Market action – or the wild price swings of stocks accelerating up the charts – happens in the list of the top gaining stocks. These are the stocks that have risen the most over a single day.
Many traders like to check out the top gainers for ideas on where the activity centres – analysing the sectors, or any key themes that emerge from the list. Others, like pure technical analysts or chartists, like to plug these stocks into their trading systems to see if there’s any momentum left or trends that they may capitalise on. Either way, it can offer an interesting insight into the beat of the market.
In a week that saw the ASX200 plunge by 8.7% in just four days – including Friday’s 4.0% rout – there were few stocks that had something to cheer about.
Just two stocks managed gains on Friday, one of them being education provider Navitas, although it still ended up 5.0% lower for the week. Earlier in the week Bow Energy was the top gainer for two days in a row, jumping 9.8% and 8.5% on Monday and Tuesday, however heavy selling later in the week saw it give up those gains and then some to finish the week 5.9% lower. While the top daily gainers all performed better than the index, only gold miner Medusa managed to record a gain over the week. It finished 13 cents, or 1.8% higher at $7.03.
Top Gainer – Bow Energy, +9.8%
Top Gainer – Bow Energy, +8.5%
Top Gainer – Medusa Mining, +2.9%
Top Gainer – Bathurst Resources, +2.4%
Top Gainer – Navitas, +2.3%
Top Gainer: Navitas (NVT)
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On a dismal day on the ASX, just two stocks in the ASX200 managed to make gains – education provider Navitas and Cabcharge, up 2.3% and 1.1% respectively.
Earlier in the week education provider Navitas Ltd announced that it has increased its full year profit by more than 20 per cent to $77.39 million despite a steep fall in student enrolments in Australia (down 14%) and the UK (down 16%). Revenue increased 15.6 per cent to $643.8 million.
Shares in the company fell 10 cents, or 2.6 per cent, to close at $3.75 on Tuesday on the news, however on Friday – the bleakest day on the market since the GFC – its shares managed to make a 2.3% gain.
Chief executive Rod Jones said Navitas’ English division had operated in a challenging environment while the company as a whole would continue to expand in new and existing markets. The English division experienced a 48 per cent fall in earningsbefore interest tax, depreciation, and amortisation. “Although facing headwinds in several markets, the inherent opportunity for Navitas remains robust, with demand for quality education continuing to grow as more students seek education and training overseas and at home,” Jones said.
The Core university programs division underpinned the company’s growth, with six new colleges opening in 2010/11. Navitas’ main challenge in Australia and the UK was the uncertainty caused by changing government policies in relation to the issuing of visas to international students.
The company said weakness in UK and Australian enrolments had been partially mitigated by strong enrolment growth in Singapore, up 44 per cent, and Canada, up 36 per cent. The English division anticipated growth in full year 2012. “The company remains confident in the long-term drivers of its growth, including continued growth of the international education sector, with steady long-term increases in enrolments,” Navitas said.
NVT declared a final dividend of 12 cents per share fully franked, compared with 10.7 cents a year earlier.
While not exactly bullish on the stock, Andrew Inglis of Shadforth Financial Group does have a hold on the education provider that has been out of favour since the introduction of stricter immigration rules for overseas students and the fallout from racial attacks on foreign students in Australia. “The company business model provides strong cash generation, it has low capital requirements and there are significant barriers to entry into many of the universities where they have established on-campus colleges.
Peter Russell from Intersuisse regards Navitas as a global industry leader with strong prospects. “Growth remains exceptional due to a clear focus, strong campus relationships and a cash-generating model of up-front fees,” he says.
Based on Thomson Reuters data, six analysts have a buy on NVT.
Stock code: NVT
Charts: Navitas Limited
More news: Navitas Limited
Investor Centre: Navitas Limited
Bathurst Resources (BTU)
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Phenomenal gains have been made on companies that specialise in the hottest commodities, such as coal explorer Bathurst Resources (BTU), whose shares have risen from just 19 cents to $0.95 – an incredible gain of almost 500 per cent over the past year. BTU is a New Zealand-focused coal miner with a spot in the Buller coalfield on New Zealand’s South Island. On a day that saw more pain for the wider market on Thursday it was the day’s top gainer, up 2.4%, however it was subsequently hammered on Friday to finish the week 9.5% lower.
Investors should always consider the company, sector and global outlook before buying shares. In the case of coal – thermal for generating electricity and metallurgical or coking for steelmaking – the outlook appears relatively bright.
