October 17, 2024
Top 10 Stock ASX Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: ASX – Top 10 Stock in Australian Securities Exchange Index ASX 200
ASX is listed as a top 10 stock on October 17, 2024 in the market index ASX 200 because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is safely financed, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 50 (high 50% performer), Obermatt assesses an overall buy recommendation for ASX on October 17, 2024.
Snapshot: Obermatt Ranks
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View ASX Buy
| 360 METRICS | October 17, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 15 |
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| GROWTH | ||||||||
| GROWTH | 41 |
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| SAFETY | ||||||||
| SAFETY | 90 |
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| SENTIMENT | ||||||||
| SENTIMENT | 43 |
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| 360° VIEW | ||||||||
| 360° VIEW | 50 |
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ANALYSIS: With an Obermatt 360° View of 50 (better than 50% compared with alternatives), overall professional sentiment and financial characteristics for the stock ASX are above average. The 360° View is based on consolidating four consolidated indicators, with three out of four metrics below average for ASX. The only rank that is above average is the consolidated Safety Rank at 90, which means that the company has a financing structure that is safer than those of 90% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the Value, Growth and Sentiment Ranks are all below average. The consolidated Value Rank has a less desirable rank of 15, which means that the share price of ASX is on the high side compared with typical size in indicators such as revenues, profits, and invested capital. The consolidated Growth Rank also has a low rank of 41, which implies that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. Finally, the consolidated Sentiment Rank is also low at a rank of 43, which means that professional investors are more pessimistic about the stock than for 57% of alternative investment opportunities. While Safety is strong, it’s not the most critical indicator, so we suggest proceeding with caution if you are considering this stock. ...read more
RECOMMENDATION: With a consolidated 360° View of 50, ASX is better positioned than 50% of all alternative stock investment opportunities based on the Obermatt Method. As only the financing structure, namely the Safety Rank, is on the safer side and all other consolidated Obermatt Ranks are below-average, this is a riskier stock investment proposition. This is especially the case, since professional investor sentiment, the consolidated Obermatt Sentiment Rank, is also low at 43. The negative market view on ASX may be the high stock price (low value) or the low level of growth. This is a problem. As the Safety Rank is the least significant of the four consolidated Obermatt Ranks, we cannot identify enough positive facts that are visible today to make a case for this stock investment. The company may have a strong future which would justify the high stock price, but this is not visible from investor behavior today. As market sentiment is critical, you should be careful with paying more than market-average for this stock, and conduct further research into the company's future growth potential. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for ASX only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 43 (better than 43% compared with alternatives), overall professional sentiment and engagement for the stock ASX is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and above average for ASX. Analyst Opinions are at a rank of 5 (worse than 95% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 85 which means that stock research experts are changing their opinions for the better. In other words, they are getting more optimistic of stock investments in ASX. Market Pulse is also positive with a rank of 60, which means that the current professional news and professional social networks are positive in their discussions about this company (more positive news than for 60% of competitors). Only professional investors tend to be absent with a Professional Investors rank of 49, which means that professional investors hold less stock in this company than in 51% of alternative investment opportunities. Pros tend to invest in other companies. But that could also be due to the size of the company. Professional investors tend to invest in XL and XXL companies. If the company is smaller than that, that fact alone may explain why there are fewer pros present. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 43 (less encouraging than 57% compared with investment alternatives), ASX has a reputation among professional investors that is below that of its competitors. Since analysts are getting more optimistic and the professional communication channels are positive, it may be an indication of a company that has the difficult times behind it or the stocks’ value is improving. For medium to smaller companies, the positive sentiment indicators outshine the negative. ...read more
Value Strategy: ASX Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 15 (worse than 85% compared with alternatives), ASX shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for ASX. Price-to-Sales is 9 which means that the stock price compared with what market professionals expect for future profits is higher than 91% of comparable companies, indicating a low value concerning ASX's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 23, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of ASX. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 15 and Dividend Yield, which is lower than 58% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 15, is a sell recommendation based on ASX's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for ASX? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as ASX? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. ASX may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. ...read more
Growth Strategy: ASX Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 41 (better than 41% compared with alternatives), ASX shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for ASX. Only Capital Growth has a good rank of 60, which means that currently professionals expect the company to grow its invested capital more than 29% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 47 which means that currently professionals expect the company to grow less than 53% of its competitors. Profit Growth with a rank of 29 and Stock Returns with a rank of 49 are also low (below 51% of alternative investments). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 41, is a hold recommendation for growth and momentum investors. The good news from the invested capital side is surprising. A company with disappointing revenues, profits, and disappointed shareholders typically doesn't invest above average. Overall, the growth momentum for ASX is thus negative. As it is intriguing to see that company executives are optimistic about their investment policy, it is worthwhile looking into the details of the capital investment projects. They may indicate future growth and profits and thus if accompanied by a good value, a sign of good timing to invest in the stock. ...read more
Safety Strategy: ASX Debt Financing Safety very solid
| SAFETY METRICS | October 17, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 82 |
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| REFINANCING | ||||||||
| REFINANCING | 47 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 72 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 90 |
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ANALYSIS: With an Obermatt Safety Rank of 90 (better than 90% compared with alternatives) for 2024, the company ASX has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of ASX is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for ASX. Leverage is at a rank of 82, meaning the company has a below-average debt-to-equity ratio. It has less debt than 82% of its competitors. Liquidity is also good at a rank of 72, meaning the company generates more profit to service its debt than 72% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 47, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 53% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 90 (better than 90% compared with alternatives), ASX has a financing structure that is significantly safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for ASX. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: ASX Below-Average Financial Performance
| COMBINED PERFORMANCE | October 17, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 15 |
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| GROWTH | ||||||||
| GROWTH | 41 |
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| SAFETY | ||||||||
| SAFETY | 72 |
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| COMBINED | ||||||||
| COMBINED | 48 |
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ANALYSIS: With an Obermatt Combined Rank of 48 (worse than 52% compared with investment alternatives), ASX (Financial Exchanges & Data, Australia) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of ASX are low in value (priced high) with a consolidated Value Rank of 15 (worse than 85% of alternatives) and show below-average growth (Growth Rank of 41) but are safely financed (Safety Rank of 90), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 48, is a hold recommendation based on ASX's financial characteristics. As the company ASX's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 15) and low growth (Obermatt Growth Rank of 41), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 90) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
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