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Ally Selby: And welcome to Livewire Markets and Buy Hold Sell. I am Ally Selby. And as many of you know, markets have been off to a rough start in 2022, with the S&P/ASX 200 down around 7 per cent.So, which companies can help you sleep at night and weather the volatility ahead? Glad you asked. Today we are joined by Bruce Williams from Elston and Simon Conn from IML.Ally Selby: We asked our fundies to bring along one all-star Aussie company that they think can weather the volatility ahead this year. Simon, I might start on you. What have you brought for us today?MetcashSimon Conn: Our focus is on the mid and small-cap sector, so I’ve picked Metcash today. We think it’s an underappreciated franchise, and a business that’s no doubt benefited from COVID-19, but I think that’s delivered enduring benefits to their food business. But also their liquor business has been growing and is a very resilient business. But really it’s the hardware business, where they position themselves as the second player in the hardware, retail and wholesale markets that we think is underappreciated by investors.Their acquisition of Total Tools looks really well priced. They bought that prior to COVID-19, effectively on about three-and-a-half times EBITDA. A business that’s grown very well through COVID-19. But we think as the franchisees and the operators in those networks reinvest in their stores with the increased profitability they’ve generated, the local consumers are spending more in their local communities, and we think that will continue to a large extent, going forward. And all of those stores have been refurbished. And again, the hardware business, I think can continue to do well going forward. And the thing about Metcash is it’s really attractively priced on 13 times, and a yield of over 5 per cent, with a really strong balance sheet. For us, it looks like a standout in the market, where a lot of stocks look pretty fully priced.
Ally Selby: And welcome to Livewire Markets and Buy Hold Sell. I am Ally Selby. And as many of you know, markets have been off to a rough start in 2022, with the S&P/ASX 200 down around 7 per cent.
So, which companies can help you sleep at night and weather the volatility ahead? Glad you asked. Today we are joined by Bruce Williams from Elston and Simon Conn from IML.
Ally Selby: We asked our fundies to bring along one all-star Aussie company that they think can weather the volatility ahead this year. Simon, I might start on you. What have you brought for us today?
Simon Conn: Our focus is on the mid and small-cap sector, so I’ve picked Metcash today. We think it’s an underappreciated franchise, and a business that’s no doubt benefited from COVID-19, but I think that’s delivered enduring benefits to their food business. But also their liquor business has been growing and is a very resilient business. But really it’s the hardware business, where they position themselves as the second player in the hardware, retail and wholesale markets that we think is underappreciated by investors.
Their acquisition of Total Tools looks really well priced. They bought that prior to COVID-19, effectively on about three-and-a-half times EBITDA. A business that’s grown very well through COVID-19. But we think as the franchisees and the operators in those networks reinvest in their stores with the increased profitability they’ve generated, the local consumers are spending more in their local communities, and we think that will continue to a large extent, going forward. And all of those stores have been refurbished. And again, the hardware business, I think can continue to do well going forward. And the thing about Metcash is it’s really attractively priced on 13 times, and a yield of over 5 per cent, with a really strong balance sheet. For us, it looks like a standout in the market, where a lot of stocks look pretty fully priced.
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