Monday 25 January 2021 My spotlight is on these 5 stocks Last Saturday I shone the spotlight on the five big winners and losers of the past week of trading. Today I thought I’d see what the expert analysts think about these winning companies. After big rises for the likes of Zip and Lynas, you could expect a bit of profit-taking this week but let’s see if there could be a positive trend for these stocks going forward. Sincerely, Peter Switzer Inside this Issue 02 My spotlight is on these 5 stocks My spotlight on 5 stocks by Peter Switzer 05 Magellan’s partnership offer – should you invest? Should you invest in Magellan’s partnership offer? by Paul Rickard 08 Stocks to shine from President Biden’s win Stocks to shine from Biden’s win by James Dunn My spotlight is on these 11 Buy, Hold, Sell – What the Brokers Say For the week ended Friday January 22, there were 17 upgrades 5 stocks and 19 downgrades to ASX listed stocks covered by brokers in by Peter Switzer the FNArena database. 02 by Rudi Filapek-Vandyck 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. My spotlight is on these 5 stocks by Peter Switzer Last Saturday I shone the spotlight on the five big $5.15 to $7.23. But now the analysts’ target prices winners and losers of the past week of trading. Today are a tad lower, so an 8.1% drop is tipped. I thought I’d see what the expert analysts think about these winning companies. After big rises for the likes That 28.8% jump last week has done that, and while I of Zip and Lynas, you could expect a bit of think this is a good company with a future (which profit-taking this week (fund managers do that) but benefits when Afterpay spikes because of what’s let’s see if there could be a positive trend for these called the halo effect), the future upside will depend stocks going forward. on some new runs on the board from the company. These can’t be easily predicted. But, like Afterpay, these guys often come up with new acquisitions and it’s why I argue Z1P is a good “buy the dip” kind of company. And they should be a good long-term play as well, given the news last week. Zip reported an 88% spike in quarterly revenue to $102 million on the back of record quarterly transactions of $1.6 billion. That’s a 103% rise. “The company boasted it had now cemented itself as a 1. Zip Co (ZIP) “true global BNPL leader”, and was closing in on Afterpay in Australia,” The Australian reported. Until last week, the analysts surveyed on FNArena thought Zip Co’s outlook was positive. Two weeks “We’re the fastest growing industry player in ago with my first story of the year, I pointed out that Australia – we were the most downloaded BNPL app Zip had a 21.2% upside so the analysts I looked at in December,” co-founder Peter Gray said last week. were on the money, and more! 2. Lynas (LYC) Z1P one month Lynas has always been a tricky company to play but recently on back of our Switzer Report I dabbled with this miner of rare earths, and it has saluted the judge. However the analysts now think the latest share price spike was too much. The survey says a 23.6% downside risk exists but these look too negative, given the news last week. “Australian rare earths miner Lynas Corp’s (ASX: Since Christmas, the stock is up 40% going from LYC) shares jumped on Friday after it announced a Monday 25 January 2021 02 deal with the US government to build a commercial administration (FUA) at 31 December 2020 of $38.8 light rare earths separation plant in Texas,” billion, an increase of $4.8 billion (14% increase) for Mining.com reported. “The facility, expected to the December quarter, including a market movement produce about 5,000 tonnes of rare earths a year, of $2.2 billion. The company also liked that it was would help Washington’s push to secure domestic named as a Top 200 company (out of 18,000 supply of essential minerals used in magnets and companies) in the 2020 Forbes Asia, which motors that power phones, wind turbines, electric recognises 200 Asia Pacific companies with less than vehicles and military devices.” US$1 billion in revenue that demonstrate consistent top and bottom line growth, low debt and robust Once again, Lynas could face a bit of profit-taking, governance. but the longer-term potential of the company was seen by many investors on Friday. This should not be Netwealth (NWL) forgotten, whenever the company’s share price slips. China currently accounts for 70% of worldwide production and controls 90% of the $4 billion global market. So with relations with China souring, especially with the US and us, Lynas could be well placed. That said, this has been a company that can disappoint, just when you think it’s on the way up. The one-year chart shows a company that’s on the way up, but, once again, we could see some 3. Netwealth (NWL) profit-taking. Before the Coronavirus crash this was a $8.54 company. Now it’s $17.75, so that’s a 107% The next company is one that I’ve never had any gain, which is clearly coming out of the demise of its interest in but Netwealth had a nice rise last week — bigger rivals, such as AMP. up 20.5%. And where there’s smoke, there’s often a fire worth getting warmed up by. At this point in time, Given I believe stocks will rise in 2021, NWL is the analysts are leaving the company out in the cold. another “buy the dip” company, but the biggest rises The assessment is that the share price should fall by might have already been clocked up. 13.4%! 4. Bingo (BIN) But why? The next company is Bingo (BIN), which registered a Back in October, we learnt that there had been an 8% 20.22% rise last week, but the analysts think a 9.8% increase in funds under management (FUM) during downside is ahead. This isn’t surprising given the the September quarter, the majority of which was latest rise follows the announcement that the attributed to positive inflows rather than market company had received a $2.3 billion takeover bid movements. The platform group also noted a 109% offered up by an Australian private equity group for its year-on-year increase in its managed account waste management business. Bingo confirmed media balanced over the 12 months to 30 September, reports it had been approached by CPE Capital and a despite negative market movements over the period. consortium of investors to acquire the company under a proposal of $3.50 per share. Further, Netwealth said net inflows to its funds under advice had been $9.1 billion in the 12 months to 30 The current share price is now $3.27. I don’t like June, and that it had recorded a 35% increase in getting into these takeover plays. Many years ago, funds under advice in the 12 months to June the late Rene Rivkin told me he often gets into these (ifa.com). because he believed the first offer is never the best. But it’s a gamble that can backfire if the buyer is not This good news continued, with funds under Monday 25 January 2021 03 for haggling. BINGO (BIN) The long-term chart says WTC has re-established itself in the eyes of the market, but it will have to come up with some proof in coming months that its acquisitions deliver profits, or recent gains will unwind. The current share price of $33.20 isn’t far The long-term chart shows $3.27 is the top for this from its previous highs so if you want to invest in company. It has always had trouble spiking much WTC, you need to believe that all their promises are higher. At these levels, Bingo goes in the bin for me. more than promises. 5. WiseTech Global (WTC) Management advised that the share price rise was driven by growth from both its CargoWise platform The final winner is WiseTech Global (WTC), which and newly acquired businesses. put on 19.73% last week, but that was too much for the experts, who think it could fall 22%! Earlier this year, management reaffirmed its FY 2021 revenue guidance of $470 million to $510 million and This is a company that has been a victim of Viceroy EBITDA guidance of $155 million to $180 million. This Research, the same short seller as Tyro. This market represents revenue growth in the range of 9% to 19% thumbs up might not only be a sign that the company and EBITDA growth of 22% to 42%. is better than was suggested by the self-interested short-seller, it might also say that the research leaves CEO Richard White told the AGM that “CargoWise is a lot to be desired.