Stockwatch: Billabong (BBG) Macquarie Group (MQG) and Perpetual (PPT)
July 31st, 2012 · Greg Atkinson · 5 Comments
The last 5 years have taken their toll on many Australian listed companies whose stocks were once considered almost a must for any respectable balanced shares portfolio. But will some of these stocks regain their former glory and move on to set new highs, or are their best days behind them? Today we will look at three shares which are in the category of former stock market high flyers: Billabong International, Macquarie Group & Perpetual Limted.
Billabong International (BBG) was once one of those companies that were held up as example of an Australian company taking on the world and winning. The company did grow from very humble beginnings into a major international brand but too much debt and too many acquisitions finally took its toll.
Billabong International (ASX:BBG) 5 year stock price chart
As the chart above shows, it has been a long slide downwards for BBG shares from just above $16 to where they closed today at $1.35. Maybe the proposed takeover by TPG International will put a floor under the share price, but just looking at the stock price chart is enough to keep me away from adding BBG stocks to my portfolio at the moment.
On the positive side the company is trading well below its book value and the dividend payout is quite high (although only partially franked) so it is a stock worth watching.
The chances however of BBG stocks being near $16 again within the next 5 years I would suggest are very slim, so my view is that this is one stock that is unlikely to relive the good old days any time soon.
Now onto one of the bluest of blue chip Australian stocks – Macquarie Group. Shares in Macquarie Group (MQG) were once tipped to break though the $100 mark and I for one thought that this was going to happen in 2007. But then along came the GFC and shares in MQG slumped to below $20 in early 2009. As of the close of market today they were trading just under $25.
Macquarie Group (ASX:MQG) 5 year stock price chart
Business conditions for Macquarie are going to be tough for this year and probably much of next year, but it’s a quality blue-chip company that looks a touch oversold to me.
At the moment MQG shares have P/B ratio of around 0.77 plus a dividend yield up near 6% and a quick look of the chart above suggests to me that this is one stock that can rally pretty strongly when the planets are aligned.
So I would put MQG onto the list of possible comeback stocks. But please note, I am not suggesting anyone buy this stock based on my ramblings.
The last stock I will have a brief look at is Perpetual Limited (PPT) which along with Macquarie Group was one of those shares which found their way into many blue-chip stock portfolios in years gone by.
Perpetual Limited (ASX:PPT) 5 year stock price chart
PPT is a stock I have not owned but one I have often thought of buying. I cursed myself for not snapping up shares in Perpetual in 2005 but now I sense I may have an opportunity to pick up a quality stock at what may turn out to be a bargain price in a few years time.
The dividend yield of around 5.7% full franked is attractive and the chart above does appear to indicate the stock price might be about to trend higher. But the P/B ratio of around 2.9 and uncertain outlook for the Australian economy will keep me on the benches for now.
Disclosure: The author of this article holds (indirectly) MQG shares.asx pe ratio, pe ratio asx 200, asx 200 pe ratio history, asx p/e ratio, price earnings ratio asx, bbg avustralya