Should You Buy Tatts Group Limited Shares Today?

What Happened to the TTS Share Price?

Tatts Group Limited [ASX:TTS] gained 2.47% by 1:47pm today. The stock was trading at a $3.94 a share. The whole market was up today. Everyone is expecting the RBA to cut rates. Overnight, the Federal Reserve also signalled that it will want to see a stronger labour market before lifting rates. We are now seeing the full effects of monetary policies being played out. This is clear evidence that asset prices are benefiting from the much more accommodative central banks of today’s world.

Why Did This Happen to TTS Shares?

Tatts Group Limited is a provider of gambling services in Australia and the UK. Lotteries are its main offering. The latest financials have seen a stronger net profit and stronger revenue. This means the group is making money in the current economic climate. However, investors are looking for an even stronger result from the company.
If 10 years ago you’d invested in the ASX 200 index, you would have yielded a much better return than if you’d bought TTS. That said, the rallies in the last few years have been impressive. The company definitely offers an edge over the index during normal market conditions, discounting crisis periods such as the Global Financial Crisis.

What Now for TTS?

Market analysts are quite positive on TTS. A number of brokers raised their outlook for the stock recently. The long term growth rate of the company’s revenue and earnings appears to be positive, which has been supported by higher income from lotteries and online sales. These are structural trends to ‘bank’ on. They are the factors that make TTS attractive.
The group has expressed that its momentum will carry forward into 2015. This is good news for investors investing into the fundamentals of the company. On the other hand, the strong gains in the last year have made the company more of a momentum stock. This very much pleases the appetite of momentum investors.
All in all, the company does appear to be attractive at this point. However, expectations for the company have been rising. As that happens, investor sentiment becomes a skewing factor to the stock’s price movements.
The market is very sensitive to whether the company can continue its winning streak. Until it starts to disappoint, it remains a hyped momentum play with some good fundamental strength.

Ken Wangdong
Emerging Market Analyst, New Frontier Investor

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