Investor Insights

With equity markets steaming ahead, there’s no shortage of people calling this a ‘dead cat bounce’ and, by implication, predicting another market correction. History, however, suggests that 2022 was simply an isolated poor year for markets, and that we have now returned to ‘normal programming’. If I’m right, then 2023 could be a good year for investors.

The past year posed considerable challenges for equity investors, including runaway inflation, a rising interest rate environment, geopolitical tensions, and the lingering effects of the pandemic. The confluence of these headwinds – and a lack of positive catalysts – roiled market sentiment, resulting in most equity analysts adjusting their expectations for corporate earnings growth substantially lower.

Over the last six months, we have provided a growing list of arguments favouring investment in equities. We have shown the compression of P/E ratios of 2022 rendered high-quality companies cheap, and we’ve revealed arithmetic demonstrating investors will receive a return commensurate with the earnings growth rate of the company they buy even if stocks don’t become popular again.

Breville (ASX:BRG) the kitchen appliance company this week reported another record for half-yearly sales, albeit slightly below consensus. First half 2023 revenue grew 1. 1 per cent to A$888. 0 million, which was also 0. 7 per cent higher, on a constant currency basis, than the first half of FY22.

  In this video Scott speaks with Gary Rollo, portfolio manager of the Montgomery Small Companies Fund to provide an update on what we have seen from reporting season so far. It is early in the number of companies who have reported, but we can already see some key themes coming from the consumer sector.

Since starting life in 1996 as the operator of Melbourne’s CityLink, Transurban (ASX:TCL) has come a long way. Taking advantage of falling interest rates, TCL has expanded its portfolio and now operates lucrative urban toll roads in Sydney, Melbourne, Brisbane, Canada and the U. S.

Last week, the Reserve Bank of Australia (RBA) lifted interest rates off the back of the heightened inflation data that came in for the December 2022 quarter. The RBA decided to lift the cash rate by 25 basis points, bringing it to 3.35 per cent.

With interest rates rising, many of you are probably wondering if it would be beneficial to pay more off your mortgage. The good news is that if you have sufficient funds, and you are in a high personal tax bracket, it could be your best investment right now. Let me explain why.

On first blush, the much-anticipated consumer slowdown does not appear to have impacted Nick Scali (ASX:NCK), which reported half-year 2023 results earlier this week. But delving more deeply into the trading update reveals a different story. Nick Scali’s 1H23 sales revenue of $283. 9 million was up 57. 4 per cent on H1 FY22.

Since its founding in Melbourne in 1997, carsales. com (ASX: CAR) has grown its footprint to now operate in digital marketplaces across Oceania, Asia and the Americas. This has largely been done via acquisitions. However, I’m scratching my head over its recent acquisition of the US marketplace, Trader Interactive. To my mind, they have simply paid too much.

  IMDEX (ASX:IMD) reported a strong set of 1H23 results, well ahead of consensus with revenue up 18. 5 per cent from 1H22 and EBITDA up 21. 9 per cent from 1H22.  Despite great results these were overshadowed by IMDEX’s proposed acquisition of Devico, which appears highly strategic.

All English-speaking Central Banks seem committed to higher official cash rates. This interest rate tightening cycle began in New Zealand on 6 October 2021, and six months later Australia was the last to blink, on 6 April 2022. On average, the five Central Banks in the table below have increased their official cash rates on nine separate occasions.