- Diversification aids investors in earning returns while lowering overall risk, as these assets react differently during the same event.
- While choosing stocks, investors should be aware about their risk appetite and objectives, in addition to possessing good knowledge about the businesses they pick for parking their funds.
While making investment decisions, investors consider a range of strategies to build wealth and reduce the probability of losing their money. Out of several investment strategies, one is diversification, wherein, an investor parks his/her hard-earned money in different asset classes that can earn the highest return for the least risk.
In the article below, we are discussing few ASX-listed diversified stocks, covering their recent market updates. Let us check how these companies are placed amid the current market turmoil caused by the COVID-19 pandemic.
Jumbo Interactive Limited (ASX: JIN)
Jumbo Interactive Limited (ASX: JIN), operating in the online and digital lottery retail industry, on 29 June 2020, announced to have extended its 15-year relationship with Tabcorp Holdings Limited and associated subsidiaries. The parties have signed a binding term sheet concerning new reseller agreements for the next 10 years to around July 2030.
The revised agreements recognise the enlarged scale of JIN and the fundamental value of Tabcorp’s lottery licences to the company. Accordingly, JIN would pay an upfront extension fee amounting to $15 million for the term of 10 years, along with a service fee of 4.65% of the ticket subscription price.
For FY20, the company expects to have 39 large jackpots with an aggregate value of $1.57 billion and average value of $40.1 million.
The stock of JIN was trading at $11.290 with an increase of 11.561% on 2 July 2020 (AEST 11:57 AM). The last three-month return of the stock was noted at 13.96%.
Eclipx Group Limited (ASX: ECX)
Eclipx Group Limited (ASX: ECX) provides fleet leasing, management and vehicle rental services to corporates, SMEs and consumers in Australia, while serving NZ corporates and SMEs.
Recently, the company released a business update, highlighting:
- ECX experienced continued momentum in the volume of “end of lease” car sales since its last update on 22 May. Total unit sales in the month of April, May and June 2020 were better than what had been expected at the start of the pandemic.
- Eclipx expected available liquidity of around $120 million at the end of June 2020. This included cash and cash equivalents of around $95 million and $25 million revolver capacity.
- ECX has recently commenced reprioritising its focus back to new business writings over lease extensions, considering the liquidity position, together with the momentum in end of lease sales.
On 2 July 2020 (AEST 12:00 PM), the stock of ECX was trading at $1.455, moving upward by 7.38%, with the stock delivering a return of 93.57% in the last three months.
Servcorp Limited (ASX: SRV)
Servcorp Limited (ASX: SRV) is engaged in the provisioning of Executive Serviced and Virtual Offices, Coworking and IT, Communications and Secretarial Services.
SRV Reorganises US Operations - At the end of June 2020, the company announced closure of 12 locations in the United States through reorganisation. These locations include Atlanta (2), Boston (1), Dallas (2), Los Angeles (2), Miami (1), Philadelphia (1), San Francisco (2) and Washington DC (1).
The company estimated $5.5 million (US$3.8 million) as the one-off, cash cost of the reorganisation. SRV highlighted that the reorganisation does not imply that its global footprint would shrink, and the company is passively looking for locations where it can expand in early 2021.
On 2 July 2020 (AEST 12:13 PM), the stock of SRV was trading at $2.290, down 0.435% from its previous close. The stock has generated a return of 10.58% within the time span of last three months.
McMillan Shakespeare Limited (ASX: MMS)
McMillan Shakespeare Limited (ASX: MMS) is in the provision of remuneration, asset management and finance services to public and private organisations, mainly in Australia.
MMS to Acquire JV Partner’s Share in Plan Partners - Recently, MMS entered agreement to acquire the 25% interest of its joint venture partner in “Plan Partners” for a consideration of $8 million. The transaction would be financed from existing cash reserves and is likely to close on or around 30 June 2020.
Business Update and FY20 Profit Estimate - Salary packaging business of the company continues to be unaffected by the COVID-19 containment measures. MMS is focusing on extending and restructuring customers lease arrangements. New asset financing in ANZ has remained subdued.
