Retail Food Group (RFG)
Rundle: It's sell for me. Their core franchise business has been struggling, but Retail Food Group has been making more from them. I think that's unsustainable and the chickens will come home to roost. It's a sell.
Stott: Hold for us, James. 13 times P/E growing at 20%. Good cash flow business. Hold for now.
Aconex (ACX)
Stott: Still a sell. The P/E still looks ridiculously high at 50 to 60 times, post the downgrade. In the sin bin for a good six months. Sell.
Rundle: I think it's a sell as well. The key thing with Aconex is the fact that they're not showing any operating leverage, and that's why these software businesses get a premium multiple. I think it will continue to de-rate. Sell.
Altium (ALU)
Rundle: It's a hold. It's a good business. Cashflow is pretty good, or it's getting better at least. But the whole market loves it, and I just don't like that on such a premium multiple. So, hold for me.
Stott: Sell. Again, it's expensive and when you hear it's a market darling that worries us. We get paranoid, so sell.
A2Milk Company (A2M)
Stott: Buy. A2 have worked out the right channels to China. The Bellamy’s news is certainly not a negative for A2. They have the right channels into China, and they have nailed those by upgrading in the last few months. So, buy.
Rundle: That's a hold for me. Still quite a ritzy multiple. I'm just worried about their margins in the infant formula business if Bellamys does start to heavily discount which we're seeing early signs of. So, hold.
Speedcast International (SDA)
Rundle: I think that one's a buy. They acquired a business that’s highly leveraged to energy at probably the right time in the cycle, and the market's not really giving them the benefit of the doubt for that. I think it's still cheap enough to buy it.
Stott: Hold. Good business. Good management team. We get worried about companies making large transformational acquisitions like Harris CapRock. We're watching for the integration of that over the next few months. Hold for now.
