LLC, ORA, VUK, GEM

ORA

The market is clearly expecting a big downgrade for ORA, the large packaging company.

The AGM pointed to the slowing outlook in North America and inflationary pressures in Australia (and elsewhere, really) but hung on to guidance. Is it priced cheap enough for downgrade risk?

Amcor today also had a modest negative flavour to the outlook (although they are in a much stronger position, so we aren’t worried overmuch).

But for ORA it is difficult.

VUK

The market is clearly expecting the UK economy to collapse outright, given the spread between VUK (the old Clydesdale bank) and the earnings trajectory.

Betting on a housing implosion (and rising BDDs) is an attractive trade but challenging to pull off.

The tailwinds are clear: rising net interest margins, thanks to higher interest rates. But the threat of insolvencies outweighs the benefits, in the market’s mind.

Compare the P/Sales ratio for VUK to every other Aussie bank. There is a sizeable discount. Not for the faint of heart.

LLC

It just continues to amaze me that all LLC need to do is not haemorrhage cash (read, execute well on work already done), and the re-rate can/could be enormous. A most frustrating hold.

GEM

GEM is enjoying what might be the first modest forecast EPS upgrades in a while. They were net beneficiaries of the budget, but the main thing is the lack of crushing respiratory viruses and torrential flooding.

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