According to the Australian Bureau of Agricultural and Resource Economics and Sciences, world thermal coal trade is projected to increase by 4 per cent a year to 962 million tonnes in 2016. Increasing thermal coal imports into developing economies – particularly India and China – will drive growth, and growing demand will be met by Australia, Indonesia and Columbia.
And in its 2011 March quarterly report on Australian commodities, ABARES says global metallurgical coal trade is forecast to increase at an annual average of 5 per cent to reach 341 million tonnes in 2016, with emerging Asian economies lifting imports. Coal companies may be a welcome addition to any balanced portfolio, and State One Stockbroking’s John Rawicki offers his value selections for investors to consider.
Rawicki’s list focuses on explorers and junior producers, as he believes they offer the most upside in percentage terms if all goes to plan. That’s the point – potentially bigger gains carry substantially higher risk, which investors should carefully weigh before buying stocks with promising objectives. And BTU was firmly on the list.
BTU plans to start producing high quality coking coal from its Bulla project in New Zealand late this year. “The company’s coal is top quality as its low in ash and sulphur and high in carbon,” Rawicki says. “Another benefit is the coal is near the surface and occurs in thick seams.” He says Bathurst has a JORC Resource of 47.1 million tonnes and will spend most of 2011 trying to shore that up towards its planned exploration target of between 60 million and 90 million tonnes.
CSLA Markets has a buy on BTU with a price target of $1.50, saying that it is cheap based on CSLA’s NPV valuation with substantial upside. “Bathurst is trading at a 53% discount to our A$1.50 target price, which includes a development of the Buller Coal Project to 2.1mtpa,” it says. “Longer term there remains a possibility to increase production to 4.0mtpa, albeit with significant uncertainty around timing. Factoring in an expansion to 4.0mtpa from 2016 would see our valuation increase by 75% to A$2.50, representing around 150% upside to the current share price.” You can read their comprehensive report here.
Other brokers are also bullish on the coal explorer, with both E.L & C Baillieu’s Adrian Prendergast and Goldman Sachs’s Neil Goodwill placing a $1.40 price target. However Prendergast warns that there are risks to the coal miner in terms of weather because the area where they intend to mine is subject to heavy rainfall year round. “The company has designed its pits adequately but can not prevent some fines from being washed away,” says Prendergast. “Also, given the project is in the mountains, operations are at times brought to a standstill by clouds touching down, creating dangerous zero visibility at site.” You can read E.L & C Baillieu’s report here.
Meanwhile Goldman Sachs has a positive outlook for coking coal and BTU. “We think BTU is attractively priced given its coal production profile, coal quality and our coking coal price forecasts and, as a commodity, it is geologically scarce,” it says. “While there are always start-up/construction risks with new projects, we regard these as relatively modest for BTU and, given the longer duration of the coking coal story, any such delays will not significantly affect the valuation, in our view.” You can read Goldman Sachs’sreport here.
The Goldman Sachs Resources Fund is also overweight BTU.
Based on Thomson Reuters data, 100% of analysts have a buy on BTU (3 analysts).
Stock code: BTU
Charts: Bathurst Resources Limited
More news: Bathurst Resources Limited
Investor Centre: Bathurst Resources Limited
Top Gainer: Medusa (MML)
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Goldman Sachs: BUY
NCP Northland: BUY, price target $8.90
FIS (UK): BUY
In a day that saw the stockmarket plunge 2.3% to a 12-month low, there wasn’t a lot to cheer about for Australian investors on Wednesday. Only a handful of gold miners managed to eke out gains, including Newcrest, Gryphon, Alacergold, Perseus and Medusa, who made up five of the top six gainers. Ultimately it was Medusa who came out on top, with a 2.9% gain to finish the day at $7.38. As the market tumbled throughout the week it gave up much of the gains but it was one of the few stocks that managed a win for the week, with a 1.8% increase.
After hitting an all-time high of $8.71 at the end of May Medusa Mining has been on a rollercoaster ride, tumbling 30% in the month to June 29. It then put back on 20% in five weeks as global markets have plunged and investors have rushed into the save haven of gold – pushing the yellow metal to a record high of US$1,671.
Despite its volatility, the Australian-based Phillipine-focussed gold producer has been a standout performer this year in a sideways market, rising 80% over the past 12 months on the back of soaring bullion prices.
