A UK research report has found a growing number of couples over 60 live in separate households, a trend particularly pronounced among those entering a new relationship at this stage of their lives. Improved mental health is a bonus.
Speakers of the calibre of David Knoff, the expedition leader stranded with his team in Antarctic during COVID, can regularly be heard at this global institution that places a premium on knowledge, not qualifications.
Buy, sell, hold with Luke Laretive
Buy – Adore Beauty (ABY)
ABY has struggled since listing, with its inaugural half year result disappointing investors with a lack of guidance. While we weren’t participants in the IPO, we see value for investors at current prices with Adore trading at a discount other single-category, online retailers like Temple & Webster (TPW) and Redbubble (RBL). We see ABY as a higher quality, more exciting business than both these companies and our research indicates a comparably more engaged, stickier customer base. We also like the diverse management team believe the company has significant leverage to the continued shift from instore to online within the makeup category, with only 5% of sales in online vs 30% of most other retail categories. This should prove a material tailwind for the business, which when coupled with market share wins, offers a tantalising opportunity for shareholders.
Hold – Origin Energy (ORG)
Origin’s fortunes are really tied to two distinct commodity prices. For the Energy Markets business, that price is the wholesale price of electricity in Australia which currently is around $41/MWh and below what the two major retailers (AGL, ORG) in the country need to breakeven (over $50MW/h). ORG looks best placed to gain from our forecast recovery in east coast electricity pricing longer-term, though still faces pricing pressure in the immediate future. We think more likely in the short term is a bump in oil prices, the 2nd important market to Origin, because of its APLNG assets. APLNG distributions should exceed $600m and be the primary source of free cash flow for ORG. We think there is certainly value here, with the stock trading on only 11x FY22 earnings and offering a growing dividend yield, however it comes with short term risks and potential volatility.
Sell – AMP Ltd (AMP)
Financial planning and funds management are industries facing digital and regulatory disruption and while I’m sure some investors want to try and play the takeover angle, I see little value even at a c.$5bn market cap. The investment banking division, AMP Capital, appears to be the only business unit worth anything in the open market, however anyone who’s worked in the industry knows it’s less about the company and more about the key staff and their relationships – and who’s to say they stick around? While the potential for a capital return and some early progress in turning the business around has been made, I think the road ahead is longer and fraught with more danger than investors currently realise.
Disclaimer: This article is of a general nature only and does not consider your objectives, financial situation or needs. You should consider the appropriateness of the information in light of your objectives, financial situation and needs before acting on it and obtain copies of any relevant disclosure documents. Seneca Financial Solutions does not warrant the accuracy or reliability of the information in this report. Luke Laretive, Seneca Financial Solutions, it’s Directors and it’s associated entities may have or had interests in companies mentioned. They may have or have had a relationship with or may provide or has provided investment banking, capital markets and/or other financial services to those companies mentioned. Luke provides clients with a weekly note, which you can access here.
