Why Recall Holdings and McMillan Shakespeare have rallied?

Recall Holdings Ltd (ASX: REC)

 
REC Dividend Details

• Stock price rally: The shares of REC rallied over 7.91% in the last one month alone driven by its series of positive updates (as at March 31, 2016). In fact, the stock improved by 7.2% on April 01, 2016, as the group’s potential acquirer Iron Mountain agreed to divest part of the group’s business in US and UK as well as launch REC business in the UK, after the regulatory bodies review the merger. On March 31, 2016, Iron Mountain reported that Australian Competition and Consumer Commission gave approval for proposed undertaking of the group in Australia while Competition and Markets Authority agreed to Recall’s UK business as a separate entity.
• Recommendation: We believe that the recent rally in the stock was mainly due to these positive outcomes placing the stock at higher valuations. REC is trading at a high P/E with a decent dividend yield while the stock price is close to its 52-week high value. We give an “Expensive” recommendation on this stock at the current price of  $8.04

 

Updated Synergy Assumptions with recent changes (Source: Company Reports)
 

McMillan Shakespeare Limited (ASX: MMS)

MMS Dividend Details

• Salary packaging expertise: Queensland Government reappointed MMS wholly owned subsidiary, Remuneration Services (QLD) Pty Ltd (RemServ), as a salary packaging provider indicating the group’s expertise in this domain. Queensland Government has over 205,000 staff with around 120,000 salary package.
• Stock performance: In view of the above, MMS stock surged over 2.08% on April 01, 2016 leading to an overall gain in the stock of 10.63% (as at March 31, 2016). We remain bullish on MMS and reiterate our “BUY” at the current price of $12.75

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