6 Stocks that Weathered the COVID-19 Storm - ANN, KGN, XRO, RMD, MIN, FMG

  • Jun 13, 2020 AEST
  • Team Kalkine
6 Stocks that Weathered the COVID-19 Storm - ANN, KGN, XRO, RMD, MIN, FMG

Summary

  • COVID-19 might have proven to be the worst nightmare for businesses and markets, yet many companies saw significant operational and financial growth during the pandemic.
  • The specific players that have bucked the trend either fell in the category of essential businesses or were able to exploit the opportunities that arose amidst the crisis.
  • Although these businesses remain optimistic about future growth, things largely depend on the duration of COVID-19 and the level of disruption it can cause in the future.

At a time when stock markets are undergoing turmoil, and investors’ confidence has shaken due to the COVID-19, several businesses stand strong defying all the disruptions in the business environment. Yes, you read that right!

We bring you six stocks from diversified sectors that have been on a gravy train amid the COVID-19 crisis

Kogan.Com Ltd

As a leading Australian consumer brand,  Kogan.Com Ltd (ASX:KGN) is renowned for price leadership through digital efficiency and is focused on making in-demand products and services more affordable and accessible.

Notwithstanding the COVID-19 storm, the Company’s active customers grew to 2,074,000, representing an increase of 126,000 active customers in May 2020. In addition to this, KGN’s gross sales climbed and exceeded 100% growth across 4QTDFY20 while the gross profit skyrocketed and surpassed 130% across 4QTDFY20.

The Company has drawn significant benefit from its digital retail platforms during the present scenario and has completed an AU$100 million Placement and plans to launch a Share Purchase Plan soon to raise an additional AU$15 million.

The funds raised shall be channelised towards providing the financial flexibility to respond swiftly on upcoming value accretive opportunities as the Company has a proven track record of delivering operating leverage.

KGN has a P/E multiple of 64.83x, which is quite high among the online retail industry and implies that buyers are optimistic about the future. KGN stock, at AU$13.150, was down by 0.605% intraday on 12 June 2020 with a market capitalisation of AU$1.24 billion.

ResMed Inc

A pioneer in providing innovative health solutions ResMed Inc (ASX:RMD) offers cloud-connected medical devices and comprehensive out-of-hospital software platforms to help people stay healthy.

The Company has been operating during unprecedented times posed by COVID-19 and achieved a 16% increase in its revenue to AU$769.5 million for the quarter ended 31 March 2020. In addition to this, the Company also witnessed balanced growth throughout its product portfolio, software solutions, and international markets.

With a focus on preventing COVID-19 pandemic through boosted ventilator production and continuing partnership and support of crucial international stakeholders, RMD delivered globally, leading solutions to various stakeholders in need, especially the patients.

Going forward, RMD is optimistic about its ability to endure through a challenging health and economic environment to deliver for all its stakeholders while having well-positioned growth prospects, business continuity plans, and robust balance sheet.

RMD stock closed the day’s trade on 12 June 2020 at AU$23.360, down 0.97% with a market capitalisation of AU$33.86 billion.

ALSO READ: 5 Stocks that could be winners post COVID-19 containment

Ansell Limited

With the outbreak of COVID-19, the world leader in providing superior health and safety protection solutions, Ansell Limited (ASX:ANN) experienced strong demand for its hand and body protection product, AlphaTec®, as well as for many of its Microflex® & TouchNTuff® single-use examination gloves and for Gammex® & Encore® surgical gloves.

Moreover, ANN’s products are tested and certified to recognised standards for protection from infective agents. COVID-19 was declared as a global health emergency by the WHO, and there was a shortage of safety and protective equipment across the globe for doctors, patients, and the public.

Companies had doubled the production for safety equipment seeing the spiralling demand for these products and shortage at the supply end.

However, the Company expected that the highly dynamic COVID-19 situation might lead to an increased likelihood of delays and likely disruptions to transport and local distribution.

Despite all the uncertainties, ANN reiterated its FY20 EPS guidance range of US112¢ to US122¢ based on the order pipeline and tracking of the business performance.