Listed in Australia, Canada and the UK, the principal activities of MML include mineral exploration, evaluation, development, mining and production of gold. MML’s projects include multiple mines in the Phillipines, where it produced 90,000 ounces of gold last year.
Medusa reported just last week that it had set a new production record at the Co-O gold mine, one of the cheapest gold mines to run in the world on a per ounce basis. In the 12 months to June 30, Medusa produced over 100,000 ounces of gold at a cash cost of US$189 an ounce, then selling it at an average price of US$1,371.
“I am pleased to report that annual production of 101,474 ounces for this financial year is a new record,” said MD Peter Hepburn-Brown. Hepburn-Brown suggested that the record annual production could be broken this coming financial year, with a forecast production of 100,000 to 110,000 ounces. “During July 2011 we commenced changes to the majority of our existing haulage shafts to facilitate the increasing rate of development and set the mine up for longer term benefits.” You can read the full quarterly report here.
Goldman Sachs is keen on the stock, recently purchasing shares in MML for its Resources Fund. “MML offers low-cost gold production and a significant opportunity to expand its resource inventory through near-mine exploration,” said Goldman Sachs in a research note.
Canadian broking house NCP Northland has a buy and a $8.90 12-month target price on MML, saying that Medusa’s low operating costs make it relatively lower-risk versus its global peers. “Exploration programs extending beyond the Co-O mine area indicate the potential for reserve expansion,” it says. “Additionally, several projects are being tested along its significant land package held in the eastern Philippines, which should provide long-term upside.” You can read thefull report here.
Major shareholders are Bendigo & Adelaide Bank and Trust Company Fiduciary Services.
Based on Thomson Reuters data, analysts are bullish on MML – four analysts have a buy on MML, two have a hold, none have a sell.
Stock code: MML
Charts: Medusa Mining Limited
More news: Medusa Mining Limited
Company website: Medusa Mining Limited
Bow Energy (BOW)
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WilsonHTM: BUY, price target of $1.80
Deutsche Securities holds 5% of BOW
Merrill Lynch holds 5.1% of BOW
Following on from Monday’s whopping 10% gain, BOW was again the day’s biggest gainer on Tuesday, soaring 8.5% on a day the broader market slumped 1.6% as the debt rally in the US faltered. However it was hit along with the rest of the market on Wednesday, Thursday and Friday to finish the week 5.9% weaker.
It’s been a rollercoaster ride for investors. After hitting a 12-month low of 73.5 cents in mid-May BOW had bounced strongly, rocketing 60% over the past two months to hit $1.215 on Tuesday. A 21% fall in the past three days well and truly put an end to the run, but if Deutsche, Merrill’s & WilsonHTM are correct there’s still plnety of upside in this explorer.
According to its website, BOW’s “primary business is the discovery and commercial production of oil and coal seam gas fields with projects in several of Australia’s producing Basins”. The focus is on exploration of coal seam gas (CSG), although it is also involved in oil exploration. It has eight CSG projects in Queensland within the Bowen and Surat basins. The next step for BOW is to become a fully fledged producer to supply gas to local and international markets.
With two of the world’s largest investment banks as major shareholders – both Deutsche and Merrill Lynch own 5% of BOW – there’s some serious weight behind the company. And with its announcement on Jul 19th that certified 2P reserves by 60%, the company seems to be moving in the right direction. CEO John De Stefani says that the new gas reserves at Blackwater are a further step towards achieving its goal from the current funded work programs. “Pilot programs are continuing on the Blackwater CSG Field with a series of pilot wells aimed at obtaining further reserve upgrades,” said De Stefani.
If you’re interested in more background information on BOW and where the company currently sits, you can read the Quarterly Activities Report, released on Friday.
Back in February this year John Young, Wilson HTM resources analyst had a $1.80 target on BOW. “Rerating catalysts include achieving commercial flow-rates at its Blackwater and Norwich Park projects, conversion of 3P to 2P reserves and securing major gas supply contracts,” he said. Although it’s a year old now, you can access one of Young’s previous reports from last year on the Bow Energy website:
Based on Thomson Reuters data, 100% of analysts have a buy on BOW, no change from 3 months ago, although it must be noted that there are only three analysts covering the stock.
Stock code: BOW
Charts: Bow Energy Limited
More news: Bow Energy Limited
Investor Centre: Bow Energy Limited
Each week we will look at the top gainers and biggest losers throughout the week. Note that these are not recommendations to buy or sell, although we do include broker views on these stocks in the article.
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