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Technology Stocks

Jacobs Engineering Group Inc. (NYSE: J) after Strong Fiscal Q3 Raises FVE. To $141

Checking Stock market data information graph on screen

he fair value increase reflects the firm’s outperformance, an improved near-term outlook, and time value of money, partially offset by the implementation of a probability weighted change in the U.S. statutory tax rate in our model.

Jacobs’ net revenue was up 10.6% from the prior-year period. Critical mission solutions increased its revenue 0.6% year over year. People & places solutions net revenue grew 1.4%. Lastly, PA Consulting delivered stellar 36% year-over year revenue growth. The firm’s adjusted operating margin expanded by 170 basis points from the prior-year period, with improvement across all business lines.

Management increased its outlook for full-year fiscal 2021 and now expects adjusted EBITDA in the range of $1,210- $1,275 million (up from $1,200-$1,270 million) and adjusted EPS in the range of $6.15-$6.35 (up from $6.00-$6.30). Furthermore, management is optimistic that the company can deliver double-digit adjusted EBITDA growth over the medium term. 

Company’s Future Outlook

We believe the company is poised to capitalize on multiple favorable secular drivers, including infrastructure modernization, space exploration, intelligence analytics, energy transition, supply chain investments (particularly in the semiconductor and life sciences end markets), and the 5G build out. We also think Jacobs is well-positioned to benefit from a likely infrastructure plan in the U.S., given the firm’s strong position in areas such as water and transportation infrastructure.

Company Profile

Jacobs Engineering Group Inc. (NYSE: J) is a global provider of engineering, design, procurement, construction, and maintenance services as well as cyber engineering and security solutions. The firm serves industrial, commercial, and government clients in a wide variety of sectors including water, transportation, healthcare, technology, and chemicals. Jacobs Engineering employs approximately 55,000 workers. The company generated $13.6 billion in revenue and $970 million in adjusted operating income in fiscal 2020.

 (Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
ETFs ETFs

Vanguard Australian Shares ETF (ASX: VAS)

Vanguard Australian Shares ETF (ASX: VAS) is an appealing and efficient alternative for investors seeking exposure to the broader Australian equities market. The strategy’s cost-value balance, in particular, is unrivalled. At 0.10 percent per year, it is one of the most affordable exchange-traded funds that provide diversified domestic equities exposure. Vanguard Australian Shares ETF seeks to provide broad Australian share market exposure in a passively managed, tax-efficient vehicle. To achieve that goal, the strategy uses an index-replication approach to track the S&P/ASX 300 Accumulation Index. The fund’s large size brings economies of scale to the effort and allows Vanguard to invest in virtually all the securities that make up the index. Security weightings are approximately the same proportion as the index’s weightings.
However, the portfolio will deviate from the index when the managers believe that such deviations are necessary to minimize transaction costs. Such strategies have helped keep annual tracking error as low as 0.20% and annual turnover below 2%. So, while the passive approach means the strategy is unlikely to depart far from the index, it offers a low-cost and reliable way to get Australian share market exposure. 		 
Vanguard Australian Shares ETF aims to track the S&P/ASX 300 Accumulation Index, a free-float-adjusted, market-cap-weighted index. It is one of Australia’s best-known stock market benchmarks and covers about 85% of Australian equity market capitalization. While the S&P/ASX 300 Index is dominated by giant- and large-cap companies, the fund has exposure to small caps, with an approximate weighting of 7.5%. The portfolio is top-heavy, with about 29% of the index in the top five companies.
The concentration in banks skews the fund’s sector weightings, with financial services forming around 26% of the portfolio. The basic-materials sector also looms large, but its dominance declined as the mining boom waned. Basic materials peaked around 31% of the portfolio in 2008 but shrank to around 18% by March 2020, while energy fell from around 8% to around 4% during the same period. Some sectors that are prominent on the global stage are underrepresented in the Australian market. Technology and to a lesser extent healthcare (thanks to the share price rise of CSL) combined make up around 17% of the index–a lower proportion than equivalent US and European indexes.		 
Company’s Performance outlook
Vanguard Australian Shares ETF (ASX: VAS) has rewarded investors well over time ahead of an average category peer. Given its exposure to small caps, which have underperformed large caps in the last 10 years, the strategy has modestly underperformed category index, S&P ASX 200 Index. On the other hand, the category relative outperformance has been led by the strategy’s higher market-cap exposure than an average category peer. More recently, when COVID-19 wrecked the market in the first quarter of 2020, Vanguard ceded 20.3% in line with the broader market sell-off and more than the category average. But the rebound was equally strong with 34.4% that ended the year for the strategy at just 20 basis points lower than its peers. In terms of risk-adjusted returns, Vanguard has delivered middling performance over long haul.		 

