AX1 - Accent Group

[galumay]

Well done @tinhat - i will be interested to see how the business performs this year. I was a sort of reluctant seller, but have come to believe sticking to strategy is important for me.

 

[roland]

I'm holding, got 'em at the right time (the little "P"'s in the graph) average is $0.79 so dividend yield on cost is currently 7.5%. Can't complain

 

[galumay]

I think my buy was about 65c, I have never thought about yield that way though. In my mind i think about the yield on the current SP, I think its self deceptive to calculate on invested capital. After all if you sold today, then the capital realised would be what you would calculate any potential returns on.

 

[roland]

I think my buy was about 65c, I have never thought about yield that way though. In my mind i think about the yield on the current SP, I think its self deceptive to calculate on invested capital. After all if you sold today, then the capital realised would be what you would calculate any potential returns on.

I agree, but if you are intending to hold long term for yield, then I think it's a valid calculation. Makes me feel better anyway

 

[galumay]

Makes me feel better anyway

I think thats what made me stop doing it!

 

[barney]

Courtesy of @tech/a Post dated 2nd July 2018

 

[tinhat]

Lincoln Indicators (Stock Doctor) dropped the stock today from its income and borderline star stock (growth) stock picks. They cited the following risks:

• Growth is primarily driven by new store rollouts,
• Tough retail environment,
• High household debt,
• Global expansion - AX1 does not own brand distribution rights in the jurisdictions it is seeking to enter as a retailer (Singapore and Malaysia),
• Management transition,
• Valuation (their valuation is $1.21).

"From an income perspective, although the gross forecast yield is slightly above the market average, we are wary that free cashflow, if it does not improve, will not be sufficient to cover dividend payments going forward."

If Lincoln's investment funds sold out today that may account for some of today's fall in stock price. I only hold one retail stock at the moment, GZL (Gazel) and that is also down quite heavily today, also off a recent run up in price.

 

[systematic]

Darn, I've not long been holding this one...could be a short hold at this rate!

 

[galumay]

Its tended to perform better than one might expect @systematic. I got out about 6 months ago for about $1.26, which was above the high end of my range of valuation at the time. I could have done better holding a bit longer but it was a good return and I slept better at night!

 

[Darc Knight]

The Athlete's Foot, AX1's flagship brand, is a specialty retailer of athletic footwear. AX1 operates 148 Athlete's Foot stores across Australia and New Zealand. The Athlete's Foot also expanded its distribution channel to online shopping site.
Strong buy rating according to MarketIndex
https://www.marketindex.com.au/asx/ax1


Accent Group owns a number of retail store brands including Platypus and HYPE DC. Although there have been concerns that Australian retailers are struggling from lower consumer spending, this certainly hasn’t been the case for Accent Group. It recently advised that trading has been “materially stronger” than expected. As a result, the company is on course to deliver a 15% to 20% increase in first half EBITDA. This could put the Accent board in a position to increase its dividend again. At present its shares offer a trailing fully franked 5.8% yield.
https://www.fool.com.au/2018/12/31/is-it-time-to-buy-nab-and-two-other-quality-dividend-shares/

 

[galumay]

@Darc Knight AX1 has surprised me with being able to continue to create organic growth with its business, I am still comfortable with my decision to book the profit, I think its still a fairly precarious business, but you cant argue with the fundamentals!

 

[Darc Knight]

AX1 gained 3.45% (to $1.20) yesterday to finish the year at 301 on the ASX ranking. This is what I'm watching - to see what happens when it breaks 300 and how much effect VAS buying it up will have on its price. Thoughts anyone?

 

[galumay]

I honestly dont see it having a huge amount of upside, I looked back at my calculations for IV and my comments in my decision journal when I sold last March at $1.27 and it was well above the range of IV I calculated, I also worked up an expected value based on some back of the envelope probalistic assumptions about the business and arrived at a value around $1.30.

It would seem to me to still have a higher risk of ending up at a lower price than the liklihood of it going much higher, an asymmetric bet round the wrong way!

One of my comments in my journal was,

"I have some lingering concerns about the retail sector as a whole and the current price of $1.25 implies some pretty heady growth in earnings over the next few years. I calculate that cash flow would need to increase by around 30% from last year to support that sort of share price and that seems a tall ask."

Of course, Mr Market may strongly disagree with me and it may well run back up to ATHs of around $1-80.

 

[Darc Knight]

I was shocked that a Retailer was doing so well, let alone The Athletes Foot.
I was wondering if some of the price rise on Friday was due to expectations of VAS buying up, EMH and all?

 

[Ann]

I was shocked that a Retailer was doing so well, let alone The Athletes Foot.
I was wondering if some of the price rise on Friday was due to expectations of VAS buying up, EMH and all?

You need to start charting young man. This retailer is not doing so well. This chart was drawn just for you DK.

 

[Darc Knight]

You need to start charting young man. This retailer is not doing so well. This chart was drawn just for you DK.

View attachment 91075

Thank you. Yep, like most retailers I guess. Can you explain the 3% rise in price on Friday. Once it hits ASX 300, $2.9 bil VAS will buy in. Increase demand, increase price. That's all I'm watching.

 

[galumay]

I thought you were a FA type @Darc Knight ?!

Be careful not be beguiled by the astrology types!

 

[Darc Knight]

I thought you were a FA type @Darc Knight ?!

Be careful not be beguiled by the astrology types!

You're a braver Man than I

 

[Ann]

Thank you. Yep, like most retailers I guess. Can you explain the 3% rise in price on Friday. Once it hits ASX 300, $2.9 bil VAS will buy in. Increase demand, increase price. That's all I'm watching.

3% rise....someone put in an offer to sell at that level, someone else bought. Rule of thumb for buying and selling, buy on a Monday, sell on a Friday. Likely to have been a newbie with a story in their head. And if VAS buys in, so what? They will be just another investor. It will also be weighted so who knows how many they will buy. They will buy over time, none of these professional investors want to distort the price in any way. Years ago, many years ago when I watched the S&P rebalances, I often saw stocks drop when they were added. No idea why just wild pointless guesses.

 

[Ann]

I thought you were a FA type @Darc Knight ?!

Be careful not be beguiled by the astrology types!

Just a price trail galumay no fancy astrological mumbo jumbo as in Jupiter's clouds have disappeared so now we are all in for it....just a wee little wiggly line showing what the daily price close looks like and which overall direction it is headed. I like to know if the price is going up or down, don't care if Venus wants to take Pluto for a walk!