Latest / ausbiz a.m / 04.09.26 with Mitchell Stone, Invest with Mitch
Transcript
- Andrew: Good morning and welcome to your morning wrap from Osbys. It is Friday, September the 4th, and we're expecting the local market to extend yesterday's gains, ASX futures up around three-tenths of a percent. In a moment, we'll preview the day ahead. With Mitchell Stone, first a quick wrap of where global markets finished overnight. The US dollar and bond yields fell, equities rose after FOMC member Christopher Wallett said the Fed could hold in September if inflation data. Next week softens. So on Wall Street we saw tech stocks rally, which ⁓ lifted the Nasdaq one point four percent, the SP up one percent, the Dow finishing one point two percent higher. ⁓ notable movers there, including Tesla up around five and a half percent, and NVIDIA almost two percent higher. Among the commodities, Brent crude remains around ninety-five dollars a barrel, gold is back above four and a half thousand US, iron ore up to one hundred and one US a ton. ⁓ Bitcoin also rallying up some five percent to above. eighty one thousand US and the Aussie dollar has risen to seventy two US cents. Well joining us now to get across the market moves, Mitch Stone from Invest with Mitch. Mitch, good morning. Mitch Stone: Good morning Andrew. to have you. Thanks for having me on. and Andrew: Good to have you on again. Let's ⁓ take a look at that overnight session. Look, I mean, clearly weighing on markets at the moment, particularly investor sentiment, have been those higher bond yields. They have come off just over the past couple of days. this is a lot to do with obviously that that Fed commentary and perhaps the expectations that they will need to hike. Mitch Stone: days. This is a lot to do with obviously that, that Fed commentary and the expectations that they will need to hike. Yeah, yeah. Overnight we've got some interesting commentary out of the Fed. Walla signals his support for no rate hike. So I think the market was really starting to price in a hike and now there's a bit of uncertainty around that. So it was a good night on Wall Street really setting the stage for a solid Friday here on the ASX. Andrew: Yeah, how does that set us up? Because ⁓ certainly ⁓ earlier in the week we had ⁓ certainly negative sentiment that weighed on the on the broader market. Managed to ⁓ to finish in the green yesterday. It looks as though we're gonna finish positive or start at least positively today. W what what are you seeing the trends developing on the local market at the moment? Mitch Stone: Yeah, how does that set us up? Because certainly, early in the week, had a negative percent of the weight on the broader market. We managed to finish the green year stable. We finished positive, we'll start the lease positively today. What are you seeing the trends developing on the local market for month? Well, ASX is still hovering above 9,000 points, which I think is a key psychological level. We've just finished reporting season, which was... guess it was a bit of a non-event really. It sort of came and came and went. And yeah, the Aussie market just really looking for clues from from Wall Street and certainly bullish momentum over there. So what's the old saying? When America sneezes, Australia catches a cold and and and vice versa as well. So as long as they're trucking along, I think our market will too. All right. So when you look at reporting season, what were you take out? Andrew: All right, so when you look at reporting season, what were your takeouts from that, Mitch? Mitch Stone: Look, the banks a little bit underwhelming, approvals were obviously down, but the market has already priced that in. I think the big miners a little bit better than expected. So Net-Net, it was a bit of a non-event. Well, let's maybe turn to a couple of stocks on your list that you're focused on. Andrew: Well let's maybe turn to a couple of stocks on your list that you're you're focused on though. now in fact this wasn't what this is a a laggard reporting season. Talking about Laggards, ⁓ it's taken a year. ⁓ I shouldn't laugh because if you've been in this stock, it's been incredibly painful. Corporate travel is what I'm talking about. It has ⁓ hasn't been trading for for more of the year. Just got it back on the boards yesterday off the back of its ⁓ Mitch Stone: is a Laggard reporting station. Talking about Laggards, it's taken a year. I shouldn't laugh because you've been in this stuff. corporate travel is what I'm talking about. hasn't been trading for more than a year. Just got it back on the boards yesterday off the back of its updates and took a huge hit as a result. Talk us through this, I don't know if we'd call CTD or corporate travel management a laggard. Would we say it was an absolute dumpster fire? And I'm strangely attracted to it. Yesterday, so basically, if you're new to this story, they're one of Andrew: its updates and took a huge hit as a result. Talk us through this, Mitch. Yeah. Yeah. Mitch Stone: world's largest corporate travel companies and ⁓ last year they went into voluntary suspension it was trading around the 16 dollar per share level market cap of about two billion back then the CEO at the time ⁓ requested a voluntary suspension saying look there could be potential rectification to some ⁓ prior financial statements essentially the UK business that they were overcharging their clients and that just escalated the scandal deepened they pulled in the auditors and had to go back three years subsequently they were unable to lodge their financial reports and and went into ⁓ went into trading help for it for a whole year yesterday they they came back out So look, it wasn't surprising to see that the shares got battered yesterday, closing down around 85 % on the day. But I don't think the situation is as bad as what everyone's making out to be. We certainly saw some forced selling by fund managers during that period of suspension. It got pulled from the top 300. those fund managers that tracked the top 300 had no choice but to sell yesterday. We would have seen some potential ⁓ margin calls, we potentially would have seen some increase in short selling that just couldn't catch a break. No, Andrew, I've got a rule of thumb that tends to work 100 % of the