Is Roger Montgomery buying Decmil?
In this episode of Your Money Your Call, Roger Montgomery answers viewers questions on Prima Biomed(ASX: PRR) Demcil (ASX:DCG) Monodelphus (ASX:MND). Roger also revels which A2 retail business has caught his eye. Watch the interview.
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.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Brad
:
Re DCG
” the future is always uncertain, you pay a very high price in the stock market for a cherry consensus…”
Warren E Buffett
Ash Little
:
Good call Brad,
and not just for DCG
Brad
:
on my model DCG is a hold (and a buy under $2.30), FGE and SWL are buys at the moment in that space
I note DTL confirmed guidance this week, profit to be up 38%. Consensus NPAT for FY 11 is $15.2mn which is 58% ROE.
Margins last year were 2.7% which is historically low but ROC and ROE were at the higher levels compared to past decade. Operating cash flow OK.
MD John Grant reckons they’re killing the competition. Big tail wind with internet, social media, cloud etc.
At 47.5% ROE and 60% POR I have value at $19 for 2011 and $23 for 2012. Well run, quality business in a great space.
Matty
:
Hear, Hear Roger re: pharmaceuticals,
They sold us cheap on Cellestis too. Disappointed in the action group caving in for an extra 25 cents. Just a little fish in a big pond….
Rici Rici
:
Roger would you mind just posting the unedited version of these shows, rather than cropping them. Its really annoying when an interesting piece of commentary is edited, and i miss out on the full response. .
Roger Montgomery
:
Hi Rici,
I have people who do that so they don’t take up too much time and space. I don’t have any input. Sorry.
Greg Mc
:
I must say that I have been watching Decmil’s decline with interest since I sold it at $3.30, and though I have wondered aloud on this blog about the prospects for the sector, it is a company that I’d be interested in buying again closer to $2.
Two questions for you Roger.
1. With the reporting season imminent, how much do you ‘trust’ your valuations at this time when there is a paucity of up to date information? Do you hold fire on buying stocks shortly before reporting even if there is an apparently attractive discount on offer, particularly on smaller stocks that have not provided any recent advice on their progress? MCE is an example. (Disclosure – MCE is one of the few stocks I currently own but I consider that I have enough despite the current discount)
2. Did they force you to tie up on the program? It’s just a bit of a change from the snappy open necked shirt/jacket combo.
All the best.
Roger Montgomery
:
We do indeed regularly decide to wait for greater ‘visibility’
Brian
:
There is nothing “snappy” about an open necked shirt when appearing on a television program.
Edward V
:
Hi Greg,
Your first question is a very good one. My personal view is that I won’t buy or sell in the month or two before a company reports (which would be a speculative buy/sell). I think it’s important to wait for the annual results in August, proceed to value the business on the most recent information and only worry about the market’s reaction afterwards.
For argument’s sake, if the business you’re interested in reports a respectable increase in profitability, this doesn’t necessarily mean the market will adjust the price upwards (who knows what the market thinks in the short term). If it’s trading at a discount prior to reporting and this discount disappears afterwards, it’s better to let it go and then go on to your next idea. The market being the market though, if you’re patient, the price will always come back and allow you to buy cheaply later on. This is preferable to buying in before reporting only to find the stock falls because it’s profitability has fallen or risen at a rate slower than acceptable to the market, and you’ve bought in without having all of the facts. In other words, be as fully informed as you can before pulling the trigger.
On another point, I know companies have to keep the market informed of any material news that may affect its profitability prior to its profit announcement. Regarding ARP, I know that “no news” is “good news” in the couple of months prior to reporting. No market updates just prior to reporting is generally a sign that they’re continuing on their historical growth path (which is an extremely satisfying one) and that there will be no surprises.
Regards,
Edward
Roger Montgomery
:
Hi Edward,
Good thoughts, particularly the idea that a strategic approach to every situation applied with consistency works better than no strategy at all.
vic
:
Hi Edward,
I have found it better to buy when the company has reported, rather than anticipate the news. If its bad the stock will get dumped, if its good news the market will react positively for a few days. This market is currently in a sideways pattern and probably won’t move out until we have a change of government.,
Regards, Vic