{"id":412,"date":"2023-10-28T13:08:33","date_gmt":"2023-10-28T13:08:33","guid":{"rendered":"https:\/\/economicherald.net\/?p=412"},"modified":"2023-10-28T13:08:33","modified_gmt":"2023-10-28T13:08:33","slug":"sunday-roast-the-stocks-that-lit-a-fire-under-our-experts-this-week","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=412","title":{"rendered":"SUNDAY ROAST: The stocks that lit a fire under our experts this week"},"content":{"rendered":"

Barry Fitzgerald<\/p>\n

Gold. It\u2019s never been more expensive to buy, at least in Aussie Dollars.<\/p>\n

Yesterday it was sitting at an all-time AUD high of $3155 oz. That\u2019s up 6.26% for the past month, and 22.63% for the past 12 months. Put it down to a combination of geopolitics and a sadly flagging AUD.<\/p>\n

It all makes 1 million ounces bought for the knockdown price of $8 million look pretty good, which is exactly what 2021 IPO Larvotto Resources (ASX:LRV)<\/a> is now sitting on, just shy of its second anniversary since listing.<\/p>\n

It\u2019s just acquired the Hillgrove gold-antimony mine near Armidale in NSW. That\u2019s 90,000 tonnes of antimony on the side, btw, nothing to be sneezed at if you\u2019re familiar with the critical metal\u2019s uses in fire retardants, batteries, plastics, and growing high tech applications.<\/p>\n

Garimpeiro smells a bargain. Both for LRV, which acquired a resource \u2013 and processing infrastructure \u2013 that Red River had spent some $200m shoring up before it was derailed by a \u201cfall of ground\u201d at its main undertaking, the Thalanga zinc-copper-lead operation Northern Queensland.<\/p>\n

And for Larvotto shareholders. The company was trading mid-week at 10.5c a share for a market cap of $23 million \u2013 after shares associated with the acquisition are taken into account. That\u2019s \u2018barely moved\u2019 on the acquisition of an additional 1 million ounces of the hottest metal right now.<\/p>\n

In fact, Garimpeiro suggests that kind of disinterest renders Larvotto\u2019s other three exploration assets \u2013 copper\/gold\/cobalt at Mt Isa, some New Zealand gold, and gold\/nickel\/PGEs in WA \u2013 as basically \u201cfree\u201d projects. All are the subject of drilling programs, with assays pending.<\/p>\n

Of course, there\u2019s a bit of work to be done at the former Hillgrove mine. LRV needs a case to bring it back in to full production, but it might not be too difficult to convince the button pushers when what exploration\/resource extension work Red River was able to do produced results such as 4.5m at 29.5g\/t gold (and 0.3% antimony).<\/p>\n

As Fitz notes, \u201csuper high grade gold with increasing depths can be a feature of gold-antimony systems\u201d.<\/p>\n

LRV is following up six priority exploration targets Red River was planning to get cracking on. <\/p>\n

Garimpeiro\u2019s verdict? \u201cSet for a re-rating.\u201d
\n\u00a0
\nJohannes Faul
\nDirector of equity research, Morningstar<\/em><\/strong><\/p>\n

It\u2019s that time of the month when we turn to Morningstar for its Best Stock Ideas list. It\u2019s all about highlighting companies which are ideally positioned at attractive discounts vs the equity team\u2019s assessed fair values.<\/p>\n

Sounds sensible enough to us. So where are the \u201cattractive discounts\u201d on the ASX this month?<\/p>\n

\u201cASX retailers,\u201d Faul told Stockhead. Not so great the past 12 months or so, due to rising costs and interest rates. But that\u2019s knocked them down to reasonable entry points as those cost pressures look like easing.<\/p>\n

\u201cSteep declines in global food commodity prices bode well for fast-food restaurants,\u201d Faul says. \u201cWe also expect e-commerce growth to start to gain traction in fiscal 2024.\u201d<\/p>\n

Fast-food and e-commerce? That makes for a couple of standout picks. Namely, these:<\/p>\n

Domino\u2019s Pizza Enterprises (ASX:DMP)<\/a>: Clearly ticking the \u201cnot great 2023\u201d box, Domino\u2019s had a March Quarter and H1 entire to forget.<\/p>\n

High cost inflation forced management to increase their pricing, but as Faul notes, \u201cthe increase was such that demand dropped off and clipped their earnings\u201d.<\/p>\n

However, if it can manage higher costs from wages and ingredients, and continue to roll out stores, Faul is confident DMP will \u201ccontinue to be a growth company\u201d.<\/p>\n

At the same time, obviously, Johannes says Domino\u2019s wants to grow the store network \u2018quite dramatically\u2019 over the next 10 years. A key part of that success is CEO Dom Meij\u2019s ability to ensure franchises remain lucrative for owners and still deliver the top-lines sales growth that the company earns royalties from.<\/p>\n

\u201cDMP\u2019s fair value is $68 per share, which basically means there\u2019s a lot of upside, in our opinion, at its current share prices,\u201d Faul says.<\/p>\n

\u201cWe believe the market is overly discounting Domino\u2019s significant long-term growth potential. This is a high-quality company with long-term growth outlook and we still see a bright future and those shares are undervalued at the moment.\u201d<\/p>\n

Kogan (ASX:KGN)<\/a>: Kogan is another under-appreciated stock, according to Faul.<\/p>\n

\u201cBasically what we\u2019re expecting to happen with Kogan is for their sales growth to reignite.<\/p>\n

\u201cThey went through a period of extraordinary sales growth during the lockdowns and that unwound following the reopening of the economy. And now, we\u2019re still seeing their sales declining year-on-year, but that momentum is slowly turning around.<\/p>\n

\u201cSo, what we\u2019ve seen in the last quarter is that their sales growth, while still negative, is not as bad as it was, if you like.\u201d<\/p>\n

Johannes says Morningstar believe that KGN can grow sales coming into fiscal 2024 \u201cand that will be the catalyst for their EBIT margins, for the profit margins to come back to where they were before COVID\u201d.<\/p>\n

\u201cRevenue is also supported by growing Kogan First subscriptions platform.\u201d
\n\u00a0
\nThe views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.<\/em><\/p>\n

<\/span><\/p>\n

The post SUNDAY ROAST: The stocks that lit a fire under our experts this week<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

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