Michael likes Costa Group (CGC), an Australian “pure food” supplier, with ambitious China plans, in a business subject to seasonal fluctuations. “Disappointing earnings guidance last week saw its share price trounced, falling from above $5.30 to touch $3.60.
“Those who have faith that management can deliver on their plans may see current levels as a bargain,” Michael says.
Michael doesn’t like Eclipx Group (ECX). “The shares shot higher last week after a new management group announced a turnaround plan.
“However, the earnings released at the same time show underlying profitability continues to slide. A re-structure may help, but in my view the businesses here are traditional or first-
generation internet operations, and under ongoing threat from newcomers to the space. A potential value trap, even at the much-reduced share price,” he says.
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