technicals vs fundamentals | the call: Thursday 25 June

[Music] Hello and a warm welcome to the call. You know the deal 10 stops picked by you to expert guests over 60 minutes and today I have with me in studio a familiar face Howard Coleman from team invest great to see you Howard. And his very first time on the call as well we have David Bird from mastering the markets welcome to the call David. Thanks for having me. All right well we'll get straight into it and our stock of the day today is Echo IQ and ProMedica has signed a binding agreement with the artificial intelligence medical technology company under the arrangement. ProMedica will invest an initial 10 million Australian dollars in Echo IQ through secured convertible notes. There is also an option to invest for the 10 million dollars if Echo IQ receives FDA clearance for its heart failure detection product. ProMedica will also become a reseller of Echo IQ's products to US healthcare customers. Now RBC Capital has called it a strategically logical partnership with initial analysis suggesting visage and Echo Solve as complementary platforms. Visage serving as the imaging and workflow layer and Echo Solve serving as the AI-driven diagnostic intelligence layer on top. A very impressive response from the market Howard does it meet your filters? No Echo IQ certainly doesn't you know it's been listed for 10 odd years it never makes any money at runs at the loss every year the losses get bigger every year than the year before. So from a point of view of looking at it as a company it's not a business really it's an idea so far that will hopefully make money somewhere down the track. But the big change of course is ProMedica's having put some money into it and ProMedica's having the marketing cloud actually market it but you know if you're going to be investing you're probably a lot smarter investing in ProMedicus than your own these various little things like 40x and ERQ. It looks as though that's the direction ProMedicus is going the same as they didn't develop their own visage software they bought it many years ago and they've done wonderfully well with it. I think we'll probably see ProMedica's making other little acquisitions or not acquisitions to start with little investments that will turn into the money a piece of the company helping that company market and probably long term acquiring them I would think but I wouldn't invest in ERQ because if it doesn't make it you've lost all your money whereas if you invest in ProMedica's you're in a business that's a proven business already and you're going to piece the upside in ERQ anyway. All right so this will be good void from you if you had it and you saw that 35% jump today what would you do? Say thank you Mr. Marker. I'll hit my mind. I'll tell you. All right David what do you think about EIQ? Yeah so there's strategic investment from Mekeresis obviously a major positive and it validates the EIQ technology it kind of turns a little bit more from a story to a little bit something more. The potential for ProMedica's to become a reseller will give an EIQ that access to the large hospital network etc is obviously a good thing. The existing product security and C strong broke thing in customer usage and the big catalyst would be the FDA decision that would be likely around that might link it a little bit more but I'd have to agree with Howard here to me that gap up is a little bit worrying because it's gaped up and it's then stayed stagnant. So to me there's different types of gaps is what's called a breakaway gap and an exhaustion gap. That to me looks like an exhaustion gap which means that the market is actually using it for a catalyst to sell into but we won't know obviously till more data comes in but if that gap closes then that is definitely a sign of an exhaustion gap which means that it's probably the end of the trend and you're going to get a pretty decent retracement here so I'd be really keeping an eye on that and if that gap gets filled then that is the market saying thank you very much I'm taking my profits on this news event. So would you say then a sell as well? I would say so yeah. All right well kicking it off with a double sell for the first stock of the day which is ECOIQ there and basically Howard saying not quite a business yet both my guess saying that they would have more interest here in ProMedicus rather than EIQ and looking for a catalyst as well into when you might buy in would be the FDA decision according to David but looking at the technicals he says that gap up is quite worrying and could be the end of a trend so a sell there for ECOIQ. Let's dive straight into the first five stocks as picked by you. Yanko came from to us rather from Roman we also have Transurban. Tony asked for BAPCOR, Tyler asked for Accent Group with a very thoughtful question we do love those thoughtful questions and Margot came through with a call for calls I think that was the second stock that Margot has asked us to get into so thank you so much Margot let's kick it off though with Yanko and this came to us from Roman so oh look you get off with you again Howard it's generating strong cash flow here is it attractive on evaluation metric? Well the problem with coal companies in Australia particularly is firstly we don't know what's going to happen to the coal price. Anybody who tells you in advance what a commodity price is going to be doing sometime well into the future is either guessing or dishonest because there's no way of knowing what we do know about coal is 60 years ago and it really is 60 when I was the first year university student we had a professor who told us we were doing physics and maths and applied maths that the world ought to get rid of burning dirty coal and we were all enthusiastic about that and I remember a whole big student demonstration that I took part in to get rid of coal being used for you and you and Howard absolutely we were all in those days long here you know the whole that was actually second year first year we had a wee tie still but it changed the following year and but coming back to the coal story since then world consumption of coal and production of coal has continued rising year after year last year was