Macquarie Group (ASX:MQG) is a Sydney-based investment bank.The company posted 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
Our Position: Currently sitting at $134.83, which we understand from our research as seemingly undervalued in comparison to the quality of company we are talking. MQG pays a semi-annual dividend which yields at 4.32%, allowing some form of security over the next 6 months if the market continues to decline. In our opinion, Macquarie Bank has room for Capital gain over the next 3 months if markets recover effectively. Our understanding is that if we enter a bearish market - MQU's operations may be affected in the short term however MQU have the right management in place to ensure long term stability and stock growth.
Clinuvel Ltd (ASX: CUV), founded in 1987, is a leading biopharmaceutical Australian company. CUV specialises in delivering treatments for severe skin disorders.CUV reported an 11% increase in revenues in comparison to June-December 2018, totalling $9,971,000 million. A driving factor behind CUV’s revenue growth was the 4.7% increase in European sales of SCENESSE. Clinuvel’s US, Australian and Asian campaigns made significant progress in 2019 and the trend looks to continue throughout 2020.
Our Position: With a current price of $17.77, we have an understanding that this stock is currently undervalued. With the recent market trends, CUV has taken a beating - losing 1/3 of it's value over the last week of February. CUV posted a 74% decrease in H1 2020 profit compared to 2019, which is partially why CUV is so cheap. Regarding dividends, CUV's annual dividend was estimated $0.025 a share. This is considered a very short dividend however for most Bio-tech companies a dividend is rare. With 10% weighting on our portfolio, we see CUV's potential something too great to miss.
Paradigm Co (PAR:ASX) has been one of our top performing stocks which we’ve been closely following since we started Youth Investment Group. We first noticed Paradigm bouncing around $1.85 and saw it’s potential in the Bio-Pharmaceutical industry. Paradigm, through its repurposed drug Zilosul, aims to alleviate the suffering and cartilage degradation of Osteoarthritis. PAR’s impressive clinical developments in osteoarthritis and 240% surge in 2019 captivated both the scientific and investment world.
Our Position: Currently PAR is valued at $2.85, which has seen a recent fall of 25% over the course of one week. However, PAR is not unfamiliar with a volatile share price. PAR's short term future is relying on the results on the Ex-NFL players treated with the recycled drug. Interestingly, the first Ex-NFL player - Former Carolina Panthers Mitch Marrow called the treatment "life-changing". At it's current price, we are taking on 18% weighting at $2.85. From our research, even with the current unstable nature of the markets - Paradigm has shown it's true value above $4. We did not believe we would ever get a chance at an entry below $3 again until the markets collapsed by 10% in the last week of February. PAR still holds risk with such big expectations leading up to the first results of the trial however we are taking on this risk as the signs are all pointing towards the long term success of PAR.
Telstra (ASX:TLS) is a veteran Australian company in the Telecommunication industry.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. In response to the recent TPG-Optus merger, the increased competition in the Telco industry will cause Telstra to be more innovative, more reliable and more customer orientated.
Our Position: Firstly, Telstra's stability and low Beta are a significant element to this portfolio. The Beta held true in the worst recorded week since the GFC. The ASX 200 fell -10.8% while Telstra only fell -7.5% over the same week. This aspect of Telstra makes it a critical aspect in diversifying risk within the Portfolio. It's dividends of 8 cents a share, semi annually have made the stock an attractive asset to have. From our findings, it's current price of $3.43 is slightly undervalued. Especially with the current $15 billion Merger between Vodaphone and TPG, forcing Telstra to become more efficient and cost effective. The battle for 5G market share will be a crucial element in Telstra producing a capital gain by the end of 2020.
ZIP Co (ASX:Z1P) is an Australian Buy Now Pay Later (BNPL) company which has seen phenomenal stock growth since January this year. They posted a 500% increase from January to October 2019 . Z1P's stock price made an impressive Yearly return of 295.83%. Coming off the back of strong quarterly results, Z1P seems to have some good support from investors. With a growing Industry, Z1P may have everything in place now for strong 2020 growth. However, ZIP's most recent financials have concerned investors, with one-off costs producing a negative $24 million EBITDA.
Our Position: While currently running at a negative EBITDA, it is one off costs that have pushed them to a net loss, such as their recent acquisition of PartPay. This has had a short term negative impact on the stock price, now currently valued at $2.72. We have decided after reaching a Beta of 0.91, that 15% of weighting would go towards Z1P. At $4 we would not buy Z1P, as the industry is still so unpredictable. However, we see 15% as enough weighting to reap the rewards as the markets recover and Z1P begins to post positive Net Profits.
Imugene (ASX:IMU) is an Australian biotechnological company that specialises in developing a range of Immuno oncology therapies. Immuno oncology therapy is where your body activities your immune system to target and eradicate cancer cells/tumours. Imugene’s vaccine range is a result of over 12 years of research from the Medical University of Vienna. Further adding credibility to their vaccines, which could radically eliminate breast and gastric Cancer.
Our Position: At 2%, we picked Imugene as a Bio-tech company that if successful will hold the key to curing Lung, Gastric and Breast Cancer. IMU fell to $0.023 per share after the major collapse on the ASX. At this price, it does. hold serious risk which we have decided to absorb, as we see Imugene's development the best the world has seen to date. Current trials will determine the effectiveness of their treatment. The next few months should be an indicator on whether the company will produce any sort of increase in share price.
0.9712 (5Y Beta). We aimed for a Beta around one, as this would generally suggest our performance will be on par with the markets. With markets currently down, our Beta suggests we would be slightly outperforming the market. However, this is all in theory and is apart of our strategy of mitigating risk.
3/6 stocks in this portfolio pay a dividend. 2/3 pay semi-annual dividends and the other pays once a year. With this extra cash flow we can choose to cover some short term losses or we can Re-invest the funds back into the company on a DRP.
All of these stocks have been on our radar for many months, however we could not find a good entry price as these stocks continued to soar on the back of 2019. Since last weeks market collapse, it has opened up a very nice gap for opportunity for investors that missed the first boat.
Our diversification comes with completely different industries under the one portfolio. Industries include Bio-tech, Bio-Pharma, Investment Banking, Micro-financing and Telecommunications. Therefore, if one industry is effected by World events (such as an increase in Oil), it won’t necessarily mean your whole portfolio will be effected. This was another one of our strategies to obtain diversification.
The next 3 months will be hard to predict however I believe in the next 2 weeks markets will begin to stabilise. The Coronavirus will have it’s effects on the economy, however from what history tells us it won’t be an issue for too much longer. We will continue to update our positions every week and provide you with the best free information out-there to assist you in becoming an informed and proficient investor.
We want to remind you that this Portfolio is only for educational purposes. Our portfolio is the result of many months in planning and research. It is important to conduct your own research before committing to any financial investment. Make sure you understand our disclaimer as this is information is not advice. It is our research and commentary that we love providing for free, for all generations of investors alike. If you like our content and research, be sure to subscribe down below.