One of the key functions of the research table in the ASX200 research page in the Members Research Portal is to provide investors the ability to quickly screen the ASX200 universe, and find investment ideas in shares that fit their investment criteria.
This week, we are using it to simply identify the top 10 large cap stocks (those in the ASX 50) that are currently providing some value. The output is provided by the screenshot below.
As you can see below, in the filter we have just used a market cap of greater than 9700 (that’s actually $9.7 billion, as that field is measured in millions). This reduces the universe to the largest 50 stocks on the ASX. Then, we’ve just clicked on the “Price to Value Ratio” column in the table (and clicked the up arrow that appears beside it for ascending order). On the bottom right, we’ve got the “rows per page” set to 10.
What this then provides is a list of the 10 stocks in the ASX 50 that are showing the best value. In the “Price to Value Ratio” column (which is just price divided by fair value), a number less than 1 indicates the price is less than the fair value estimate from Lonsec’s equities research team. Hence, the lower the number, the better value it is currently showing.
The standout on this list is Amcor, which is also one of our portfolio stocks. As per the weekly company updates that we publish each week on the site, on the 9th November, we published this update on Amcor:
Amcor PLC (AMC) released a 1Q21 update on Friday with net sales of US$3,097 million, up 2% on the pcp in constant currency (cc). Adjusted EBIT of US$358 million increased 9% in cc and EPS of 15.8cps lifted 20% in cc. Both segments delivered strong growth with adjusted EBIT increasing 11% in Flexibles and 7% in Rigid Packaging in cc. Following the strong outperformance in 1Q21, AMC increased FY21 adjusted EPS growth guidance to 7-12% in cc (5-10% growth previously) and increased the quarterly dividend to 11.75cps. AMC also announced a further US$150 million share buy-back to be funded by divestment proceeds. AMC shares rose 4.1% to close at $16.07. Valuation increased slightly on the outlook upgrade.
With both attractive Growth and Income profiles, a 4.1% dividend yield, a forecast ROE (return-on-equity) of 23.5%, and forecast EPS growth (earnings-per-share) of 10.5%, the current approximate price discount to fair value of 18% is compelling value. More information on Amcor, along with a snapshot of financial metrics can be found in the viewpoint report in the Members Research Portal.
Issued by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec).
Warning: Past performance is not a reliable indicator of future performance. Any advice is General Advice without considering the objectives, financial situation and needs of any person. Before making a decision read the PDS and consider your financial circumstances or seek personal advice.
Disclaimer: Lonsec gives no warranty of accuracy or completeness of information in this document, which is compiled from information from public and third-party sources. Opinions are reasonably held by Lonsec at compilation. Lonsec assumes no obligation to update this document after publication. Except for liability which can’t be excluded, Lonsec, its directors, officers, employees and agents disclaim all liability for any error, inaccuracy, misstatement or omission, or any loss suffered through relying on the document or any information.
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LONSEC STRONGLY RECOMMENDS THAT ALL OF THE ABOVE INFORMATION BE READ IN CONJUNCTION WITH THE RELEVANT PRODUCT DISCLOSURE STATEMENT.
Important Notice: Issued by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec). Lonsec receives a fee from the fund manager or financial product issuer(s) for researching the financial product(s), using objective criteria and for services including research subscriptions. Lonsec’s fee is not linked to the rating(s) outcome. Lonsec Investment Solutions Pty Ltd ABN 95 608 837 583 CAR (CAR: 001236821) of Lonsec receives fees under separate arrangement for providing investment consulting advice to clients, which includes model portfolios, approved product lists and other financial advice and may receive fees from this fund manager or financial product issuer for providing investment consulting services. Refer to the Conflicts of Interest Policy at: https://www.lonsec.com.au/aspx/IndexedDocs/general/LonsecResearchConflictsofInterestPolicy.pdf Lonsec does not hold the financial product(s) referred to in this document. Lonsec’s representatives and/or their associates may hold the financial product(s) referred to in this document, but details of these holdings are not known to the Analyst(s).
Warnings: In line with industry practice returns may be estimated, to access verified returns please refer to the product provider. Past performance is not a reliable indicator of future performance. Any advice is General Advice based on the investment merits of the financial product(s) alone, without considering the investment objectives, financial situation and particular needs of any particular person. It is not a recommendation to purchase, redeem or sell the relevant financial product(s). Before making an investment decision the reader must consider his or her financial circumstances or seek personal financial advice on its appropriateness. Read the Product Disclosure Statement for each financial product before making any decision about whether to acquire a financial product. Lonsec’s research process relies upon the participation of the fund manager or financial product issuer(s). Should the fund manager or financial product issuer(s) no longer participate in Lonsec’s research process, Lonsec reserves the right to withdraw the document at any time and discontinue future coverage. The product rated in this publication may have related financial products or be associated with other financial products and platforms. The rating may only be applied to the financial product outlined in this publication at first instance, seek professional advice before you make an investment decision on related or associated financial products and platforms. You should be aware that the mandate, fees, underlying investments, the issuers of the related and associated financial products and platforms may be different from the financial product specified in this publication.
Disclaimer: This document is for the exclusive use of the person to whom it is provided by Lonsec and must not be used or relied upon by any other person. No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented in this document, which is drawn from public information not verified by Lonsec. Financial conclusions, ratings and advice are reasonably held at the time of completion but subject to change without notice. Lonsec assumes no obligation to update this document following publication. Except for any liability which cannot be excluded, Lonsec, its directors, officers, employees and agents disclaim all liability for any error or inaccuracy in, misstatement or omission from, this document or any loss or damage suffered by the reader or any other person as a consequence of relying upon it. ©2020 Lonsec. All rights reserved. This report may also contain third party material that is subject to copyright. To the extent that copyright subsists in a third party it remains with the original owner and permission may be required to reuse the material. Any unauthorised reproduction of this information is prohibited.