a new record that's despite the Glasgow climate summer summit bow and talking about we're not going to burn coal the world is burning more coal every year than the year before except it's buying it from somewhere else Australia is saying we actually don't mind anymore than we can help only the minds of the currently going can go on we don't want any new ones because we're going to be good in the rest of the world is mining more it's a bit like Britain at the moment where they don't drill anymore in the North Sea for oil they buy their oil from Norway which drills in the North Sea for oil so Britain can claim look how well we're helping the climate rubbish they're not helping the climate they're using exactly the same amount of oil they would use if they drilled it themselves they're just paying more from it and letting Norway make a profit we're doing the same other countries are making more profit so from a young coal point of view yes it's doing well at the moment but we don't know what the coal price will be tomorrow we know government is more likely to make it difficult for them to expand than make it easy for them to expand so where's the long-term growth coming from but you do get quite a decent dividend because it's on a reasonably low-peer ratio of about 15 so you know if you're looking for a dividend and you think the coal price will stay high young coal may be a good one but they go in the too hard basket for team investment members because we can't predict we want own companies that we can predict over the next five years how they're going to do or at least reasonably accurately with 85% certainty and young coal we really can't and that's not fall to the young coal it's just the industry it's in so an avoid yeah an avoid all right David your thoughts on the young coal yeah so the Kestero acquisition was the big catalyst and even with that acquisition it's actually so it got quite a strong balance sheet as well stable production reliable dividends good payout ratio 55% but the market is waiting for that dealer completion for that net for those next results so it was looking really really good at the beginning of the year when it broke out to that new high and I have to admit I was actually on it then but I actually sold it recently once it started to come back in because once those sellers didn't become buyers I what became very cautious and right now it's in this mid range I I'd be kind of looking to see if it gets down to that kind of $4.45 range and if those buyers start to step up there that's where I might come become interested again so I'd say it's a hold for now but it is one that I believe will go high in the long run I'm very bullish on the energy sector in the coming decade I believe you know everyone's very bullish on AI AI needs data centers data centers need energy with everything's going on with the wall we're going to be going into energy deficit now and yeah that supply and demand dynamic is going to shift and I think coal will be part of that that that bull market so wouldn't buy now but I would if it started to head down at about $4.40 to $5.40 as a buy all right let's stick with you David and talk about the second stock transfer of an T-City. So we've got traffic growth and normalising somewhat. Do you think we can see some meaningful shareholder returns? Yeah, definitely. I think the environment that we're moving into is people are going to start moving from, "I'm going to pay for tomorrow's earnings, so I'm only going to pay for what's now." That's why I believe someone like Howard at TuneVest, they'll do extremely well in this coming because they've got that Warren Buffett approach. So if you look TCL here, they're breaking out into a new hire. It's been range bound for a long time now. There's an old saying, bigger the base, bigger the explosion. That little red circle you've got there, that's that final liquidity grab where you come down and get all of the stop losses. And we are just making a new hire now, but that 15. So it's looking very good. As long as it stays above that $3.00 zone, I believe it will stay in a bull market. And if you pull up the adjusted for dividends, because most people come to TCL for the income, not for the growth, you can actually see that it's making a new hire right now. And it actually already has broken out to new hire. Turn those old sellers into buyers. And so this for me is a big buy. I have it in my portfolio myself. I collect a nice dividend along the way, but also get that growth. And with high inflation, TCL can actually pass that inflation into their prices anyway. So they've got that pricing power as well. Hey, Cordy Warren Buffett, I called you a hippie. I don't mind either. I was one. Well, I wasn't really a hippie. You've gone from a hippie to a blog, but I looked like one because my hair was long. Everybody said it was long at the time. I wasn't really a hippie. All right. What do you think about Trans-Evon? Look, the problem with Trans-Evon is it's hugely heavily loaded with debt. And what David called a dividend, it's like a dividend in that you get a payment from the company. But most of the money you're getting from the company is actually capital. Because this company only makes a tiny little bit of profit every year, and it pays out of the dividend much greater than its profits. Now, if it wasn't listed on the stock market, imagine I ran a little grocery store, dry cleaner restaurant, whatever. And I paid my shareholders more money than I made in profits every year. It wouldn't take terribly many years and I'd go broke. Now, the only reason they don't go broke is every now and then they are the sell and asset, or they do a capital raising. So, it's really a bit of a force, the money they give you. It's a case of financial engineering, huge debt burden. And our team-invest members would look at it and say, "This doesn't pass the Buffett approach." Yes, the payout is nice, but it's a payout from a nonsensical base. And, you know, I can't imagine why the Buffett looking seriously at this in all would be. So, if you've not ever been able to hold it or you just don't want it at all. You don't want companies with large amounts of debt. You don't want companies that