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Technology Stocks

Micron’s Dividend Initiation Makes Sense Based on Healthier DRAM Fundamentals (NASDAQ: MU)

The cyclicality of the memory industry often led to bouts of weak performance that could threaten the financial health of suppliers such as Micron, thus putting potential dividends at risk. However, management now believes

Micron is enjoying strong and sustainable secular demand across a variety of end markets as well as slowing industry supply growth due to consolidation, slowing of Moore’s Law, and an increasing focus on maximizing ROICs. Specifically, Micron has aligned its capital expenditure plans with stable memory bit supply market share targets while tactically adjusting utilization and holding higher levels of inventory during weaker demand periods. We agree with this thesis that Micron and its memory peers are better equipped to maintain healthy investment levels during downturns as well as a quarterly dividend.

Net capital expenditure as a percentage of revenue is now expected to be in the mid-30s versus low-30s previously. Overall, we think Micron’s DRAM business is well-positioned to generate cross-cycle excess ROICs, thanks to a more consolidated market.

Company’s Future Outlook

Our fair value estimate for Micron remains $90 per share, and we think shares look modestly undervalued at current levels. Management also updated its capital allocation plan. While the firm continues to target the return of 50% of cross cycle free cash flow, Micron will now pay a dividend that it intends to grow in addition to a more opportunistic approach to share repurchases In contrast, Micron’s NAND business is likely to continue to face more severe swings in profitability. Given that DRAM accounts for over 70% of Micron’s revenue, we expect the firm will be able to sufficiently fund its dividend.

Company Profile

Micron historically focused on designing and manufacturing DRAM for PCs and servers. The firm then expanded into the NAND flash memory market. It increased its DRAM scale with the purchase of Elpida (completed in mid-2013) and Inotera (completed in December 2016). The firm’s DRAM and NAND products tailored to PCs, data centers, Smartphone, game consoles, automotives, and other computing devices.

 (Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Funds Funds

Quant Small Cap Fund Direct Plan-Growth Updates

Investing goal and benchmark

The fund’s primary goal is to “create capital growth through investments with a very well mix of small cap companies.” The NIFTY Small cap 250 Total Return Index is used as a benchmark.

Portfolio Structure & Asset Allocate

The fund’s asset allocation is roughly 95.85% in equities, 0.0 percent in bonds, and 4.15 percent in cash and cash equivalents. The top 10 equity holdings account for 43.41 percent of total assets, while the top three sectors account for 44.15 percent. The fund invests in a variety of market capitalisations, with roughly 1.41 percent in gigantic and big cap companies, 19.83 percent in mid-cap companies, and 78.76 percent in small cap companies.

Implications for Taxation

1. If units are surrendered within one year of purchase, gains are taxed at a rate of 15% (Short-term Capital Gains Tax – STCG).

2. Gains of up to Rs. 1 lakh accruing from units redeemed after one year of investment are free from tax in a financial year.

3. Profits of at most Rs. 1 lakh would be subject to a 10% tax rate (Long-term Capital Gain Tax – LTCG).

4. Dividend income from this fund will be assigned to an investor’s income and taxed as per to his or her tax slabs for Dividend Distribution Tax.

5. In addition, for dividend income in excess of Rs 5,000 in a financial year, the fund house is required to deduct a TDS of 10%.

