May 2019


Stock I'm watching this month:-

API - Australian Pharmaceutical Industries Ltd

Sector: Healthcare
Market Cap:  650.1 Million
Price/Earnings: 13.75
Price/Book: 1.29
Return On Equity: 9%
Return On Assets: 3.26%
Debt/Equity: 54.36%

Reasons to watch: API is a leader in health and beauty retailing in Australia. Health products are a necessity especially in an ageing population. The acquisition of Clear Skincare is a recent synergistic move that should add to the company's return in the long term. The valuation shows that API is a low growth company. However, it is considered cheap at this level and should the economic environment in Australia pick up, there is a chance for the company to grow.

Risk: API operates in the pharmaceutical industry where there is no moat. Australia's economy is expected to remain soft with wage growth being an issue. Therefore, it will take time before retailers such as API (although health products is considered defensive and will not fare too badly) pick up again.

Sentiment: Hold
Disclosure: Held
Current Price: $1.287
My Strike Price: $1.25 (Discounted Cash Flow Intrinsic Value: $1.4)




Disclaimer: This does not constitute any financial advice or stock recommendations. As always, Do Your Own Research.

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