Reasons Why Investors Should Look at Mid-Cap Stocks -PDL, PTM, PME

Good, Solid Investments Can Really Pay Off! You don’t need to be a dedicated day trader to make money in the stock market. If you study the stocks you want to put your money in and watch their overall performance over a period of time, you’re more likely to make a wise decision when purchasing them. Buy low, sell high!

Let’s talk about Mid-cap stocks! They typically belong to those companies boasting market caps between $ 2 billion to $ 10 billion. Although, as companies move ahead on the growth curve, their respective classification changes over time. With mid-cap companies, one thing for certain is that they tend to grow with time and accrue increasing profits, gain market share and deliver productivity, which puts them in the middle of their growth curve thereby delivering high value to shareholders. In addition, the mid-cap stocks are less risky than small-cap and perhaps slightly riskier than the large caps, which belong to well-established and reputed companies.

Mid-caps can be good addition to one’s stock market portfolio, providing a balance of stability and growth. In the long run, real prosperity is not defined by how much money you make but how much of that money you put to work by saving/investing it.

Why put Mid-cap stocks in your investment basket ? Mid-caps are usually underfollowed in the stock market and exhibit the following features-

  • Shareholders of the mid-cap enjoy the benefit of easy liquidity;
  • Mid-cap companies perform well during the recession time, as they can get the credit easily in order to grow. Besides, their main focus remains on some particular business segment with an aim to create a niche in the target market.
  • Generally, the return on mid-cap companies is better than other stocks during easing monetary cycles resulting in low cost of capital.

In light of this knowledge, let us look at three mid-cap ASX stocks – PDL and PTM, PME and their recent updates–

Pendal Group Limited (ASX: PDL)

Pendal Group Limited is a global investment and management company focussed on delivering superior investment returns through active management. It operates through two segments – investment management business in Australia and outside Australia. As of 30 June 2019, the company had $ 101.3 billion in funds under management (FUMs).

FY19 Results: On 6 November 2019, the Group disclosed its financial results for the full year to 30 September 2019, posting the statutory net profit after tax (NPAT) of $ 154.5 million, which is higher when compared to $ 202.0 million recorded in the prior year. The Group’s Cash net profit after tax (Cash NPAT) and cash earnings per share (Cash EPS) fell by 19 per cent over the same period, to $ 163.5 million and 51.3 cents per share (cps), respectively.  

The result included a significantly lower performance fees, which was down 89 per cent from $ 54.5 million in FY18 to $ 5.9 million. The base management fees also reduced by around four per cent as FUMs remained broadly steady and fee margins shrunk two basis points to 49 basis points (bps) on account of a change in the asset mix.

The Group also reported an operating profit pre-performance fees of $ 198.5 million, which was 8 per cent lower compared to prior year. The Board of the Group declared a final dividend of 25.0 cps, which took the full year dividends to a total of 45.0 cps.

FUMs for September 2019 QuarterThe company released its September quarter 2019 figures for FUM, which stood at $ 100.3 billion, of which $ 21.1 billion is from institutional, $ 8.2 billion is from wholesale, and $ 5.0 billion is from Westpac Legacy retail and $ 14.2 billion from other segments.

 

Stock Performance: The stock of PDL closed the market trading on 8 November 2019 at $ 7.840, down 1.38% by $ 0.110. The company has a market cap of $ 2.57 billion and approx. 322.8 million outstanding shares. The 52-week high and low value of the stock price is $ 9.590 and $ 6.430, respectively. The stock has generated positive returns of 4.61 % in the last six months and 3.525 on a year-to-date basis.

Platinum Asset Management Limited (ASX: PTM)

Platinum Asset Management Limited is an Australian based investment management company, that focuses on offering one core investment style and delivers portfolios of globally listed companies whose actual worth and prospects are yet to be fully recognised by the market. Recently, PTM also released the date for the annual general meeting to be held on 20 November 2019.

Funds Under Management:  Platinum Asset Management FUM as of 31 October 2019 stood at $ 24,595.93 million as compared to $ 24,612.68 million as of 30 September 2019. During October, Platinum experienced net outflows of around $ 252 million which includes the net outflows from the Platinum Trust Funds of ~ $ 212 million.

Annual Report 2019: The full year to 30 June 2019 was a challenging period for Platinum Asset Management with investment returns for most of its managed funds and portfolios lagging the broader market resulting in lower fund flows, lower investment performance fees and a consequent decline in earnings per share and dividends paid out. The Group’s average FUM for FY19 decreased by 4% to $ 25.3 billion from an average FUM of $ 26.4 billion for the previous year.

 

Stock Performance: The stock of PTM settled the trading session on 8 November 2019 at $ 4.390, down 0.454% by $ 0.020. Platinum Asset Management’s market cap is around $ 2.59 billion with approx. 586.68 million outstanding shares.

Pro Medicus Limited (ASX: PME)

Pro Medicus Limited is a medical imaging Information technology provider specialising in Enterprise and radiology information system (RIS) software to hospitals, diagnostic imaging groups, and other allied entities worldwide. The company is headquartered in Richmond, Australia and recently announced the date for annual general meeting as 19 November 2019.

Contract with Ohio State University: In early November 2019, Pro Medicus’s US-based 100%-owned subsidiary, Visage Imaging, Inc. signed a 5-year contract with the Ohio State University Wexler Medical Center (OSUWMC), whereby the company’s Visage 7 technology will be deployed at OSUWMC’s radiology departments in 7 hospitals and outpatient clinics and it will also be integrated into OSUWMC’s electronic health record. The implementation is scheduled to commence in Q2 FY20 and be completed by mid-2020.

FY19 Results: Revenue soared by 47.9 per cent for the year ending 30 June 2019 (FY19).

  • NPAT was up 91.9 per cent to $19.13 million.
  • Increase in EBIT Margins to 51.6%.
  • The company’s cash reserves increased by 28.0% to $ 32.32 million
  • Underlying Net Profit after tax was up 83.1 % to $22.74 million.

Stock Performance: The stock of PME settled the day’s trade on 8 November 2019 at $ 24.680, down 0.56% from its previous closing price. The company has approx. $ 103.98 million outstanding shares and a market cap of $ 2.58 billion. The stock has generated a positive return of 29.61% in the last 6 months and a positive return of 118.26% on a YTD basis.


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