are paying you money through financial engineering. Because there's no way of predicting that that financial engineering can go on forever. Hi, Andrew here. Did you know you can get your stock picks straight to the front of the queue and to the guests you choose if you become an Osbus contributor? It's our small way of saying thanks for your support. The link is in the show notes. And while I've got you, we'd love it if you could leave us a review. Thanks for listening. All right, stock number three then. And I might stick with David to kick it off as well. So this is Bap Corps and came to us from Tony. So it has faced somewhat operational challenges, weaker earnings. Do you think David, we can see a turnaround executed maybe from the management here? So yeah, trading remains very difficult for Bap Corps. Turn around is lost momentum and unfortunately the 2026 guidance was cut as well. So I'd say be very, very cautious until earnings start to improve. And if you pull up the chart there, you'll see that you're making new lows. And there's an old saying that you never ever hold or you never ever buy something that's making you lose. And it's the opposite to how most retailers think because they think, oh, it's a bargain. So cheap right now. But what you actually want to do is buy inequality businesses that are increasing their earnings, increasing their growth every single year. And don't be afraid of something making a new high because Apple made a new high at $2, then $3, then $4, then $5. So you've got to realize that actually that's a good thing because it means that the company is hitting its targets and actually growing as a company. So I guess the only positive thing I could say about this is that it's extremely oversold on the monthly right now. So you may get some kind of bounce or people thinking that it's cheap. But for me, it's unebuffable in the market for a very long time to make a new low. So would not touch it just so just so would not touch how it. Yeah, basically, David wouldn't touch it. You know, this was a market darling for a number of years. And I remember when it first listed talking on air here that it's too early to tell. We really want to see how they cope through an economic cycle. And it's sheer price went up and up and up and everybody said what a great company it was that got to a price I'm just having. And look here, it got into the $6 or so and now it's down to $39. So the people who got so excited about it at the time went, "Oh, after all, what does it do?" It sells car parts effectively. Now, this is not a new unique idea. People have been selling car parts for ever since there's been cars. So to expect a company that was doing that to be this enormous winner that people were talking about some time back was really unrealistic. And it's now fallen off a cliff. Which generally in team invests love at a company, Share price falls as long as the company's earnings are growing. So when the company's earnings are growing, as David points out, you want to be buying into companies as earnings are growing, if that's combined with a Share price falling, that's like heaven. But here we've got a case of the earnings were somewhere around about 24 cents a share in 2018 and 2019. Now they're making losses and there's no real sign that they're going to in a hurry, turn it around and get anywhere close to their 24 cents again. So avoid. Avoid or sell, right? Okay, let's look then at stock number four. And we have quite a good question here coming to us from Tyler for this one. Tyler asks wondering what the expert think of Fraser's takeover bed because he owns Share its Howard. Yes, and in fact for many years I own shares in the accent group. Don't anymore because it went from being a company that had a really, really good board that was very focused on shareholder returns. The chairman since left the CEO at one stage was ill. We would never heard why he wasn't working for a period of time. Board's change phrases is bought into part of it. The offer from them was clearly opportunistic. I mean the Share price that they were buying at some time earlier was close to $1. I think 90 odd cents or something. And they made the offer at something like 70 cents. So a while back it started having too much debt to pass our filters and our members around the country said, well it no longer passes our filters. It's time to get out. Up till around about 20, 20 it's debt was quite low. It then rose and most of our members sold out. I was one of them that was maybe a bit slower than I should have been and I got a little bit less than I would have got if I'd done it when it first stopped passing our filters. But it got a boost in COVID when everybody was walking. I'd go for a walk every day with my wife and we'd see dozens of people walking. So everybody needed lots of casual shoes. That's not so much the case anymore. I was checking whether you got no, you got your work shoes on sometimes. Sometimes people come in and they're suits with their sneakers on, but yeah, absolutely. Well, they're advantage here as you can't see the show. Exactly. So again, an avoid I'm guessing. Well, look, I mean it's not that bad a company that you'd say an avoid. But your team in rest of them is only one 20 to 25 companies maximum in their portfolio. Some are even comfortable with 15. Now that means you're going to be very, very selective. What I described it as if you're not just dating, but you're actually looking for somebody as your life partner. You know, you want to keep the potential audience that you're talking to pretty small and be very fussy. Well, you don't have to be quite that fussy with the chairs you own, because you're going to have 15 to 20 or 25 of them. But there's 2000 on the ASX. You're going to be eliminating a hell of a lot more than you're saying yes to. This one's one of the better ones. So if you were looking for 100, it would probably be in the 100. But is it in the best 20 or so? No, I mean, I don't think so because of its debt level. If someone had it and going to Tyler's question, would you hold though? Probably because the chair prices come down quite a lot already. Yeah. That any damage that you would have suffered has probably been