Episode 24: EOFY Tax Selling Unveils Bargains
Australia’s inflation rate surged to 4% in May, the highest this year, driven by significant increases in automotive fuel and electricity prices. This unexpected rise has increased pressure on the Reserve Bank of Australia (RBA) to consider another rate hike in their upcoming meeting, with economists predicting a potential increase to 4.6% to combat persistent inflation pressures.
Stock Highlights
Insurance Sector: Suncorp (SUN) and Insurance Australia Group (IAG) experienced significant developments. Suncorp’s sale of its banking arm to ANZ Group was seen as a positive move, enabling it to focus on general insurance. IAG announced major new reinsurance partnerships, marking a significant transaction for the company.
Collins Foods (CKF): Reported a 0.8% decline in same-store sales for May and June. Interim CEO Kevin Perkins expects challenging conditions to persist into 2025 due to higher mortgage rates, rents, energy bills, and inflation.
Bannerman Energy (BNM): Launched a $76 million share placement to support its Etango project in Namibia. This move aims to capitalize on the rising demand for uranium amid a global shift towards nuclear energy and interest in decarbonizing power grids.
ResMed (RMD): Shares plunged over 13% after Eli Lilly’s weight-loss drug tirzepatide showed significant reductions in obstructive sleep apnoea severity, renewing concerns about the impact on ResMed’s market.
Trade of the Week
- Fortescue Metals Group (FMG): Entry price at $21.60 with a target price of $30 and a 15% trailing stop loss. Fortescue is currently undervalued, presenting a favorable entry point due to the recent sell-off. This trade aims to capitalize on the potential price recovery and yield advantage offered by FMG, leveraging its strong fundamentals and growth prospects.