Source: Economic times

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
ETFs ETFs

Kotak PSU Bank Exchange Traded Fund updates

Investment goal and benchmark

The fund’s investment objective is “The scheme’s objective is to offer total returns that correspond to the total returns of the Nifty PSU Bank Index.”The NIFTY PSU Bank Total Return Index is used as a benchmark.

Portfolio Structure & Asset Allocate

The fund’s asset allocation is roughly 99.98 percent equities, 0.0 percent loans, and 0.02 percent cash and cash equivalents.The top 10 equity holdings account for roughly 96.27 percent of assets, while the top three sectors account for around 99.98 percent.The fund invests mostly in companies with a substantial market capitalisation, with 64.86 percent in giant and large cap companies, 33.04 percent in mid cap, and 2.1 percent in small cap companies.

Implications for Taxation

1. If units are surrendered within one year of purchase, gains are taxed at a rate of 15% (Short-term Capital Gains Tax – STCG).

2. Gains of up to Rs. 1 lakh accruing from units redeemed after one year of investment are free from tax in a financial year.

3. Gains of more than Rs. 1 lakh would be subject to a 10% tax rate (Long-term Capital Gain Tax – LTCG).

4. Dividend income from this fund will be added to an investor’s income and taxed according to his or her tax slabs for Dividend Distribution Tax.

5. In addition, for dividend income in excess of Rs 5,000 in a financial year, the fund house is required to withhold a TDS of 10%.

Source: Economic india

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Fixed Income Fixed Income

Principal Core Fixed Income A (CMPIX)

The team still intends to balance a higher-yielding corporate-bond stake with securitized fare and U.S. Treasuries, yet the strategy’s high-yield sleeve is now capped at 5% of assets (compared with a previous sleeve of 10% to 20% of assets). Corporate credit still typically accounts for 60% to 65% of assets and drives returns, while high quality securitized fare (20% to 25%), U.S. Treasuries (10% to 15%), and cash are intended to provide stability. This stake stood at 35% of assets as of March 31, 2021, which was 17% larger than the typical intermediate core bond peer. This translates to more credit risk relative to peers.

  • A new shift to higher quality is untested.

The managers employ a consistent, conventional investment process overseen by an adequately sized team. The strategy earns an Average Process Pillar rating. The team emphasizes corporate credit relative to Treasuries and securitized assets, with bottom-up analysis driving credit selection. Manager John Friedl and his team search for credits they believe will provide the best opportunities over a full market cycle; they have a stated preference for smaller offerings in energy, healthcare, utilities, and REITs buoyed by larger names in the financial sector. Prior to 2020, the team invested heavily in high-yield debt (usually 10% to 20% of assets). Now, the team is limited to a 5% sleeve in high yield after a mandate change in January 2020. The team does not make interest-rate calls and historically has kept the strategy’s duration within 15% of the Bloomberg Barclays U.S. Aggregate Bond Index.

  • Still a barbell construct with heavy credit exposure.

The strategy’s barbell structure is composed of income-generating corporate bonds on one end and high-quality securitized fare and Treasuries for ballast on the other. As of March 2021, the strategy’s corporate credit allocation sat at 57% of assets, including a BBB rated stake (35%) and BB and below (4%) that was about 17 and 3 percentage points higher, respectively, than its typical intermediate core bond category peer. The team has historically focused on oilfield services and pipelines in its energy stake (about 4%), given their resilience in the face of commodity price drops. Financials have made up a consistent overweighting relative to the benchmark (11% versus 6%), with the team focusing on the debt of large banks with strong balance sheets. The ballast end of the barbell, composed of agency mortgage-backed security pass through (20%), U.S. Treasuries (15%), and asset backed securities (3%), has not seen major sector shifts since 2013.

