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In the present situation, created by critical global events such as COVID-19 pandemic, and the fluctuations in oil prices, the investors seem to be stuck in a quandary concerning their investment decisions. The predicament has left the market participants wondering where to invest their hard-earned money.
While the economies are putting in their best efforts to come out of the woods, most of the investors are increasingly resorting to safer options such as putting their money in bank deposits, that are likely to generate consistent returns albeit at a lower rate. However, this does not offer a solution to the ones seeking better returns over a period.
In a bear market where almost all the sectors are struggling to stay afloat, it makes sense to look at companies that have strong fundamentals and excellent strategies in place to steer the business through these difficult times. Let us look at some diversified ASX-listed stocks which possess decent fundamentals and could do tackle the coronavirus storm better than the rest.
Metcash Limited (ASX:MTS)
Metcash Limited works as a wholesaler to independent retailers in food, grocery, liquor, hardware and automotive industries.
Recently, on 30 March 2020, the company announced that Allan Gray Australia Pty Ltd and its related bodies corporate have made a change to their substantial holdings in the company. The current voting power remains at 12.51% as compared to the previous voting power of 13.59%.
Robust Financial Position with Decent Growth in Topline
Metcash recently notified the market with its financial and operational performance for the six months ended 31 October 2019 and outlined the following:
- Reported Group revenue for the period witnessed a rise of 1.6% to $6.3 billion excluding charge-through sales. MTS’ revenue for 1H FY20 stood at $7.21 bn, reflecting a rise of 0.5 percent, along with increase in the Food and Liquor pillars division’s sale, which was partially offset through a decrease in sales from Hardware division. The Board of MTS has paid a fully franked interim dividend amounting to 6.0 cps on 23rd January 2020.
- Also, MTS’ hardware pillar division has done well with increase and cost programs largely offsetting the negative effect of the slack in construction work.
- Moreover, the company is optimistic about the market fundamentals for Hardware over the medium to longer term.
Metcash, as part of an industry that is thriving at the moment, is likely to have a decent 2020 despite the tumultuous first quarter.
Do Read: How this COVID-19 panic is creating opportunities for retailers?
The stock of MTS closed the day’s trading session at $2.800 per share on 8th April 2020, indicating a fall of 1.06% against its previous closing price. The market capitalisation of Metcash stood at $2.57 billion with ~909.26 million outstanding shares. The annual dividend yield of the company stood at 4.59%. During the last three months and six months, the stock of MTS has provided returns of 9.27% and -2.08%, respectively.
Fortescue Metals Group Ltd (ASX:FMG)
Australia based, Fortescue Metals Group Ltd is involved with activities like mining, processing and transportation of iron ore for the purpose of export from its deposits within the Pilbara region of WA. To protect the health and safety of its team and contribute to efforts to contain the spread of COVID-19 throughout the community, the company has implemented and expanded several measures including:
- Arrangement of work from home for its team members in order to promote social distancing.
- It has relocated non-critical site-based employees to work from home.
During 1H FY20, the company reported record production and shipments throughout its operations, which helped the company in generating revenue amounting to US$6.5 billion at an average realised price of US$80/dmt.
The company possesses a strong balance sheet along with debt facilities, which are structured on low cost, investment grade terms and conditions. FMG had available liquidity amounting to US$4.3 billion as on 31 December 2019. This comprises cash on hand of US$3.3 billion and US$1 billion available from the revolving credit facility.
On the outlook front, FMG’s activities like mining, processing and shipping are in accordance with its outlook for FY20 period of shipments towards the upper end of its guided range between 170 mt – 175 mt.
Iron ore prices have remained strong in recent months and look likely to continue the trajectory. The steady prices will act as a tailwind for FMG in the future.
The stock of FMG closed the day’s trading session at $11.250 per share on 8th April 2020, indicating a fall of 1.489% against its previous closing price. The market capitalisation of Fortescue Metals stood at $35.16 billion with ~3.08 million outstanding shares. The annual dividend yield of the Company stood at 8.76%. During the last three months and six months, the stock of FMG has provided returns of 6.83% and 28.17%, respectively.
CLINUVEL Pharmaceuticals Limited (ASX:CUV)
CLINUVEL Pharmaceuticals Limited is focused on the development of its proprietary first-in-class drug SCENESSE®. The Company recently announced that it is planning to roll out its novel drug SCENESSE® in the USA with first patient to be treated post 15 April 2020.
CUV, recently released its results for the six months ended 31 December 2019 (1H FY20) and outlined the following:
- It delivered net profit amounting to $1.059 million during the period, which proved as eighth consecutive half year net profit result. It witnessed a rise of 11% in its topline, which stood at$9.971 million.
- CLINUVEL managed to finish the half-year with the strong balance sheet, which comprises of CUV’s cash noted at $57.432 million, net equity amounting to $58 million and zero debt.
- As per the key personnel, during 1H FY20, the Company has planned to establish cash reserves to accommodate for any economic downturns, permitting CUV to go ahead with its plans without substantial concerns about building a promising business.
- The European business of CUV has continued to reflect revenue growth from distributing SCENESSE® for the prevention of phototoxicity in adult patients with erythropoietic protoporphyria.
Do Read: Why these two healthcare companies are trending among industry?
The stock of CUV closed the day’s trading session at $20.00 per share on 8th April 2020, indicating a fall of 3.382% against its previous closing price. The market capitalisation of CLINUVEL stood at $1.02 billion with ~49.41 million outstanding shares. The annual dividend yield of CUV stood at 0.12%. During the last three months and six months, the stock of CUV has provided returns of -27.65% and 23.62%, respectively.
Evolution Mining Limited
Evolution Mining Limited (ASX:EVN) is involved with the activities related to mining of gold. It is focused on the operations of its six fully owned gold mines. EVN recently wrapped up the acquisition of Red Lake Gold Mine for the consideration of US$375 million as per the agreement with Newmont Corporation.
The Company has available liquidity of around A$510 million, which comprises of cash balance of around A$150 million and an undrawn three-year revolver amounting to A$360 million after completing the acquisition transaction and the payment of the interim dividend of A$119 million on 27 March this year.
On the outlook front, EVN is planning to decrease unit processing costs by making an investment in Campbell Mill in order to enhance reliability and utilisation with the objective of increasing throughput to over 1Mpta by FY23 period.
The stock of EVN closed the day’s trading session at $4.460 per share on 8th April 2020, indicating a rise of 1.364% against its previous closing price. The market capitalisation of Evolution Mining stood at $7.5 billion with ~1.7 billion outstanding shares. The annual dividend yield of the company stood at 2.95%. During the last three months and six months, the stock of EVN has provided returns of 14.88% and -5.98%, respectively.
