Seven consumer cyclical stocks

 
Ardent Leisure Group


AAD Details

Strategic move on sale of d’Albora Marinas portfolio:Ardent Leisure Group(ASX: AAD) stock rose about 15% in last one month (as of August 11, 2016) after a recent fall as investors were concerned on the group’s performance over Brexit outcome. Moreover, the group’s update of postponing sale of the d’Albora Marinas portfolio led to the stock decline. AAD took this decision to make some capital enhancements before proceeding for the sale. The company is paying final dividends on August 31, 2016. We remain bullish on this dividend yield stock and recommend a “BUY” at the current price of $2.31
 

AAD Daily Chart (Source: Thomson Reuters)
 
Crown Resorts Limited


CWNDetails

Focusing on domestic opportunity:Crown Resorts Limited (ASX: CWN) got the approval from NSW Planning Assessment Commission for the modification of the plan for Barangaroo and for the construction of the Crown Sydney Hotel Resort at Barangaroo South. At the same time, the group is facing legal proceedings from the Millers Point Fund Incorporated regarding the NSW Planning Assessment Commission approval on the projects. But, we believe that the group would be able to withstand these proceedings and the company has stated to defend the same. CWN is focusing on the luxury tourism accommodation opportunity in Sydney which has growth potential. The group has made efforts to demerge its non performing investments (including Melco Crown in Macau). We recommend a “Hold” on this dividend yield stock at the current price of $13.28
 

CWN Daily Chart (Source: Thomson Reuters)
 
Ainsworth Game Technology Limited


AGIDetails

Novomatic's majority shareholding in AGI:Ainsworth Game Technology Limited (ASX: AGI) is selling 52.2% of its stake to Novomatic AG. As a result, AGI stock fell over 10.2% in the last three months (as of August 11, 2016).
 

AGI’s growing international profitability (Source: Company Reports)
 
With this move, management believes that they would benefit from the collaboration across a range of markets that would be yielding positive results to long-term shareholders for wealth creation, via Novomatic's majority shareholding. It is expected that AGI would benefit under the control of Novomatic through the access to Novomatic’s games library and the opportunity to distribute products via Novomatic channels. Moreover, the stock is trading at attractive valuations with a very cheap P/E and has a decent dividend yield while it rose about 5% on August 11, 2016. We give a “Buy” recommendation for this stock at a current price of  $2.32, ahead of the full year result release on August 23, 2016.
 

AGIDaily Chart (Source: Thomson Reuters)
 
Kogan.com Ltd

KGNDetails

Efforts to expand business:Kogan.com Ltd (ASX: KGN) was recently listed on ASX via IPO and raised over $50 million at $1.80 per share. The group intends to divert the funds to expand its business through new products and marketing. The group estimates revenue rise to $241.2 million and EBITDA (earnings before interest, taxes, depreciation and amortisation) of $6.9 million for 2017. Kogan.com now has about 28,000 products for sale in the current market. Meanwhile, the group’s founder, Ruslan Kogan and CFO David Shafer have retained major stake of 69.2% of the business indicating their confidence on the group. The shares of KGN generated over 4.67% returns since its listing till date (as of August 11, 2016). We recommend a “Speculative buy” for the stock at the current price of $1.585

 
KGN Daily Chart (Source: Thomson Reuters)
 
Tatts Group Limited


TTSDetails

Sold UK Slots Business:Tatts Group Limited (ASX: TTS) recently confirmed their talks with Intralot SA for acquiring Intralot’s Australian and New Zealand businesses. This move from TTS could affect its balance sheet owing to the current net debt position. Even though the group sold its United Kingdom based slots business Talarius Limited, to Novomatic UK Limited to strengthen its capital position, the group raised only£111m (A$210m), which in turn would be used to repay the group’s existing GBP denominated debt facilities. The company’s wagering operational results also continued to show softness in retail network for 1HFY16. We give an “Expensive” recommendation on the stock at the current price of  $4.01
 

TTSDaily Chart (Source: Thomson Reuters)
 
Retail Food Group Ltd


RFG Details

Speculation concerning Eagle Boys:Retail Food Group (ASX: RFG) recently confirmed that the rumours were untrue in a statement issued to the Australian Securities Exchange. Even though, this company’s acquisitive activity remains a central feature of its strategic growth, the group confirmed it is not engaged in any discussions to acquire Eagle Boys Brand System. Moreover, management reiterated that they would pursue opportunities only which are EPS accretive, capable of generating business in supply side scale and accordingly enhance the number of Brand Systems and outlets owned by the company. This move from the group indicates the cautious stance of the group while making acquisitions.
 

RFG’s brand presence across the world (Source: Company Reports)
 
Retail Food Group has been expanding its business via acquisitions and was able to report a decent performance even during challenging conditions. RFG stock generated over 38.57% in the last six months (as of August 10, 2016) and we believe there is more upside to witness. Accordingly, we recommend a “Hold” for this dividend yield stock at the current price of $5.85
 

RFGDaily Chart (Source: Thomson Reuters)
 
JB Hi-Fi Limited


JBHDetails

Seeking to acquire The Good Guys:JB Hi-Fi Limited (ASX: JBH) reported that they are making a bid for the business of The Good Guys. If JB Hi-Fi wins the bid and acquires The Good Guys then it could significantly boost its store numbers, particularly those under its new ‘HOME’ format brand which focuses predominantly on selling white goods such as refrigerators and washing machines. This would also lead to a merger of two of the country’s biggest electronic retailers and would enhance the group’s penetration. Recently, Australian Competition and Consumer Commission (ACCC) has also commented on not opposing JBH’s proposal move for The Good Guys as the companies generally focus on different product categories and customers. The stock has moved up about 4.6% in the last five days (as at August 11, 2016). We recommend a “Hold” on this dividend yield stockat the current Price of $27.38
 

JBH Daily Chart (Source: Thomson Reuters)

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