February will see a flurry of results announcements - i.e. earnings season. Here are our top picks of counters to monitor either to confirm an uptrend in earnings and/or to enter into a positionn to potentially benefit from a positive results announcement. You would note that these counters are in the small to mid cap category and hence tend to have a higher risk profile compared to the bigger cap stocks so we would advise our readers to consider their risk appetite and do your own homework before you enter into a position.
1) Orion IXL - we have already wrote about Orion twice, here :- https://klse.i3investor.com/blogs/wiz_of_finance/144185.jsp and here :-https://klse.i3investor.com/blogs/wiz_of_finance/144937.jsp . Despite the pullback in prices a couple of weeks back, Orion again reported a huge surge in volume on Friday, pushing the price back to RM0.155. Again, the question would be is this sustainable. There is also resistance in RM0.155 and RM0.16 levels. Should Orion be able to sustain the buying interest and push through the resistance level, the price movement could be quite interesting.
There have also been movements in shareholding with Yahya disposing his shares off-market (sizeable chunk of 4+% of the shares outstanding). Curious to know who transacted with Yahya and is this another sign of the management and ownership take-over. Out with the old and in with the new? In terms of earnings, we have already written in our previous postings on how well we are anticipating Orion to perform in the next quarters.
2) Engtex - Engtex. Hidden gem or sleeping counter? Previous months' performance seem to indicate more of a sleeping counter. The price of Engtex has stabilised around the RM1.10 level. Any movements below RM1.10 have very quickly rebounded to the RM1.10 level. Collection under RM1.10 seems prudent. The next quarterly earnings report will be an interesting one to watch to see which direction the earnings are going. It will also be interesting to examine the margins which will give a better indication on the health of the business. We last wrote about Engtex here : - http://klse.i3investor.com/blogs/wiz_of_finance/140978.jsp
3) Pesona - Yesterday announced that it has won a construction contract. After a relatively quite year in terms of its contracts, this news is a huge positive for its orderbook. As at September 2017, it has a sizeable orderbook of RM1.6 bil Also in the midst of a corporate exercise to acquire a concession that will give it recurring income. The first tranche of the transaction has completed and hence a portion of the concession income should be reflected in the upcoming quarterly report. The next quarterly result should also indicate how significant contribution the concession can make to its bottom line. Overall, its financial performance has been relatively positive the past few quarters and the next quarterly result will help confirm the uptrend in performance.
4) AYS - Our interest in this counter can be summed up by just a few points:
Low PE below 7x. Earnings from operations and not one-offs
Coming quarter should outperform on a year to year basis extrapolating from previous 2 quarters' result
Current price of RM0.425 is quite some way below the high of 2017 of RM0.60+
5) Fitters Diversified - we wrote about Fitters as a counter worth monitoring in our "Picks" for 2018 post. Again, Fitters recently turned black after 3 consecutive negative earnings. This could potentially be a turn-around story. Movements in shareholding - i.e. the entrance of Dato' Leong Kok Wah of Ecoworld fame - is also interesting. The company could be positioned into growth in the coming quarters. The next financial report would give us the information on how far along the company is in its turn-around story.
Disclaimer: This is not a buy call. Please do your own research before investing.
Cheers,
Wiz_of_Finance
If you are interested in contacting us, please contact us at wiz.of.finance@gmail.com
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