done. I would see what they pay as a dividend this year. If the final dividend is dramatically cut, then it's probably a sign to get out. If they keep it reasonably similar to the past dividend, then you could probably assume they're confident that it's going to start growing again at some stage. All right. David, what do you think about Axel? I pretty much echo the same thing. You know, you're in tough, tough, re-car conditions, weak consumer spending. The discussion in sector in general is getting hit hard. You know, so you're kind of going into the bottom end of the barrel there, hoping for that turnaround story. You know, there is potential for turnaround story there and the fundamentals. You know, the 65 cent bid rejection, but the bid abort shares much higher above a dollar. So any successful bid would likely have to be much higher. And if you look at the technicals there, it has come down to the COVID low area there. Again, it's very, oversold like that call. But really until it gets above 88 cents, you can see it's on a strong downtrend. And like Howard said, if you owned it, well, is it one of the best 20 stocks on the ASX which I do you own it after over other great companies like CSL or, you know, resmed things like that right now. And so you've got to think, yes, you could be there, but why is it going to be your top 20 there? So the only way I could kind of get some exposures if you wanted to just put a little tiny amount of your portfolio in there that you're more going for that asymmetric upside. Just though to sort of answer Tyler's question if he's got it and, you know, the takeover bid would you reckon hold like Howard or you just don't want to be there? In fact, I'll just add something David made a very good point. If your choices between this and CSL and resmed, why hold this? Put the money in CSL or resmed. All right. And sorry, David, would you hold or you just want to be? I would. Yeah, I'm just what, what's the point? You must have been something that's something much better that's going up. All right, what's the point? Yeah. I don't have a letter for that to write on my sheet, but I'll put it W for what's the point. All right, let's get into the fifth stock of the hour, which is Coles. Now, I think you and I Howard have talked about this before and certainly talked about Coles and Woolly earlier in the week on the call as well. You know, whether or not you're a Coles or a Woolly, I think we had met cash in IGA person. I'm an Aldiga, I love the middle aisle. Viewed as a defensive holding here, but growth pretty modest. What do you think? Yeah, I mean, Coles and Woolly are so defensive holdings. They're not going to grow. And anytime they grow, but we'll have all the politicians saying they're gouging customers. You know, I was so amused some time back. One of the Greens people that's probably a year or more ago said they should cut their prices at least 5%. Well, they profit margins about one and a half the supermarkets. If they cut their prices 5%, it would only take a little while and your local supermarkets would all close down and you'd have to drive out to farm to buy your produce and out to the factory to get your tins of things that come in tins and so on. I mean, it's show politicians really have almost zero knowledge and understanding of economics and finance. We see this on a daily basis. But Coles and Woolly's have very, very slim margins. Or will your money be safe in Coles and Woolly's? Yes, it's not going to collapse tomorrow. So you're okay. You'll get a dividend every year, but will you get any significant growth highly unlikely? I mean, their earnings are growing on average over the last six years by 3.3% that's almost exactly inflation. In fact, marginally less than inflation. And it's on a PE of 31. Now, why would you pay a PE of 31 for a company that's only just keeping up with inflation? You can buy other companies that are on PEs of 20 that are growing at 10% of you. It's not anything that's going to enhance your wealth or enhance the value of your portfolio. Team Invest Members wouldn't own it. It doesn't cost our debt filters as well, but the other reasons they wouldn't own it. But as I say, you won't lose money by only it. Even if a cheap price drops a bit, it won't drop that much. All right, I'm going to put you down as a hold then because if you had it, you'd say it's not like you're going to hold it. Yeah, if you had it, average amounts are lowered. All right, David, your thoughts? Yeah, so with calls and more versus well, this is where you've actually more have to apply a top-down approach, more than a bottom-up approach, because it's more going to be it is a defensive asset. So you need to think, okay, what's going to happen with the macro the macro environment. And I believe we're going to be going into a very defensive position. Calls, we don't have much data because it's been off through West Farmer a few years ago, but we do have a lot of data on Woolworths. I did buy Woolworths down at $26 at the end of last year. And if you look, when I bought it at $26, it was literally that exact same price in 2007, 18 years prior. So it did nothing pretty much for two decades, which is what how it's talking about as well. That's because we've been in a growth environment. We've had low interest rate environment where you want your money working for you. However, if you look at Woolworths from that 2000 and 2010 period, you actually had huge growth, many multiples. That's the environment I believe we're moving into. And Woolworths has actually just broken out to a new high for the dividends for adjusted. Calls is following a similar path. So for me, yes, I would buy calls, but personally I didn't buy calls. I bought Woolworths because I believe Woolworths will outperform calls and it has been since the end of last year as well. So if you wanted to, yes, it would be a buy, but for me personally, I would actually, and I have put my money in Woolworths. All right. Well, I'm going to put you down through a buy because I want to get at least one buy in this show. And I'm not putting any pressure on you, but yesterday with Henry and Andrew, I ran Cosh's Bell four times with four double buyers. We've got a lot