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.
The Sydney-based investment bank has seen incredible success posting a double-digit increase in profits this year from 3.464 billion (before tax 2018) to 3.867 billion in 2019. They also posted a net profit margin in September of 29.6%, a Y/Y increase of 12%. It’s long term potential is quite remarkable due to it’s five specific operating groups. It is estimated that 2/3 of Macquarie Group’s earnings are generated overseas, which also shows it’s capitalising financially on a global scale. With a current share price of $140.23, it has made it difficult for newer investors with lower capital to enter. However, if you do have the capital to purchase a sufficient amount of shares it may definitely pay off, this of course is my opinion based off extensive research and you must conduct your own to see if this stock is right for you.
Outlook for 2020
Macquarie expects profits to be slightly down by March 2020 due to global speculation. However, Macquaire’s strong management team believes it has the skill and expertise to adapt to speculation and market uncertainty. They believe their position on adapting their portfolio mix in the wake of market uncertainty will drive medium to long term capitalisation. Interestingly, an estimated 60%* of it’s profits are generated from stable assets such as annuities allowing them to mitigate risk. Macquarie made $1.65 billion in their commodity department, a 65% increase since last year and is likely to post another promising result come 2020. However, CEO Shemara Wikramanyake said “Overall, the group’s result for fiscal 2020 is currently expected to be slightly down on fiscal 2019,”. There is speculation whether Macquarie are being overly cautious on their predictions. They are definitely still at risk if an economic downturn does take-place in 2020.
Is it too late?
If you have the capital to invest with Macquarie group they have been advised by brokers as one of the best stocks come 2020 on the ASX. However, an entry price below $140 would be ideal and may occur in March 2020 when financial results are released. In my opinion, waiting until Macquarie becomes slightly underpriced would provide an investor with the best returns.
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The information above is to be used as general investment guidance. Youth Investment Group has no liability for personal financial interests or investment decisions.
Written by Tyger Fitzpatrick, Founder of YIG.