I will quickly review four very different ASX listed stocks to see if we can draw any conclusions from how their shares prices have been moving. The stocks I will look at are AGL Energy, Cedar Woods Properties, Domino’s Pizza and Skilled Group.
First up let’s have a look at AGL Energy which is a major supplier of energy to retail & business users. It is also Australia’s largest private owner, operator and developer of renewable generation assets.
AGL Energy (ASX:AGK) 1 year stock price chart
AGL Energy is the type of stock I would put in the defensive category. I don’t expect it to quickly rise in value or come crashing down either. Hopefully over the years it will pay a reasonable dividend and gradually the share price will edge upwards.
The retail share offer seems to have given the stock a boost in July but since then, its share price has slid back down again and has basically not done much this year. That’s pretty much how I would expect a defensive stock to perform in the current market.
Next up a stock in the real estate and property area.
Cedar Wood Properties (ASX:CWP) 1 year stock price chart
Cedar Wood Properties is an ASX listed company with exposure to the residential and commercial real estate markets in Western Australia and Victoria. So generally speaking, if the property markets in those two states were on the rise we would expect to see, all things being equal, some rise in the company’s share price.
The share price for CWP is up around 13% over the last 12 months but I would put much of that rise down to the interest rate cuts by the RBA. So in short yes the share price is up, but I wouldn’t go as far as saying that this is an indication of a property rebound just yet.
Now onto one of the most defensive of all the defensive stocks – Domino’s Pizza.
Domino’s Pizza Enterprises Ltd (ASX:DMP) 1 year stock price chart
DMP is a stock that constantly surprises me and makes me rue the day I didn’t pick up some shares when they were around $4 a few years ago. It’s a defensive type stock that has some life in it and proves that although people might be cutting back on their spending – they still like their pizza.
Maybe if discretionary spending picks up this stock may actually fall back a touch as people dine out more? In any case this is a stock worth watching and I will review the DMP share price chart again early next year.
Finally a quick look a company with exposure to staffing and outsourcing services – Skilled Group.
Skilled Group (ASX:SKE) 1 year stock price chart
Skilled Group has around 170 offices not only in Australia & New Zealand, but also in the UK, Malta and UAE. It is a leading provider of staffing solutions which means companies basically outsource work to it or it provides the staff to do the work on a contract basis.
Clearly the share price has been given a lift this year which appears amongst other things – related to the sale of a business, a restructure, reduction of net debt and an increase in sales revenue.
Mining, oil & gas related services make up more than 50% of the company’s revenue so it’s going to be interesting to see how these business areas hold up over the next few years. I don’t follow the stock that closely so if anyone is interested in looking into SKE in more detail they can find the 2012 Full Year Result Presentation here.
My view is that we are still in a market which lacks any real direction. Yes we can see gains in three of the four stocks over the last 12 months, but we need to take into account the rate cuts by the RBA and the fact that these stocks have probably rallied as the overall stock market has, from being over-sold a touch 12 months ago.
I am still not convinced that the Australian market or these stocks can hold onto most of the gains over the next few months – but I will be quite happy if I am proven wrong!
This article was written by Greg Atkinson who is the editor of Shareswatch Australia and the Managing Director of Ohori Capital. He is originally from Australia but currently resides in Japan. He can be followed on twitter via @GregAtkinson_jp