of salesholds of oeds and what's the point so far? With team in this. I know. I know. It's 20. I know. I know. I'm aware I had Andrew one earlier this week as well. All right. Let's sum up the first five stocks with Yan Cole. This was an avoid from Howard. I did say there's a decent dividend, but a bit too hard in this space, although we did learn that Howard was once a hippie who protested. I'm going to keep going. You're hippie Howard. All right. And then David said a hold here because he's quite bullish on energy and he'd be looking around $4.44 potentially an entry point here. When it came to Trans-Urban, a sell from Howard says that it's hugely and heavily loaded with debt, too much debt to burden and to pass the Warren Buffett approach because David did very kindly call Howard a Warren Buffett approach in terms of team invest. But David did say here that he has got a big buy on it in his portfolio. It's a bull market. The income dividend aspect looks pretty good here. When it came to Bapco, it was a double sell here. It used to be a market. Dulling is Howard pointed out. It's down 92% on the year, too much to turn around here. And David also saying it to be a little bit cautious and never really hold a stock when it continues to hit these new lows. The only positive he said was that it looking extremely overshould on a monthly basis. Then we have a new one for the call, which is what's the point? And that's what we got for accident group. Both my guests here are really saying, look, if you're just looking at a number of stocks to have in your portfolio, they wouldn't be looking at this one at Saddett's COVID lows as well. And maybe people aren't out walking as much as they were during calls and we're all back to wearing proper shoes. I've got proper shoes on as well. I used to went through my sneaker phase at work. All right. And then calls was a hold here. I kind of pushed him on that for Howard. But if you're in there, your money's going to be safe. You're going to get a dividend. But again, with a P of 31 and it's not really growing any faster than inflation. Not really one of his favourites. But David said if you did want to get in his buy, but personally, he's holding wallworths in that space. All right. That was the first five stocks of the hour. The call is tracking our own high conviction fund. It's picked by our investment committee and the latest episode of the committee meeting is available for you to watch at osv.com.au. Let's check in with the portfolio update and going into June, the committee left the level of cash unchanged at around 8% of the portfolio. And two stocks came out of the portfolio that was Santos and Judah capital. And instead, the panel added energy one and site mind. You can watch the latest episode to get behind the reasoning behind those investment decisions. And the June episode is on osv.com.au. A drop down menu there is the investment committee. And so far, the fund up 32.31% on a cumulative return basis since its inception on the first of March 2022. So keep sending in your requests and keep the call switched on to see which stocks are the committee will be looking at next. You've worked hard for your money all your life. Now your money needs to work hard for you. 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Well, Fianwise is your guide to value investing powered by team Invest. All right, welcome back to the call. We are going to get into the final five stocks of the AST starting with CSL. We've also got DigiCode Infrastructure Reach which Emmet asked for. As my ASTAS to take a look at Agile Energy, Manon ASTAS to look at McCory Technology, and everyone asked us to look at Iperian X. So, David, I might start with you for stock number six CSL. I guess it has underperformed it got that huge sell-off at one point as well, but I think I did hear you earlier saying that you quite liked this stock. So, in 2022, I had said this was a major sell that it was in distribution and was almost laughed out of the room because, you know, the name, it's been one of the best wealth performers for a long, long time, but it was showing massive signs of weakened in volume, divergence, etc. However, from there, we've now had a very, very, very healthy correction and what it's actually done is corrected the whole last bull market from 2003. And you can see those little red circles there. There were gaps, okay, and those gaps tell a story and those gaps, those first three gaps are what's called a breakaway gap. So, what they do is they gap down on really bad news and then the market continues to sell into that news. And what you'll notice is that the price never goes back to feel the gap. The very last one you can see there's something different and this is where you can start to see a change of character in the price action through the chart. So, that chart right now, you can see gap down and now we're coming up to fill that gap. That's what's called an exhaustion gap. So, what happens is it's gap down on really high volume. It's then the market is used as a buying opportunity. That's also very, very key Fibonacci zone. It's the Fib 500. It's the Fib 3D3 extension zone. So, it's a key technical level whereby should step in as well. And yeah, and it's showing massive signs of life there right now. So, it's a little too early to really say it's it's definitely bottomed. However, I believe that whole healthcare sector put in a major generational bottom a couple of weeks ago and see all the big healthcare name CSL ResMed, Sonic, Cochlear, I believe have put in lows, but CSL being the big one, yeah, showing massive message signs. So, I would put a banner, I have bought it, I bought it at $94 a couple of weeks ago and yeah, I'm just managing it to see how she goes. Alright Fibonacci 500, I prefer a Bollinger band, mainly just because of her name. Alright, Howard, what do you think about CSL? Yeah, having a mass statistical background as well as my physics. I laugh at all these charts, but anyway, from a point of view of the company itself, even if this report in a couple of weeks time is really bad, they're going to make well north of $3 billion. They probably make $4 billion in profits, but it'll certainly be well above $3 