time, 60 % of the time. And that is if a stock falls 85, 90 % in one day, you disclose your eyes and you buy it. And I actually... Entered that position yesterday afternoon at about 250 Ended up closing at 236. So it'd be really interesting to see what happens on today's Well, absolutely. Okay, so you're seeing opportunity here. I guess the question, Mitch, too, is, I mean, is the business model still intact? Given what's happened over the past 12 months, Andrew: Well, absolutely. Okay. So you're seeing opportunity here. ⁓ I I guess the question, Mitch, too, is I mean, is the business model still intact? It's ⁓ I mean, given what's happened over the past twelve months, others have come in, ⁓ we know what's going on with AI in the in the travel space, perhaps less so in the corporate travel. ⁓ nonetheless, I mean what's what's it gonna take to turn this around and and perhaps for you to get more bullish on it? Mitch Stone: have come in. We know what's going on with AI in the travel space, perhaps less so in corporate travel. Nonetheless, mean, what's it going to take to turn this around and perhaps for you to get more bullish on it? Well, I am bullish on it, but it's certainly a high risk play. mean, if you look at the numbers, ⁓ FY 2026, which were just lodged, revenue was actually up 4 % to $669 million. ⁓ Underlying EBITDA was up 36%. to 113 million and net profit after tax swung to 17 million dollars profit. That was versus a 350 million dollar loss in FY 2025. So there is evidence of a turnaround story taking place. Andrew: All right, so well, I'm I'm gonna be fascinated to see how this plays out for you, Mitch. I'm perhaps we can when we ⁓ catch up again. ⁓ review ⁓ your thinking, whether you ⁓ feel as though you've made the right choice. But clearly ⁓ you're ⁓ you're betting on it. So let's see how that pans out for you. Let's turn to another stock then. Domino's. ⁓ interested to know why you've chosen this down. Of course, this ⁓ has really been under pressure the past few years. Are you seeing substantial signs of a turnaround for for dominoes. Mitch Stone: Yeah, I am. This is a business that essentially grew way too quickly during COVID. Back then, there was a lot of stimulus money flying around. People were sort of forced to stay home and the CEO made a bit of an error by expanding too quickly. Outside of Australia, went into some weird and wonderful markets, France and Japan. And it turns out that the French and Japanese don't like pizza as much as we do. Essentially, open a bunch of unprofitable stores and that turned into a bit of a nightmare situation for them. ⁓ Domino's has seen like three CEOs in the past couple of years. It's been quite fascinating to watch, but I'm betting on a turnaround story here. ⁓ FY 2026 revenue was down ⁓ 11%. Okay, not a great headline number. ⁓ But interestingly, NPAT was up 4%. Essentially, what they're doing is they're cutting the steep discounts and they're working on improving, ⁓ getting those costs down. I mean, how much money can you possibly make out of a $5 pizza? You can't, you've got to raise the price. all by trying to close down those unprofitable stores. yeah, look, I think the business is starting to show signs of a turnaround. It will be a long journey. It's not going to be ⁓ a quick trade like corporate travel, which I'm hoping for today. But I do think at current levels, the share price, it's about sort of 19, 20 bucks. It'd have to be in the eyes of ⁓ what could be a potential takeover target, someone like Bain Capital. I know that they were looking at that Remember when they were referring themselves to the TechSoc that didn't turn out well for you? Look, to be honest, particularly when my kids were younger and you had a whole lot of friends over, then that was the easiest... Andrew: Yeah, r mm remember when they were referring to themselves to Tech Stock, that ⁓ that didn't pan out terribly well, did it? ⁓ we moved on from that. ⁓ look, to be honest, ⁓ particularly when my kids were younger and ⁓ you know, you had a whole lot of friends over, then that was the easiest thing to go to. ⁓ i if you didn't really sort of regard the taste as being critically important, but more recently, no. Mitch Stone: Well, just, just, just going back to the tech thing. I actually bought a pizza off their app a year ago. I thought I was signing up for a $5 pizza and I ordered it and there was all these crazy upsells after, do you want a free four week subscription to KO? I said, no, do you want to, you know, a cheap pair of shoes? It wasn't like, it wasn't that, but that was what they were trying to do with it with their tech. I found it quite bizarre, but I think most of that has gone these days and they're sort of focusing on their pizza range. Andrew: Yeah. Yeah, in fact Jack Cowan, who's come in as the interim chair, a bit of a guru obviously in fast food, he said he wanted to get rid of all that, ⁓ because it was just it was too complicated. Mitch Stone: Yeah, too complicated. It ruins the user experience. So, you know, I'm more for them raising prices, but you've got to do it incrementally as well. So I'm not surprised to see sales were down. I'm also not surprised to see net profit up as well. So I look, I think they're on the right path with what they're doing. Andrew: All right, so let's call that ⁓ mildly bullish. ⁓ you're buying the stock. ⁓ sounds as though you might be buying their product as well then, Mitch, too. Mitch Stone: Alright, so let's call that mildly bullish buying a stock. as though you might be buying a product as well. Look, I may be guilty of that. Alright, Mitch, well, maybe that's on the menu tonight for a Friday night. Good luck to you. Terrific to catch up again. Thanks for joining Cheers, Andrew. Andrew: All right. ⁓ Mitch, well maybe that's on the menu tonight ⁓ for a Friday night. ⁓ good luck to you. Hey you look ⁓ terrific to to catch up again. Thanks for joining us. All right, that is the ⁓ the morning rap. Terrific ⁓ to get across that with ⁓ with Mitch Stone from Invest with Mitch. hope you have a great day. I'm Andrew Gagan. Thanks for listening. Mitch Stone: That is the morning wrap. Terrific to get across that with which Mitch Stonema invests with Mitch. Hope you have a great day. I'm Andrew Gagan. Thanks for listening.