For FY20, the company expects underlying net profit after tax in the range of around $69 million to $72 million. MMS is due to announce its financial results for the year ended 30 June 2020 on 19 August 2020.
On 2 July 2020 (AEST 12:38 PM), the stock of MMS was trading at $9.180, representing an increase of 3.495% from its previous close. The stock has generated a return of 24.23% within the time span of last three months.
Austal Limited (ASX: ASB)
Austal Limited (ASX: ASB) is engaged in the designing, manufacturing, and support of high-performance vessels for commercial and defence customers worldwide.
12th Vessel Delivered to U.S. Navy - The company recently announced that Austal USA has delivered its 12th Independence-class Littoral Combat Ship (LCS) to the U.S. Navy, from its shipyard in Mobile, Alabama.
Moreover, Austal USA is under contract for building 14 Expeditionary Fast Transport vessels (EPF) for the U.S. Navy, with 11 vessels already delivered, additional two vessels in various stages of construction and 1 scheduled.
The stock of ASB was trading downward by 1.852% to $3.180 on 2 July 2020 (AEST 12:42 PM), with its stock generating a return of 7.28% within the time span of last three months.
Perseus Mining Limited (ASX: PRU)
Perseus Mining Limited (ASX: PRU), is a multi-mine, multi-jurisdictional explorer, developer and producer of gold, successfully operating in West Africa. As per the recent announcement by S&P Dow Jones Indices, Perseus Mining Limited has been added to S&P/ASX 200 Index, effective on 22 June 2020.
PRU Proposes to Acquire Exore Resources - In an update early June 2020, the company announced to have reached a Scheme Implementation Deed to acquire 100% of the issued share capital of Exore Resources Limited at a consideration of $59.8 million, by way of scheme of arrangement.
Shareholders of Perseus and Exore are likely to be benefited from the increased strength of the combined entity. Moreover, PRU will get access (ownership) to around 2,000 km2 of highly prospective land in northern Côte d’Ivoire, after completion of the transaction. The land is close to the company’s operating Sissingué Gold Mine.
The stock of PRU was trading at $1.335, with a rise of 1.136% on 2 July 2020 (AEST 12:48 PM). The stock of PRU has generated a return of 39.68% within the time span of last three months.
Southern Cross Media Group Limited (ASX: SXL)
Southern Cross Media Group Limited (ASX: SXL) is one of Australia's major media companies, based in South Melbourne.
Funding Aid Under PING Program - Recently, the company welcomed funding of around $10 million under the Commonwealth Government’s Public Interest News Gathering (PING) Program, supporting commercial television, radio and newspaper businesses in regional Australia during the pandemic.
The company stated that the grant to eligible regional media businesses would be deployed during the 12-month period from 1 July 2020.
SXL is eligible under:
- The regional radio stream through its 78 regional radio stations.
- The regional television stream through its network of regional television licenses.
Both of these streams provide local content to communities right around Australia.
On 2 July 2020 (AEST 12:54 PM), the stock of SXL was trading at $0.172 per share with a decline of 1.714% against its previous close. The stock of SXL has generated a return of 52.17% within the time span of last three months.
MyState Limited (ASX: MYS)
MyState Limited (ASX: MYS) provides banking, trustee, and fund management services. The company, on 1 July 2020, announced to have successfully priced $25m Tier 2 subordinated debt issue.
The 10-year, non-call 5-year, Tier 2 subordinated notes include the following particulars:
- A term of 10 years, maturing on 10 July 2030
- The notes will pay interest at a floating rate on a quarterly basis, with the aggregate of 90 BBSW, in addition to a margin of 4.35% per annum
- Moody’s has given a rating of Baa3 to the notes
On 29 June, the company unveiled to have cemented its level of loan provisioning for the potential impact from the pandemic. It received an investment grade issuer credit rating of ‘Baa2/P-2’ (long term/short term) from Moody’s.
MYS expects a rise of in the collective provision and general reserve for credit losses of around $3.0 million to $4.0 million.
On 2 July 2020 (AEST 01:05 PM), the stock of MYS was trading at $4.040 per share with an increase of 2.02%.