billion in profits. That's more than they were making eight, nine, ten years ago when the share price was lower than it is now. The market went nuts and I was on this program two weeks ago and I said CSL's a buy, it was $93.94 at the time. The other person who was on at the time said avoid management has broken the whole business has broken and can only go down from here, it's up about 26% since then, which was pure luck. I mean, I didn't expect to it was going to go up 26% in two weeks. I just mean to this kind of ridiculously low price, where it was on a P of about 11. How could you possibly lose money when you're buying into a fabulous business? Yeah, it's got a few problems at the moment on a P of 11. It's now even still on a P of 12.8. In the last ten years, if you exclude the last few months, in the last ten years its P you'd never got below 20. You were being offered by Mr. Market, an extraordinary bargain in what was a great company that is going to have a bad year or so. And sure enough, it's gone up dramatically since then. Is it still cheap? Absolutely. You know, I mean, it's P even with a little bit that it moved up today. It's P is about 13. In the last ten years, the lowest P of the year, each year, 23.4, 23.6, 24.2, 29.3, 24, and all the others over 30. So anytime you can buy a company, that cheap that isn't actually broken as a business. Wow, what a bargain. So lots and lots of team investment members have been buying it. And we're only too happy when somebody else says the company's broken and it's terrible you should get out. Because that gets you more opportunity. Absolutely. It gives us more opportunity to buy. All right, we might name and shame whoever that was, but that's a double buy there for CSL. All right, let's move on to Digico infrastructure. Read Emmett asked us about this one. So how to start with you because obviously data centers here, major investment theme. Is this attractive Digico? No, firstly, it's only been listed a short time. So we really don't know how it's going to perform. But Dr. Senter's remind me of the early days of computing. Now, we were designing a business I was involved in. I was one of the founders of we were designing new premises. There was a new building being built and we were designing our premises to fit that building and we wanted to have a computer, which we hadn't had up till then. And for this computer, we had to have a double wall, sorry, double floor room with the air conditioning and humidity such that it couldn't change by more than 2% in the day. And it was a large room, I mean, viewers can't see this room, but I would say the room was probably about eight or nine meters long by about five or six meters wide and it was going to be packed with our computer hardware. By the time we moved into the building, which was a hole in the ground at the time we were designing this, by the time we moved into the building about two and a half years later, we had the room, but our entire computer was now the size of a large filing cabinet. It didn't need a whole room, it didn't need double floors. Exactly the same thing happened in the 1990s. Everybody had a lake cable everywhere because the internet was going to need all these cables. They laid so many cables between here and the United States that they've never ever been used in in in in total. We're now building all these data centers, by the time we finished building them, what used to be in a box that size will be in a box that size or whatever and the data centers are going to be largely a waste of space because the amount that is being planned to be built around the world when things are getting smaller, faster and more efficient all the time. You know, this whole business of hyperscalers is really hyperspenders. These are not companies that are capital-like like they used to be. This has become a hugely capital-intensive industry, much like the Railways in the 1820s, 1860s, depending which country you looked at. And everybody was going to get rich out of owning railways. And then it turned out that once you'd built all the railways, they could cope with a hell of a lot more than they thought they were going to be able to cope with when the trains could only go at 15 miles an hour and belched out a lot of smoke. So the same thing I think will happen. So DigiCo REITs generally are quite low return on equity anyway. I'm sure it fits the other one that day came up earlier, confirmed. What's the point? The W. What's the point? It's a W. It's a W. All right, what about you David? Yeah, so the data center rate benefit from the AR Cloud Demand. It's got all the buzzwords. That everyone's interested in. It's recycling the assets in higher growth developments, which is good. It is trading below asset value as well. However, the financials are tracking towards the top end of the garden. So we're starting to get a little bit expensive here. And if you look at the chart, it's in a downtrend. So for me, I've got a rule. I never have anything in my portfolio, unless it's either just put in a change of market structure, which means it's put in a reversal, or it's in an uptrend. And if you keep those simple rules, because think about it, if the fundamentals are good, what are people going to be doing? They're going to be buying it. And if they're buying it, that means the charts can be going up. So you can clearly see there, that one's going down. You can clearly see where they were buying back for the last couple of years. They're now actually selling there. So that's a sign of weakness. So unless this thing got above $2.85, it's an avoid. All right, an avoid rather than a what's the point. Okay, let's move on then to a GL energy continuing with I guess all of the energy that we're going to need for these data centers as well. I might kick it off with you this time, David. Asma asking thoughts on a GL energy. Yeah, so I bought this one back in 2022 at the $5.40 I think range then. And that was when we were going into that bear market. And if you study the history of AGL, it actually has an inverse relationship with the NASDAQ. So if you look at when the NASDAQ tops AGL bottom vice versa. However, I have since exited then because when the nose that bottom