Stock Picks
As summer approaches, it’s time to light the barbie, grab a coldie and brush up on your cricket lingo this week while you play the long game with these two ASX treasures.
Here are 2 ASX stocks to watch over the long term:
There is no contender for Helium (He); ask the South African-based, dual-listed alternative and renewable energy company Renergen Limited.
Renergen sits on the world’s richest Helium deposits compared to other role-players, but what is even more impressive is Renergen’s helium concentration is at unprecedented levels. There is no substitute for the natural gas, which makes it extremely sought after, and could see an increase in demand over the coming years as most things in our everyday lives uses helium.
Another positive and innovation by Renergen is the creation of a helium spot market with Delaware Inc helium trading company, Argonon. The forward sale agreement to supply helium to Argonon’s platform spans 19 years which would see a liquid helium spot accessible to all investors. As per the latest company announcement “a portion of funds from pre-sale, should they be made, will be to be used to accelerate Phase II drilling at Virginia Gas Project without need for equity issue”
This will undoubtingly raise capital in the short term not to mention favorable exploration outcomes from Evander and the CryoVac initiative which could add to the bottom line. Fintech juggernaut Purple Group has been tasked to create blockchain technology to track and manage the helium units as they are exchanged and traded.
- Share Price: AU$ 2.50
- Market Cap: AU$ 305.18 million.
- P/E Ratio: N/A
- P/B Ratio: 13.1x
- Dividend (Annual Yield %): N/A
- Franking: 0%
- 52 Week range low of AU$ 0.99 and AU$ 2.99 share high.
Outlook – Demand for natural gas is still high on the pecking order but could see significant additional supply hit the market next year. As Hannam & Partners 2020 report indicated, demand could also start to slow, which showed growth expected in the 2-5% range.
Looking to the future of innovation as the space race heats up and other dependencies on renewables increase in the not-too-distant future, Renergen’s future looks exceptionally bright.
Technical Outlook – After reaching an all-time high at AU$ 2.99 back in April, the price action moved significantly lower in a channel (yellow dotted line). Positive fundamental factors have seen the price action breakout from this downward channel and move higher supported by the 50-day simple moving average of price (blue line). We might expect higher prices beyond the all-time high mark but are not excluding the fact that INVSTRs might start to take some profits in the short term.
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Ramsay Health Care Limited (RHC)
Health care comes back into focus as the NSW Ministry of Health lifts COVID-19 restrictions on non-urgent elective surgery, which should boast well for Ramsay Health Care Limited.
Ramsay Health Care Limited, an owner and operator of hospitals for public and private patients, also operates facilities across 460 locations across the globe. This makes Ramsay one of the largest hospital chains in the world, which also focuses on private sector surgeries, rehabilitation, and psychiatry.
The hospital chain's latest full year (FY 2021) earnings report impressed and showed strong profit growth despite ongoing pandemic disruptions to the business. Revenue increased 3%, while statutory profit jumped 58.1% to $449 million. Ramsay’s earnings per share increased 47.6% to 192.6 cents and Earnings Before Interest and Tax (EBIT) lifted 29.1% to AU$ 1,132.6 million.
- Share Price: AU$ 69.20
- Market Cap: AU$ 15.44 billion.
- P/E Ratio: 37.3x
- P/B Ratio: 4.0x
- Dividend (Annual Yield %): 2.18%
- Franking: 100%
- 52 Week range low of AU$ 58.61 and AU$ 72.41 share high.
Outlook – As the world returns to “normal” and some weight has been lifted of Ramsay’s shoulders by the Ministry of Health, uncertainty about COVID-19 is still present. The hospital operator did, however, despite these challenges, post solid earnings for the year across all jurisdictions.
“Data from the company shows significant pent-up demand existing for elective surgical and non-surgical patients due to lockdowns, the focusing of resources on COVID, and general public aversion of hospitals.” - Henry Fung.
Technical Outlook – The price action on Ramsay Health Care Limited has seen some upside momentum after the pandemic lows back in March 2020. Mostly the price action has consolidated sideways under the AU$ 68.35 resistance level as fundamental factors played out over the last year. The stock has become attractive for the famed “Buy the Dip” crowd and could see the average analyst price target at AU$ 73.00 (red line) reached over the next quarter.
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and want to know more about our other ASX stock picks?
Read: 2 ASX Stocks to Watch in October
Take note: stock data was taken on 26 October 2021 after the ASX close.
Sources: EasyResearch, Renergen Limited, Ramsay Health Care Limited, MF & Co Asset Management, Kerry Sun, S&P Global, Koyfin, Henry Fung, Australian Securities Exchange (ASX), BusinessLive, JSE SENS, Reuters.
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Barry is a market analyst with GT247, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table.
