In this section we look at two stocks that we think have investors should add to their portfolio. The upside risks are far greater than the downside and the story reads well. We will look at both company’s fundamentals, technicals and thematics to explain why we have selected the two stocks.
Kogan (KGN) – Ruslan comes through with the goods. We’ve been a supporter of Ruslan’s Kogan for some time and wrote about the stock back in June when it first listed. The stock has been a bit of a disappointment since listing at $1.80 for those that bought in, shares plunged more than 16% on its debut. It fell to a low of $1.32 in December 2016. But for those looking to buy now, the stock is roaring back. Many said the share price fall didn’t make sense given its strong institutional demand and strong sales. Ruslan even said he wasn’t concerned about the fall and knew he had a very strong business. He was confident in the company’s forecasts and its future. Well this week he proved the naysayers wrong and signalled another profit upgrade driven by strong 2Q sales from the Christmas trading period. If lifted its prospectus forecast for pro-forma FY2017 profit at its AGM in November and this week went one step further by advising the market that it has beaten even those expectations. Looks like he’s doing something right by recording better than expected sales of TVs, drones, gadgets and power tools. Whilst he hasn’t formally upgraded guidance, it’s on the cards. KGN says earnings could be between $8m-$9m up from $6.9m. Pretty bullish stuff. An upgrade won’t be formalised until its auditors review of the HY comes in.
Picture from Sydney Morning Herald KGN shares are now trading at $1.65 up a whopping 25% at a time when all its competitors are struggling. Its decision to pick up Dick Smith’s online retail business was the right decision. It’s helped prop up the bottom line and beat prospectus forecasts.
All in all, we like the Kogan business. It’s a positive announcement for a company that started in Ruslan’s garage selling just TVs. The CEO has time and time again taken on the likes of the big boys such as JB Hi-Fi and won. We think Kogan’s success will only continue. At the moment shares are trading at a discount to the pre-IPO price and areattractive. KGN has $26.5m in the kitty and it’s hitting its prospectus profit forecasts with ease. The chart says Buy. The stock has recently broken out on the upside and has reversal in trend. Traders should looking to buy on this bullish break out.
IVE Group (IGL) – For those that don’t know, IGL is a diversified print company which includes Australia’s largest sheetfed printer Blue Star. IVE has evolved from a family-owned print production business in 1921 to a leading marketing and print communications provider in Australia. The company listed late 2015 and was one of the most anticipated floats of the year. The IPO raised $75.6m for 42.5%. The remainder is held by Wolseley private equity and the Selig family. The Company’s principal activities include the conceptual and creative design across print, mobile and interactive media, printing of magazines, catalogues, marketing and corporate communications materials and stationery. IGL basically helps its customers to communicate more effectively with their customers by creating, managing, producing and distributing content across multiple channels. Its proprietary brands are Kalido, Blue Star Group, Pareto Group and IVEO. Kalido – creative & digital agency. Blue Star Group – diversified manufacturing and production services group. Pareto Group – strategy development and execution of direct fundraising programs for the not for profit sector and IVEO – integrated marketing services supply chain solutions.
The company has revenues in excess of $370m. It recently purchased two businesses Franklin Web for $100m and AIW Printing for $16m. Both acquisitions represent an expansion into the large format web offset sector making IGL a leading player. This sector is an attractive and complementary space for the company. IGL raised $40m at $2 per share to fund the acquisitions. IGL recently announced a contract win with Coles to conduct its catalogue printing services via Franklin Webb. It’s another big win for the company that has begun to start kicking goals. On the chart the stock looks particularly attractive. IGL has broken out on the upside and looks to be making higher highs, effectively reversed trend. Traders would be looking to buy on this break out, but might want to wait for a dip.