Macquarie: Why weak momentum stocks on the ASX are set for a rebound

LiveWire06-26

Macquarie says the end of the financial year presents an opportunity to buy stocks with weak momentum and get out of stocks with poor earnings growth. In his strategy 'Trading the Financial Year-End",...

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Bluescope Steel  is highlighted as the only ASX 50 stock that has an OUTPERFORM rating but fell at least 5% in FY24. The stock is currently down 3.3% in the last twelve months as volatile economic conditions have led to wea","collect":0,"end_time":0,"defaultTopTitle":"livewiremarkets.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"CRN.AU":"CORONADO GLOBAL RESOURCE-CDI","BK7511":"ESG概念","BK7506":"金矿股","SQ2.AU":"Block Inc","BK7007":"医疗保健设备","BK7033":"数据处理与外包服务","BK7153":"综合零售","IPH.AU":"IPH LTD","BK7046":"综合性资本市场","BK7124":"保健护理服务","BK7158":"交易和支付处理服务","HVN.AU":"HARVEY NORMAN HOLDINGS LTD","CNU.AU":"CHORUS LTD","DOW.AU":"DOWNER EDI LTD","DEG.AU":"DE GREY MINING LTD","BK7015":"非传统电信运营商","RMD.AU":"Resmed DRC","KAR.AU":"KAROON ENERGY LTD","BK7064":"综合支持服务","BK7503":"科技股","WES.AU":"WESFARMERS LTD","WBC.AU":"WESTPAC BANKING CORPORATION","BK7142":"石油与天然气的勘探与生产","BK7016":"应用软件","FBU.AU":"FLETCHER BUILDING LTD","SPK.AU":"SPARK NEW ZEALAND LTD","BK7108":"石油天然气设备与服务","ARB.AU":"ARB CORP LTD","MQG.AU":"Macquarie","CCP.AU":"CREDIT CORP GROUP LTD","BK7501":"新冠治疗股","BK7104":"黄金","OML.AU":"OOH!MEDIA LTD","BK7051":"机动车零配件与设备","BK7093":"消费信贷","SHL.AU":"SONIC HEALTHCARE LTD","BSL.AU":"BLUESCOPE STEEL LTD","BK7135":"综合性银行","AIA.AU":"AUCKLAND INTL AIRPORT LTD","ANZ.AU":"ANZ GROUP HOLDINGS LTD","RHC.AU":"RAMSAY HEALTH CARE LTD","RWC.AU":"RELIANCE WORLDWIDE CORP LTD","CBA.AU":"COMMONWEALTH BANK OF AUSTRAL","BK7507":"资源股","BK7129":"钢铁","SGM.AU":"SIMS LTD","WOR.AU":"WORLEY LTD","WTC.AU":"WISETECH GLOBAL LTD","BK7042":"综合电信业务","BK7041":"综合货品商店"},"translate_title":"麦格理：为什么澳大利亚证券交易所势头疲软的股票将出现反弹","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"OML.AU":1,"BSL.AU":1,"CBA.AU":1,"CCP.AU":1,"CNU.AU":1,"CRN.AU":1,"DEG.AU":1,"DOW.AU":1,"FBU.AU":1,"HVN.AU":1,"IPH.AU":1,"KAR.AU":1,"MQG.AU":1,"ANZ.AU":1,"RHC.AU":1,"RMD.AU":1,"RWC.AU":1,"SGM.AU":1,"SHL.AU":1,"SPK.AU":1,"SQ2.AU":1,"WBC.AU":1,"WES.AU":1,"WOR.AU":1,"WTC.AU":1,"AIA.AU":1,"ARB.AU":1},"content_text":"Macquarie says the end of the financial year presents an opportunity to buy stocks with weak momentum and get out of stocks with poor earnings growth.\nIn his strategy 'Trading the Financial Year-End\", Macquarie's Head of Global Quantitative Research John Conomos, outlines a two-step strategy that seeks to benefit from predictable seasonal effects around year-end.\nJune tends to see stocks with low momentum and high risk underperform as investors seek to minimalise capital gains tax liabilities, according to Conomos, while stocks with good momentum and low volatility tend to outperform as they may be kept for year-end window dressing.\nShifting to July, these trends have the tendency to reverse as \"investors adopt a longer-term perspective and become more risk-tolerant.\"\n\n\n\n\n\n\n\n\n\nSource: Macquarie\nWeak Momentum Picks\n\nBluescope Steel (ASX: BSL) is highlighted as the only ASX 50 stock that has an OUTPERFORM rating but fell at least 5% in FY24. The stock is currently down 3.3% in the last twelve months as volatile economic conditions have led to weaker steel prices. \"We still expect earnings recovery from this juncture - recovering steel prices (and spreads) should support this,\" Macquarie analysts said in a note dated 15 April.\n\nFrom the Mid Cap 50, Worley (ASX: WOR) is an OUTPERFORM-rated stock that fell 6.8% in the past twelve months, with above-average volatility. The company has faced a number of setbacks including challenged project economics (e.g. hydrogen), upcoming UK and US elections creating uncertainty around future government funding and a flat backlog over the two months to 31 February 2024.\n\nA few volatile ASX 100-200 that fell in FY24 and are currently rated OUTPERFORM include Sims (ASX: SGM), Credit Corp (ASX: CCP) and Karoon Energy (ASX: KAR).\n\nMasked decliners \nThe report coined the term \"masked decliners\" for stocks that outperformed in FY24 but the gains were driven solely by price-to-earnings expansion. In other words, the price went up but earnings (or earnings expectations) did not. \nThis group includes:\n\nANZ (ASX: ANZ)\nCommonwealth Bank (ASX: CBA)\nWesfarmers (ASX: WES)\nWestpac (ASX: WBC)\nWisetech (ASX: WTC)\n\n\"In relative terms, Banks are the second most expensive sector (after Tech) with PE 2.6 standard deviations above average,\" the report said.\nHidden growth\nThis refers to a handful of stocks where underperformance has masked an improvement in FY25 earnings expectations. The ASX 100 stocks rated OUTPERFORM for this criteria include:\n\nResmed (ASX: RMD)\nBluescope Steel\nBlock (ASX: SQ2)\n\nIn terms of small caps, the OUTPERFORM-rated hidden growth stocks include: \n\n\nCoronado Global Resources (ASX: CRN)\n\nIPH (ASX: IPH)\n\nDe Grey Mining (ASX: DEG)\n\nAuckland International Airport (ASX: AIA)\n\nNew Zealand exposure, H2 skew\n\"Companies with high NZ exposure have had a high number of negative earnings announcements since the start of May,\" the report said. \n\"Downgrades highlight the cost-of-living pressures as a cause of weaker consumer sentiment and spending. A weakening jobs market and concerns about house price have also weighed on the consumer.\"\nThe stocks with 60-100% of revenue exposure to New Zealand include:\n\nSpark New Zealand (ASX: SPK)\nChorus (ASX: CNU)\nAuckland International Airport\nFletcher Building (ASX: FBU)\n\n\nA few stocks with moderate NZ revenue exposure that could potentially be negative impacted included Harvey Norman (ASX: HVN) (36% of revenue from NZ), oOh Media (ASX: OML) (12.9%) and ARB Corp (ASX: ARB) (10%). Macquarie is also fairly concerned about companies with a high second-half earnings skew, accompanied by consensus earnings downgrades. The top suspects were:\n\nDowner (ASX: DOW)\nSonic Healthcare (ASX: SHL)\nReliance Worldwide (ASX: RWC)\nRamsay Healthcare (ASX: RHC)\n\n\n\n\nNever miss an update\n\n    Enjoy this wire? 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