Going up

At nearly the half way point of the year Stock Takes thought it was an apt time to have a look at which stocks have risen the most this year and which ones are doing it tough.

According to Bloomberg statistics the top S&P/NZX50 stock for the year to date is A2 Milk.

As of Wednesday it had risen nearly 59 per cent since the start of the year in what has been a stellar run.


Once thought of as a bit of an outsider the fortunes of A2 Milk have soared on the back of strong growth in Australia and infant formula sales into China.

In April it forecast revenue of $525 million in the year ending June 30, up from $352.8m a year earlier and said its second half infant formula sales were set to be higher than the first half of its financial year.

Despite its strong performance already the stock has a hold consensus rating according to Reuters with two analysts rating it to outperform and three rating it as a hold.

Second best performer is tech-darling Xero which had risen 49 per cent this year to more than $26 a share.

The company which once traded as high as $44.79 in March 2014 has shrugged off last month's share sell-down by director Craig Winkler.

Winkler sold 3 million shares on and off market at an average $22.63 apiece for a total of $67.9m through First NZ Capital as part of a 10-year plan to liquidate assets to fund philanthropic pursuits. He still owns 10.5 per cent of the company.

But perhaps the biggest surprise of the top performers is Air New Zealand. Shares in the national carrier were up over 35 per cent so far this year as of Wednesday.

Favourable jet fuel prices have boosted the performance of the company and are expected to continue to help lift its revenues.


Last week the company said its 2017 earnings before taxation were likely to exceed $525m - a jump up on its previous guidance.

In February the company said its 2017 earnings before taxation would be in a range of $475m to $525m.

Chief executive Christopher Luxon pointed to a significant fuel benefit and increased revenues as the main reasons behind the higher guidance.

Its shares have touched $3 this week and closed at $3 yesterday.

Going down
On the flipside of the coin there has been some very weak performances for some stocks.

The share price of Metro Performance Glass has fallen close to 30 per cent so far this year.

The company's share price was hammered in February after it down-graded its earnings expectations.

Last month it reported a profit drop as it absorbed acquisition costs associated with its recent Australian purchase.

Investors have been disappointed at the company's performance in what has been a booming building market.

Also in the worst performing list is Fletcher Building. Its shares had fallen close to 28 per cent as of Wednesday making it third-worst performer after Comvita.

Fletcher's shares were hit hard by an earnings down-grade in March.
Shares in the company were trading as high as $11.10 in September but closed yesterday at $7.55.

That has left some seeing it as a buying opportunity.

The stock has a consensus outperform rating on Reuters with three analysts saying it is a buy, another three rating it as outperform and two giving the company an underperform rating.


Shares in Steel &Tube fell 6.8 per cent to $2.35 on Wednesday after the Commerce Commission announced it had filed 29 charges against the company for allegedly making false and misleading representations about its steel mesh product known as SE62.

But despite the legal action, which was first flagged in December, shares in the company have held up strongly rising more than 30 per cent in the last year.

Mohandeep Singh, an analyst with Craigs Investment Partners said Wednesday's announcement was expected with the only new part being the number of charges.

"The fall in the share price I think largely just reflects the impact on sentiment for the stock."

He noted it had bounced back a lot. The stock closed yesterday at $2.49.

Singh has forecast a 2017 net profit of $22.6m down from 25.8m in 2016 before bouncing back to $25.5m in 2018 and has a hold rating on the stock.

Summerset's Retail raising
Rival retirement village operators are bound to be closely watching Summerset Group's bid to raise up to $100m from retail investors.

The six-year fixed-interest bond which has a minimum annual interest rate of 4.7 per cent is thought to be the first time a listed retirement village company has tapped up mum and dad investors.

Until now companies in this sector have relied on the banks for funding - the cheapest place for them to borrow.

Summerset says it will use the money to repay a portion of existing drawn bank debt and diversify its funding sources.

Castle Point director Stephen Bennie said if Summerset could get the deal away he wouldn't be surprised if other companies in the sector also turned to retail investors to raise money.

But likewise if it struggled to get over the line they won't see this as an option.

Plenty of other listed companies, including property trusts and the electricity retailers, have successfully tapped into the retail investors market to raise money through bonds in recent years.

The demand for yield is still strong from investors. Despite bank rates coming back a little they remain very low compared to what investors could get in the bank 10 years ago.

But there may be some concerns about the retirement village sector with the Auckland property market slowing down.

The offer closes on July 6.