 (Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Dividend Stocks Expert Insights

Market Gains Continue to Offset Weaker Flows to Drive T. Rowe Price’s AUM Higher

with two thirds of its assets under management derived from retirement-based accounts. At the end of 2020, 83%, 79%, and 77% of the company’s fund AUM were beating peers on a 3-, 5-, and 10-year basis, respectively, with 77% of AUM in the funds closing out the year with an overall rating of 4 or 5 stars, better than just about every other U.S.-based asset manager. T. Rowe Price also has a much stronger Morningstar Success Ratio—which evaluates whether a firm’s open-end funds deliver sustainable, peer-beating returns over longer periods–giving it an additional leg up.

T. Rowe Price is uniquely positioned among the firms we cover (as well as the broader universe of active asset managers) to pick up business in the retail-advised channel, given the solid long-term performance of its funds and reasonableness of its fees, exemplified by deals the past few years with Fidelity Investments’ Funds Network and Schwab’s Mutual Fund OneSource platform. With the company likely to generate mid- to high-single-digit AUM growth on average going forward (aided by 0%-3% annual organic growth), we see top-line growth expanding at a positive 7.7% CAGR during 2021-25, with operating margins of 47%-49% on average.

Financial Strength

T. Rowe Price has traditionally maintained a very conservative balance sheet, with no debt on its books since 2002. The company has relied overwhelmingly on its internally generated capital to fund acquisitions and other investments, while still returning a sizable amount of capital to shareholders via stock repurchases and dividends. During 2011-20, T. Rowe Price, by our calculations, generated $14.9 billion in free cash flow (cash flow from operations less capital expenditures) and returned $5.3 billion to shareholders as share repurchases (net of issuances) and $6.2 billion as dividends. Our current forecast has the firm generating $3.5 billion in free cash flow annually on average during 2021-25, the bulk of which will be dedicated to seed capital investments, acquisitions, dividends, and share repurchases.

The company’s quarterly dividend was raised 20% in February 2021 to $1.08 per share, and the company has announced a $3.00 per share special dividend, which was paid out in July 2021. The company remains comfortable with the 35%-40% payout ratio we’ve seen for the regular quarterly dividend over the past five years. During 2019, T. Rowe Price bought back 7.0 million shares (equivalent to 2.9% of its outstanding shares) for just over $700 million, offset by $83 million worth of stock issued under stock-based compensation plans. The firm followed this up with the repurchase of 10.9 million shares for $1.2 billion (equivalent to 4.6% of outstanding shares) during 2020, offset by some $200 million worth of stock-based compensation plan issuances. During the first half of 2021, T. Rowe Price bought back 1.9 million shares for around $309 million.

Bulls Say’s

  • With $1.623 trillion in AUM at the end of June 2021, T. Rowe Price is one of the larger U.S.-based asset managers. Retirement accounts and variable-annuity investment portfolios account for two thirds of assets.
  • At the end of the second quarter of 2021, 91%, 84%, and 86% of T. Rowe Price’s multi-asset AUM was beating passive peers on a 3-, 5-, and 10-year basis, respectively.
  • Target-date retirement portfolios have been a significant source of organic growth, generating just under $100 billion in net inflows (equivalent to an 8% rate of annual growth) for the firm the past 10 years.

Company Profile

T. Rowe Price provides asset-management services for individual and institutional investors. It offers a broad range of no-load U.S. and international stock, hybrid, bond, and money market funds. At the end of June 2021, the firm had $1.623 trillion in managed assets, composed of equity (61%), balanced (28%), and fixed-income (11%) offerings. Approximately two thirds of the company’s managed assets are held in retirement-based accounts, which provides T. Rowe Price with a somewhat stickier client base than most of its peers. The firm also manages private accounts, provides retirement planning advice, and offers discount brokerage and trust services. The company is primarily a U.S.-based asset manager, deriving just 9% of its AUM from overseas.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
LICs LICs

Whitefield ltd Joins LIC Raisers

Whitefield, which has a $500 million investment portfolio, is anticipated to utilise the funds to Re launch the LIC, which is now only thinly traded due to its size.

Whitefield is managed by stockpicker Angus Gluskie’s Sydney-based White Funds Management. Commonwealth Bank, CSL, Westpac, NAB, and ANZ were its top holdings as of June 30.