started going up, it has pretty much gone into a sideways range since. Really, it's not one I would be in right now. No, as you can see, it's been kind of trading sideways for a number of years now. It may turn into a buy zone around that little gray area that you can see there, but for now, no, it's in a downtrend or a sideways to downtrend and unless that kind of reverses down around that gray zone, it's an avoid for now. If somebody had it though, would you keep holding because you said there might be a turn into a buy zone? Yeah, so then you've got to think, well, what's the point of holding it is for the dividends and what's your outlook? Are you looking to hold it for five, ten years or you're looking to make money over the next couple of years? So if you're looking to make money over a couple of years, then no, there's a lot easier ways to do that. If you're looking for an income stock that will bring you that over the next five, ten years, then yeah, then I would probably say hold. All right. How would. Yeah, if we look back at utilities and that's what AGL really is, 130 odd years ago, 150 odd years ago, everybody was going to get rich out of electricity and you couldn't lose if you invested in electricity. But the problem that utilities always have is the customer wants to pay as little as possible for the electricity. If they're a business, it's the only way they can compete with businesses from other parts of the world. If you have expensive electricity, you can't have manufacturing in Australia, exactly as we've discovered. And on the other hand, as a shareholder, you want the company to be making good profits. Now, when you've got many, many, many more people as voters who want the price to be low and governments want to get their votes and you've got a smaller group of people who are called shareholders who want profits to go up. Well, there's no value in politicians helping the shareholders. They'd rather help the clients using the electricity or water or gas or whatever it is that a utility supplies. So in the end, utility companies very, very rarely make much money for their shareholders. Yes, they may pay a dividend, but you could have done far better with the money over the long term by putting it somewhere else. They'd grew and pay dividends instead of not growing and paying dividends. So unless suddenly governments decided they didn't care about how many votes they got and I'm sure we'd see old squadron of pigs flying positive if that was suggested. Utilities are not going to be good investments. So team investment must care care of utilities because long term you don't make money out of them. You could occasionally in the short term, but that's not what we're into. All right, so I guess I'll avoid that. Moving on then to stock number nine. We're up to McQuarry Technology, which Manon asked us about here, MAQ. So it has how it'd been a standout performance. Again, this data center demand somewhat. So is the growth outlook still strong enough to justify valuations? No, because it's on a PE of 58 at the moment. And yes, I know these things are very fashionable at the moment, but in terms of data centers, as I said earlier, the data centers they're building today will cope with probably four times as much going through them in eight years time and 16 times as much as a few years after that. So there's going to be a lot of waste in terms of what goes into data centers now. So and the other thing too is all the equipment you put in data centers gets antiquated the next time and you chip set comes out. So you know, no, it's not something team investment members would get excited about at all. It's metrics look okay, but we'd say in terms of the theme, it's too late. If you wanted to buy into data centers, you should have been buying into them when nobody was talking about data centers and when you said data center, somebody said, what's that? That was the time to buy into them. When everybody wants to be in data centers, it's too late. All right, David. Yeah, that's exactly it. You've got to remember the market loves what you hate and hate what you love. So you got to think everyone loved to see yourself a few years ago and then they sold into it. Now everyone hates see yourself because it's been an absolute dog for a couple of years. So then you actually buy into that fear once the opportunity arises. So yeah, Macquarie, biggest opportunity is the data centers in government cloud. The telecom business remains probably the weak spot there. It does have a 200 million national reconstruction fund investment, which will support its future growth and it is well positioned as a sovereign data domain increases. But similar to what how it said is that you've missed the train for now. That you high, you can see RSI made a new low, which is showing that it's actually RSI diversions, which means that markets were selling into it. And you can actually also see that it's that bottom one there is relative strength. That means that it's been underperforming the index for a number of years now. So if you're going to take the risk, you better make sure you outperform the market. So again, what's the point? You're not outperforming the market, you're taking unnecessary risk for no reason. I actually think it's going to keep falling further. So for me, it's a sell. It's a sell, right? I'm using extra side. They got government money out of this national fund. Government saw incredibly poor investors. Almost anything a government puts money into. They put it into, because it doesn't have a decent business case without government money. If it had a decent business case, it wouldn't apply for government money in the first place. Then governments pick out of those. And if you look at who's in Parliament, would you think that out of those 150 members in the lower house is more than a half a dozen who understand anything about investing? I think that would be very optimistic to think that when you hear the debates that they have on anything to do with money. So they are making decisions to invest in it. That's a sure fire sign that you don't want to be investing in that kind of thing. When governments put money into it, it means it doesn't have a good