Question of the Week

Questions of the Week

Co-founder of the Switzer Report
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Question 1: Costa Group (CGC) has been going through hard times with the drought and fruit fly. One day it will rain and spraying will help with the flies. The shares appear down at the moment and were not mentioned by Peter for 20 shares that may recover over the next year or so. Your thoughts, please?

Answer: In regard to Costa (CGC), I am a little wary. I like the company but maybe the recent earnings downgrade highlights the variability and challenges in agriculture – and suggests the company can’t command such a multiple. Even after the share price plummet, it is still trading on a multiple of 22.2x FY19 earnings and 18.5x FY20 earnings. Fruit fly impacting Australian citrus, crumbly raspberries, unseasonably warm weather leading to poor customer demand for mushrooms and issues with Moroccan blueberries were cited as reasons for the earning downgrade.

The brokers are marginally positive but also wary. 4 buys, 1 neutral and 1 sell recommendation and a consensus target price of $4.66, some 9.4% higher than today’s closing price of $4.28.

Question 2: I own shares in my name and would like to know whether a one-off transfer of these shares into my self-managed super account is possible?

Answer: Potentially, yes. It will count as a contribution so:

  1. You must be eligible to make a super contribution (under 65, or if 65 to 74, meet the work test);
  2. It will count against your non-concessional cap (so you must have room in the cap); and
  3. This should be done at market value. As it will be a disposal, you may also have to pay capital gains tax on any profit.

Question 3:  Apart from superannuation monies, we have other monies that don’t qualify for superannuation. Unfortunately, it appears that there is nothing like an industry fund or a not-for-profit fund that I could use for the non-superannuation monies. Is this correct?

Answer: There is a plethora of managed funds, exchange traded funds, listed investment companies and other investment products that cater for non-super monies. In the case of ETFs, some managers are charging less than 0.10% pa – a fraction of the typical 0.75%  pa charged by the typical industry super fund. If you’re talking about multi-asset class portfolios that are being managed actively, there is a bit of a gap there. They are coming – have a look at one I am associated with:

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.

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