On 14th July Morning, Whitefield stock was put on hold. In the year ended June 30, the company’s investment portfolio returned 25.6 percent before fees and taxes.

Company Profile

Our solutions support our clients’ mission critical business operations by providing proprietary and curated data and analytics to help drive informed decisions and improved outcomes. In an ever-increasing digital world, data is found everywhere. Data can describe the past or be of the moment.  Data fuels analytics that can anticipate the future.  And, data is most valuable when it drives action that moves an organization towards its goals.  Leading organizations use data and data-driven platforms to create a competitive edge. Our solutions derive data-driven insights that help clients target, grow, collect, procure and comply–even in changing times.

(Source: Fact Set)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Commodities

Fortescue sets a new record for exports and sets new goals for the future

Fortescue has broken an export record for the second year in a row, having delivered 178.2 million tonnes from Western Australia’s Pilbara region in fiscal 2020. The business stated on Thursday that it expects to have a triple trick of record years in fiscal 2022, with a goal of shipping up to 185 million tonnes.

Fortescue shares rose 2% to a new record high of $26.40 on Thursday morning, owing to the better-than-expected result and forward outlook.

The company’s remarkable operating performance indicates that it has taken advantage of a window of high iron ore prices generated by strong Chinese demand and inadequate supply from major competitors such as Rio Tinto and Vale.

Rio manager Jakob Stausholm admitted on Wednesday night that the team needed to improve as an operator and perform better in the future.

Iron ore benchmark prices hit a fresh high of $US233 per tonne in early May, and the commodity was still fetching $US201.25 per tonne on Wednesday evening, according to price supplier S&P Global Platts.

Fortescue announced last year that it would spend a maximum of $US3.4 billion on growth projects, with a slide presentation from August 2020 implying that growth spending would be closer to $US1 billion in fiscal 2022.

If spending by its clean energy subsidiary Fortescue Future Industries (FFI) is added, the total could reach $US3.8 billion. FFI will invest between $US400 million and $US600 million in the coming year, according to Fortescue.

Aside from increased expansion spending, Fortescue predicted that unit expenses in the coming year might be 11% higher than in fiscal 2021.

(Source: Fact Set)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
LICs LICs

AFIC share price hits all time high

Over the shoulder view of and stock broker trading online while accepting orders by phone. Multiple computer screens ful of charts and data analyses in background.

According to AFIC, the Commonwealth Bank of Australia (ASX: CBA) is the largest current position, followed by BHP Group Ltd (ASX: BHP), CSL Limited (ASX: CSL), Wesfarmers Ltd (ASX: WES), and Westpac Banking Corp. (ASX: WBC).

These top five positions, however, are supplemented by dozens of other ASX shares. And, with the ASX 200 index lately reaching new highs, AFIC would have benefitted from a rising tide lifting its whole portfolio (evidenced by its NTA per share growth).

This is most likely why the AFIC share price has reached an all-time high today. It isn’t the only one. Other LICs in the AFIC mould are also on the rise.

At the present AFIC share price, the organization has a market value of $9.62 billion and a trailing dividend yield of 3.05 percent (or 4.36 percent when AFIC’s full franking credits are considered).

The net tangible assets (NTA) per share increased to $7.45 per share in June (after tax). This is a significant increase over the previous month’s share price of $6.19. This means that for every AFIC share purchased, buyers receive $7.45 in other assets.

Over the last two decades, the AFIC has returned 5.23 percent in capital gains and 6.18 percent in fully franked dividends.

Company Profile

The Australian Foundation Investment Company Ltd (AFIC) is a Listed Investment Company in Australia (ASX: AFI) and it is one of the oldest on the ASX established in 1928.  It aims to provide shareholders with attractive investment returns by growing stream of fully franked dividends and growth in investment of capital. AFIC measures its performance through 2 measures namely portfolio return and the shareholders return. AFIC is presently Australia’s largest LIC, managing a portfolio worth around $8 billion for its stockholders.

(Source: Factset)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.