his Montgomery Quality Rating (MQR) but cautions its future is reliant upon the price of iron ore. Roger also reveals his 2012 forecast Value.able valuation for small appliance manufacturer Breville and shares his concerns about the future growth prospects of The Reject Shop. Watch the interview.
Roger Montgomery shared his insights into the future prospects of Karoon Gas, Matrix Composite & Engineering, Forge, Bell Financial and Think Smart with viewers of Your Money Your Call on the Sky Business Channel. Of these small cap stocks, which scores Roger’s highest Montgomery Quality Rating, A1? Roger also comments on the impact of coal seam gas and why airlines and car manufacturers erode the wealth of their shareholders. Watch the interview.
Matrix is a stock with the lot. It was added to Roger Montgomery’s Value Line portfolio in August 2010. Since that time, and with Middle East tensions fuelling the price of oil, MCE is soaring. Its competitive advantages combined with deep-sea exploration expertise put this A1 stock in a league of its own. Read Roger’s article at www.eurekareport.com.au.
Unlike many stock market investors, Roger Montgomery isn’t distracted by geo political concerns or freak weather conditions. Rather, he looks at sentimental reasons that impact the long-term price of oil. In this interview Roger also reveals an A1 MQR stock trading below his estimate of its Value.able intrinsic value. Listen to Podcast.
As more Australian companies start to pile up cash, the mergers and acquisitions buzz is sure to heat up. Roger Montgomery believes that less flashy share buybacks and dividend initiatives are often a better bet for increased shareholder returns and nominates some of his favourite A1 businesses. Read article.
Put simply, if you want a high return on your money, Transurban probably isn’t for you. Its success hinges on revenues going up and interest rates remaining stable or declining. Rather than paying down its existing debt, Transurban persistently refinances and the amount that still needs to be re-financed before 2020 now exceeds $3.5 billion. Like airlines, investing in Transurban is unlikely to put you on the fast lane to high returns. The stock does not look cheap and in Roger Montgomery’s opinion, there are plenty of better (A1) and less risky options out there. Read Roger’s article.
Shareholders of McMillan Shakespeare,Australia’s biggest provider of salary packaging, continue to sing “Let the good times roll.” But not everyone is thrilled with McMillan Shakespeare’s current market valuation, including well know Australian Fund Manager and Author, Roer Montgomery. Roger first penned his concerns about MMS at his blog back in August 2010. MMS is now above $7.00 compared to Roger’s Value.able intrinsic value of $2.64, there is also the problem of increased debt following MMS’ acquisition of Interleasing. Read article.
Well-known Australian commentator, Roger Montgomery penned his concerns about MMS in his blog back in August. Being a value investor it is easy to see why he is less enthusiastic with MMS above $7.00, than $2.64, when he first wrote his opinion on McMillan Shakespeare. Montgomery was also unhappy with debt levels that MMS took on after its acquisition of Interleasing.
With food prices on the way up and Woolies share price on the way down, I have received many requests for my updated valuation (my historical $26 valuation was released last year). Add to that Woolworths market announcement on 24 January 2011, and you will understand why I have taken slightly longer than usual to publish your blog comments.
With Woolworths’ shares trading at the same level as four years ago (and having declined recently), I wonder whether your requests for a Montgomery Value.able valuation is the result of the many other analysts publishing much higher valuations than mine?
Given WOW’s share price has slipped towards my Value.able intrinsic value of circa $26, understandably many investors feel uncomfortable with other higher valuations (in some cases more than $10 higher),
Without knowing which valuation model other analysts use, I cannot offer any reasons for the large disparity. What I can tell you is that no one else uses the intrinsic valuation formula that I use.
So to further your training, and welcome more students to the Value.able Graduate class of 2011, I would like to share with you my most recent Value.able intrinsic valuation for WOW. Use my valuation as a benchmark to check your own work.
Based on management’s 24 January announcement, WOW shareholders can expect:
– Forecast NPAT growth for 2011 to be in the range of 5% to 8%
– EPS growth for 2011 to be in the range of 6% to 9%
The downgraded forecasts are based on more thrifty consumers, increasing interest rates, the rising Australian dollar and incurring costs not covered by insurance, associated with the NZ earthquakes and Australian floods, cyclones and bush fires. The reason for the greater increase in EPS for 2011 than reported NPAT is due to the $700m buyback, which I also discussed last year.
Based on these assumptions and noting that WOW reported a Net Profit after Tax of $2,028.89m in 2010, NPAT for 2011 is likely to be in the range of $2,130.33 to $2,191.20. Also, based on the latest Appendix 3b (which takes into account the buyback), shares on issue are 1212.89m, down from 1231.14m from the full year.
If I use my preferred discount rate (Required Return) for Woolies of 10% (it has always deserved a low discount rate), I get a forecast 2011 valuation for Woolworths of $23.69, post the downgrade. This is $2.31 lower than my previous Value.able valuation of $26.
If I am slightly more bullish on my forecasts, I get a MAXIMUM valuation for WOW of $26.73, using the same 10% discount rate.
So there you have it. Using the method I set out in Value.able, my intrinsic valuation for WOW is $23.69 to a MAXIMUM $26.73.
Of course, I only get excited when a significant discount exists to the lower end of these valuations and until such a time, I will be sitting in cash.
Posted by Roger Montgomery, author and fund manager, 14 February 2011.
How did independent investment expert Roger Montgomery’s A1-quality rating portfolio actually perform? Roger revealed the results to Peter Switzer on his Sky News Business Channel. Read article.
Following the release of Telstra’s half yearly financial results, Roger Montgomery shares his views with Ros Childs on the ABC’s Midday Report. Fast Forward to 10:50 to see Roger’s interview. Watch the interview.