ANN stock settled at a price of AU$34.830 on 12 June 2020, down 1.25% with a market capitalisation of AU$4.54 billion and recorded its 52-weeks high price of AU$36.310 on 05 June 2020.

Xero Limited

Cloud-based accounting software provider, Xero Limited (ASX:XRO) has delivered top-line growth with positive free cash flow and net profit outcome taking modest impact from the COVID-19 led restrictions on XRO’s operational and financial performance for the year

Defying the significant impact of COVID-19, as at 31 March 2020, the Company recorded a 30% growth in operating revenue to NZ$718.2 million as compared to FY19 and an increase of 26% in total subscribers to 2.285 million.

Moreover, Xero witnessed an improvement of NZ$30.5 million its first full-year net profit after tax compared to a NZ$27.1 million loss in FY19, guided by continuing growth in improved gross margin, disciplined management of operating costs, and operating revenue.

The Company has laid focus on maintaining the quality and continuity of its 100% cloud-based products and services and engaging in the swift roll-out of a variety of new customer and partner support services, including immediate customer information needs, targeted product development etc.

XRO’s long-term strategic aspirations remain unchanged despite the uncertainty posed by the COVID-19, and the Company is strongly committed to its three strategic priorities, which are as follows:

  • To drive cloud accounting around the world
  • To grow the small business platform
  • To continue to build for global scale and innovation

 

XRO stock settled at a price of AU$83.770 on 12 June 2020, down 1.18% with a market capitalisation of AU$11.85 billion.

Fortescue Metals Group Limited

A global leader in the iron ore industry, Fortescue Metals Group Limited (ASX:FMGwitnessed a robust demand for its products delivering average revenue of US$73/dry metric tonne and its major growth projects achieved significant milestones in Q3.

FMG has been highly responsive towards global health as well as economic crisis due to COVID-19 and had implemented several robust plans to tackle the same. Moreover, FMG delivered strong operating performance and record shipments with a 10% increase as compared to the pcp.

Going forward, the Company has upgraded its guidance for FY20 shipments to 175 - 177 million tonnes based on year to date robust operating performance.

As a vital supplier of iron ore to China, Fortescue is experiencing robust demand for its products and expects a continuous upturn in economic activity in the industry environment, despite the prevailing uncertainty. Moreover, iron ore demand from China was driven by persistent, robust steel production and decreased consumption of scrap steel.

Demand for FMG’s products was supported by strength in steel production and with average revenue of US$72.69/dmt in Q3 FY20 and the Company’s dividend policy remains to pay-out a ratio of 50–80% of full-year NPAT.

FMG stock settled at a price of AU$14.810 on 12 June 2020, down 0.47% with a market capitalisation of AU$45.58 billion.

Mineral Resources Limited

Perth-based leading mining services provider, Mineral Resources Limited’s (ASX:MIN) operations were not materially impacted by the COVID-19 crisis during Q3 FY20; however, its impact on the remainder of the year remains unclear, especially on-demand and consumption for either iron ore or lithium.

Moreover, the mining services business of MIN has continued to perform strongly, and the Company anticipated for second half mining services EBITDA to be like the first half which was AU$172 million based on the assumption that there is no disruption from COVID-19 over Q4 FY20.

Ever since the disease outbreak, MIN has been keeping up with the developments across the globe. The Company implemented several measures to ensure health and safety of its employees at various sites, resulting in improved safety performance with a Total Reportable Injury Frequency Rate (TRIFR) of 3.36 for the last twelve months.

Some of the significant achievements of MIN during the quarter were: 

  • MIN’s Iron Valley produced 1.7 million wmt of product
  • Mt Marion Lithium Project produced 111,000 wmt and shipped 99,000 wmt of spodumene concentrate
  • MIN agreed to a series of arrangements with BCI Minerals Limited (ASX:BCI) that shall enhance MRL’s iron ore footprint in the Pilbara region

 

MIN stock settled at a price of AU$20.440 on 12 June 2020, down 0.44% with a market capitalisation of AU$3.84 billion. The stock is trading close to its 52-weeks high price of AU$21.190. 

 


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