Managing Market Volatility – 4 Tips In Buy/Hold Zone (TCL, WAM, DDR and PGC)

market volatility

Market volatility can impact your portfolio to a great extent, it is hence important to choose balanced financial products and expect potential rewards with risk management in place. One should not overreact to the short-term volatility and reevaluate your portfolio for staying invested for a longer period of time. To protect your investments, go for quality well established companies which can provide an income or dividends during your retirement years and pursue safer bets. Four such stocks are mentioned below:

TRANSURBAN GROUP (ASX: TCL) – The company is expected to improve its EBITDA and EBITDA margin, the EBITDA excluding significant items increased 9.5 per cent to $1,670 million with increase in average daily traffic of 2.2 percent. Also, the revenue increased 8.7 percent to $2,340 million. The ROE improved significantly from 5.0% to 10.1% and reflects better growth. On the back of contribution from GWA assets, Free Cash Flow has grown at CAGR of 20.7% during FY14-18. The stock has an attractive dividend yield of 5.04% for the year. The stock surged by 1.169% as at October 26, 2018, to trade at a market price of $11.250. The stock has seen a performance change since inception of 5.33%. Based on the decent outlook and effective financials we recommend the stock to be in a buy zone.  

WAM CAPITAL LIMITED (ASX: WAM) – With operating profit before tax amounting to $166.9 million reflecting the YoY growth of 87.6% represents the company’s earnings from normal operations. For the period of twelve months ended on June 30, 2018, WAM Capital’s total shareholder return stood at 6.1%. During the month of September 2018, the Australian dollar strengthened 0.6% compared to the US dollar which benefitted the company. The company is also trading at a reasonable P/E of 12.690 and EPS of 0.054 AUD. The stock has seen a performance change since inception of 153.48% and traded at a market price of $2.430. The stock has an attractive dividend yield of 6.43% for the year. Based on the macroeconomic factors and decent financials we recommend the stock to be in a hold zone.

DICKER DATA LIMITED (ASX: DDR) – For more than 15 years, the group has achieved consistent top and bottom line growth and recorded revenue growth at CAGR of 9.0% during 1HFY15-1HFY18. Resultantly the group is on track to improve its PAT margin from the current level, and the EBITDA margin, gross margin, and NPAT margin was at 9.39%, 3.80%, and 2.97%, respectively on a 3.5-year average basis 1HFY15-18 representing a positive bottom line. The stock has seen a performance change since inception of 1276.19% and traded at a market price of $2.900. The stock has an attractive dividend yield of 6.09% for the year. Based on the improving company financials we recommend the stock to be in a buy zone.

PARAGON CARE LIMITED (ASX: PGC) – As at FY 2018, PGC has a return on equity or ROE of positive 8.7% which is comparatively lower from 13.1% in 2017. The current ratio of the company is 1.88x in FY 2018 which is above the industry average of 1.31x reflecting ability to pay short term obligations. As compared to 39.3% in 2017 the company has a gross margin of 40.2% in FY 2018. However, the company’s EBITDA margin stood at positive 13.3% while in the previous year it was 14.6%. The stock has seen a performance change since inception of 158.33% and traded at a market price of $0.685. The stock has a dividend yield of 4.53% for the year. Based on the decent trading multiples we recommend the stock to be in a hold zone.


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