Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.
Qantas Airway Ltd (currently $7.30) and Telstra Corporation Ltd (currently $3.86) have both seen a successful year of growth in 2019. Qantas has posted a healthy 26.7% stock price growth since January 2nd 2019, currently at their highest price since IPO in 1999. Telstra has also posted a strong YTD yield of 39.7% since January 2nd. Both Australian giants are in completely different industries, however their movements in the stock price often offset its counterpart. This is due to the effect of diversification on a portfolio making these two stocks a possible asset come 2020 (with individual research).
Flying with Qantas stock in 2020
Qantas has recently been gaining investor momentum due to its current ACCC approval on the frequent flyer deal with petroleum giant BP. This deal will allow customers to gain Qantas points on fuel and instore purchases at BP stores across Australia come 2020 . Qantas has also been positively acknowledged by a Macquarie broker note explaining Qantas has a very cheap share price compared to its global competitors and has set their target price to $7.90. Comparing Qantas with its local competitors, there is no doubt Qantas will be enjoying the traction Virgin has lost with its customers in Australia as Virgin has lost a significant amount of “financial muscle” in terms of competing with Qantas. There is no doubt the signs are very positive for Qantas come 2020 and investors should note Qantas as the one to watch.
Telstra looking positive
Many brokers including Macquarie believe Telstra has reached a turning point, in which the share price is expected to rise well above $4 (Macquarie Bank Note). The biggest confidence booster for investors is the estimated increase of $500m EBITDA or Earnings before interest, tax , depreciation and amoritisation by 2020 EOY . The financial guidance shows investors that Telstra is continuing to grow its revenue going into 2020-21. With a beta of 0.36 (3Y) it’s a very solid sign that Telstra is protected from unsystematic risk, meaning come 2020 if a recession is to occur, Telstra shares theortically will perform a lot better than the market.
What benefits they hold as a pair
In relation to Beta, it is only theory and does not show true intrinsic value of future events. However, with Telstra at 0.36 and Qantas at 0.29 (Beta) they both act as a strong hold within a portfolio. If you are an investor that sees long term growth and can mentally handle short term dips, Qantas and Telstra hold may hold indispensible value as a longer-term investment. Both companies have a very promising future, with very positive growth YTD and projects that hold yield come 2020.
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The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Tyger Fitzpatrick, Founder of YIG .