What to do with ARB shares?
I am the emerging market analyst at Port Philip Publishing, Ken Wangdong.
Most investors would consider ARB Corporation to be a momentum stock. The stock has been on a strong trend since 2009, which is the long term view. Recently, ARB has been showing refreshed signs of momentum.
In the past few weeks, the stock has jumped from AU$13 to AU$15. That is some very strong performance. However, it is not a top stock in my own watchlist. If ARB can sustain its growth trend for a longer period, I will become more interested in investing in the stock myself.
With that said, there is nothing wrong with ARB’s momentum. And in terms of fundamentals, the stock is also reasonably attractive.
The market is predicting a long term earnings growth rate at 8.83%. Needless to say, revenue growth will likely be positive in the coming years.
The company is liquid and it’s not terribly stretched financially. Its net profit margin is higher than its peers in the sector and in the industry.
In terms of P/E multiples, it is comparable to its peers at 26 times.
My model is giving me a ‘long’ signal for the stock for the coming week. Mind you, my model has had a long position on the stock for a while now.
Again, it is not a top pick in my watchlist. However, it is still an interesting and healthy stock.
Cyclically, the stock is still in a growth phase.
Emerging Market Analyst, New Frontier Investor