economic case and it's probably going to be a failure. Maybe they should be watching Osprey's the call before they go into question time. Absolutely. They could learn a lot if they watched Osprey's on a regular basis and got a subscription as well. We're going to put you on the prime. I'm saying that. All right. Let's get into the final stock of the day. Everyone asking about Iperian X. I'm a bit of an exciting. If you can get excited about this titanium and advanced manufacturing story, David, what do you think here about the execution? Yeah. So there's strategic US titanium project with government backing again. So maybe that's saying enough right there. It's got exposure to critical minerals. It is a strong project with the manager of CAPEX as well. However, production is still years away. So the valuation is what the key risk is right now. And again, you can see you've missed the train. The train has already run and similar to the last chart, that last high on the 16th, I'm going to say on the 6th of October, went up on diversions. It's been underperforming the market ever since. It's now in a downtrend. I think this has much further to go down as well. Probably maybe even 50% drop. You can see volume didn't confirm that one. People are selling into this right now. So it doesn't mean it's not a good project. What you've got to remember is the markets forward, looking in the market likes to price in a lot of future growth and a lot of the story ahead of time. And then those people that that kind of buy into a late cycle, they get punished, it retraces and then opportunity could arise. So again, down around that grey box is probably an era I would start to look again. So good project to expensive for me a cell and buy later. Still and buy later. Oh, I like that. It's like buy now, pay later. Yeah, I pretty much agree with it. Everything David said, it's never made a profit and it's been listed for eight years. It's run at a big loss every year. There were 30 million shares eight years ago. There now 320 million shares. So this is the kind of business that's the exact reverse of what you want as an investor. As an investor, you want to put money into company once and have it give you money every year thereafter and the value of your shares go up every year thereafter. This is a company that you give them money once and pretty much looking at my chart. Every one to two years, they come back to you and ask you for more money so that they can pay themselves. The executives can get paid. The workers can get paid. The material and equipment can get paid but the shareholders don't. Now, unless you quite philanthropic in your thinking and you think it would be really nice to donate much of your wealth to some people running a project that may or may not one day make some money, why put your money into something that's going to come and ask you for more money every now and then every time it does a capital raising, put your money where it's the exact reverse where they're going to give you money all the time. So, avoid. Absolutely. All right. We got one double buy out of that show. That was exciting. So let's recap the final five stocks of the hour with CSL which was a double buy. from my panel, Howard pointing out a P of around 13 here. And even if it reports badly and inverted commas, it's still going to have around $3 billion or $4 billion in profit. David says he was a major seller in 2022, but with the Fibonacci 500 key technical level, showing massive signs of life he is a buy and he bought in at 94. Ditchyco there was a "What's the Point?" I knew one that we've got thanks to David at W here from Howard and just really reiterating the point that we don't know how fast the data center capacity is going to grow. So reminding us of those early days of computing and how much room he used to need for a computer and now we've all got them essentially on our phones. - Yeah, pocket. - You know, pockets, yeah. David saying it's got all the buzzwords, but it's in a downtrend and it doesn't meet his two filters as well, which is what he looks at. Never have anything unless you can start to see somewhat of a reversal trend or an uptrend so signs of weakness he would avoid. And avoid from both for AGL here and Howard saying, no value here customers don't want to necessarily pay for a stock at this level. And David, this was quite interesting. He says it's always in an inverse relationship with the NASDAQ, so he did buy it in 2022 and we saw a bottom in the NASDAQ, but of course we all know what the NASDAQ has been doing of late. A double cell here from a query technology going through on the same theme that we just don't know. What data center capacity is going to look like in four years or 10 years, Howard saying he wouldn't get excited and both my guests saying here, the market loves what you hate. And then a period X, a bit of an avoid cell as well. Exact reverse Howard says of what you want as investors and David here saying that he is a cell, but he might buy in later if you do start to see somewhat more of a downturn than it could be a little bit of an opportunity. Well, David, great to have you on your first time on the call, lucked your charts and your insights. Thank you very much. Thank you. Yeah, I just want to add on that CSL. Similar to what Howard said, you want to buy broken charts, not businesses, okay? So it's not CSL. It's not CSL, it's fault that it's correcting. It's that actually it was priced to perfection the markets for looking. I think it had some crazy PE of like 60 or something up at the high, okay? And that's because it had delivered time and time again, where it was allowed to be that growth story. Now it's actually a value play. That's a crazy thing. See, it's always been a growth play. Now it's actually value as put, put it up a how down with a peer ratio of 12 to 13. So it's just the stories changed and that's where the opportunity actually arises. All right, fantastic. Howard, great to see you as always. So thank you to Howard. - Thank you very much. - Yeah, Howard Coleman from Team Invest and David Bird, of course, joining us for the first time. That does it for the Call Sticker Rammel Views and News next. (upbeat music) [Music]