Review of 10 Stocks for 10 Years
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Monday 24 February 2020 Review of 10 stocks for 10 years In my quest to learn how to invest better and then pass on any learnings to you, I like to review the previous stories I’ve shared to see how the selections of my chosen experts worked out. My latest reflections took me to February 2018 to see how my “10 stocks to hold for 10 years” piece is playing out. In my article today, I go through these stocks and list the lessons I’ve learned. Paul (Rickard) says he likes boring stocks. Often thought of as a healthcare stock rather than a financial company involved in the health industry, he says Medibank is boring because it’s not volatile, doesn’t move around much and seems to have distinct ‘buy’ and ‘sell’ zones. In his article today, Paul answers the question: Right now, is Medibank Private a buy? Sincerely, Peter Switzer Inside this Issue 02 How are our “10 stocks for 10 years” faring? 24 months later by Peter Switzer 04 Is Medibank Private a buy right now? Medibank Private is ‘boring’ by Paul Rickard 07 Look at who's reporting this week Reporting season in its last full week by James Dunn How are our “10 11 Buy, Hold, Sell – What the Brokers Say 29 upgrades, 23 downgrades stocks for 10 years” by Rudi Filapek-Vandyck faring? 17 My “HOT” stock by Peter Switzer Short and sweet by Maureen Jordan 02 Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before Switzer Super Report is published by Switzer Financial Group Pty Ltd AFSL No. 286 531 acting, consider the appropriateness of the information, having regard to the Level 4, 10 Spring Street, Sydney, NSW, 2000 individual's objectives, financial situation and needs and, if necessary, seek T: 1300 794 893 F: (02) 9222 1456 appropriate professional advice. How are our “10 stocks for 10 years” faring? by Peter Switzer In my perpetual quest to learn how to invest better legendary market mates, such as Rudi and then pass it on to my subscribers, readers, Filapek-Vandyck, Geoff Wilson, Roger Montgomery, financial planning clients and other media followers, I Paul Rickard and so on, and asked them to give us like to look back at previous stories/lessons I’ve one stock to hold for 10 years. shared to see how the selections worked out. My latest look back on my work took me to February Here’s what they recommended and here’s how 2018 to see how my “10 stocks to hold for 10 years” they went: piece is playing out. 1. Rudi: CSL $198.57 to $338.68 — that’s up This was my opening paragraph, which I’m pretty 70% happy about: “One of the most frequent questions I 2. Paul: Also tipped CSL and is pretty happy with receive on radio and in real life is “what stocks/s can himself I buy for the long term?” 3. Geoff: TPG $5.49 to $8.10 — a 47% gain. 4. Roger: CBA $72.31 to $87.85 Predictably, I often refer novices to look at the big 5. Me: IOZ + SWTZ delivered 22% and 11% four banks, CSL and Macquarie whenever the market respectively, plus 14.2% dividend yield for decides to fall out of love with these great SWTZ. performers.” (I added in the SWTZ dividend effect because its job I’m pretty happy with that advice and I’m glad good is to deliver income but, of course, IOZ and CBA old Google and Yahoo will testify to my then great would have also brought nice dividend income as insights! well.) Paragraph 2 was also one that I can stand by, thank I won’t name the guys who didn’t cover themselves God! “Of course, individual stocks always have risks in glory, because stock tipping comes with many linked to government, competition, technological challenges, but I will look at the failed stocks and change, etc. A crazy CEO can also be a risk and hazard a guess at what went wrong and what were that’s why I say to many newcomers that a core the big lessons. holding of say iShares Core S&P/ASX 200 ETF (IOZ) or SPDR® S&P®/ASX 200 Fund (STW), maybe Tencent is one of the best companies in the world, along with a dividend-paying fund, such as my own when it comes to potential because it harnesses the Switzer Dividend Growth Fund (SWTZ), is a pretty future of China as it becomes increasingly wealthier safe way to dive into the stock market for the long and its middle class grows. It is in the social media term. You could easily split your core holding in your and retail space and will be a winner, but it has portfolio of stocks between, say IOZ and SWTZ and copped the trade war and now the Coronavirus. It have a fairly stable foundation over a 10-year was a $53.29 stock in February 2018 and is now period.” $52.26, which shows how resilient the company is to headwinds. But when it comes to stocks, there can be The story went on to look at 10 recommendations for temporary problems that will over-influence the long-term — 10 years. I recruited some of my short-term players, such as fund managers, but this Friday 28 February 2020 02 creates opportunities for long-term investors. Important: This content has been prepared without taking account of the objectives, financial situation or PACT (PGH) was another selection and this company needs of any particular individual. It does not seems in trouble. Its share price has gone from $5.48 constitute formal advice. Consider the to $2.42 and just can’t live up to expectations. That appropriateness of the information in regard to your said, the consensus view of FNArena’s experts has it circumstances. with 16% upside. Given this was a stock to hold for 10 years and we’re only two years in, it might be a future better performer. Event Hospitality and Entertainment (EVT) was another poor performer liked by a well-known fund manager, but its share price fell from $13.93 to $12.40. The analysts think it has 14.9% upside and, being in the tourism space, it’s not really a great time for this industry, with the Coronavirus. That said, the company is not giving out healthy signs. Two foreign stocks — Maruti Suzuki and Liberty Lilac — were not impressive performers, with the former seeing its share price fall by 24% on the Indian stock exchange and the latter lost 8.3% on the Brazilian stock exchange. One of these fund managers has changed jobs and from my point of view it’s hard enough to understand companies without throwing in curve balls such as what’s going on in India and Brazil. If I wanted to play these markets, I’d do it through a fund where the fund manager had form on the board. So what are the other key lessons from this exercise? 1. Buy quality companies when the market goes excessively negative. The bank stocks were a case in point, with the Hayne Royal Commission creating a buying opportunity. 2. The events such as the Coronavirus are creating buying opportunities, but make sure if you gamble on affected or ‘infected’ stocks that you do it with quality companies. 3. Bad performers over a two-year period might be going through a rough patch, but I’d be wary about companies that have struggled to turn around their poor earnings’ results for a sustained time. Next week I’ll look for 10 new stocks to hold for 10 years. Friday 28 February 2020 03 Is Medibank Private a buy right now? by Paul Rickard I like boring stocks. And one of the most boring must The good news be Medibank Private (ASX: MPL). Often thought of as a healthcare stock rather than a financial company Medibank reported group operating profit of $218.8m, involved in the health industry, it is boring because it down 20.9% on the corresponding half of FY19. A is not volatile, doesn’t move around much and blow out in health insurance claims, which rose by seems to have distinct ‘buy’ and ‘sell’ zones. Right 5.9%, was the main culprit. now, it is getting back towards the buy zone. Premium income increased by 2.3% on the back of Since its IPO in very late 2014 at a price of $2.15 Medibank growing its customer base by a net 20,400 (retail shareholders paid $2.00), it has largely traded customers. Australia’s largest health insurer with between $2.50 and $3.00, but with an upward bias 1.81m customers, this marked the fourth consecutive (see chart below). Over a 5 year period, this is a very half year of market share gains – the highlight of the tight range. It went for a run last year when Bill result. Admittedly, the growth was with Medibank’s Shorten was defeated and the RBA cut interest rates, “Jetstar” brand, AHM, which saw net policyholder up to a high of $3.62 in June and again in August, but growth of 29,700 customers, while the “Qantas” it has largely been easing lower ever since. On brand, Medibank, declined by 9,300 customers. Friday, it closed at $2.91.