Stock markets have a dynamic nature. Thus, it becomes crucial to periodically review and add stocks based on economic indicators and market conditions. In the wake of Australian inflation and the RBA cash rate remaining at 4.35%, the following stocks are recommended for July 2024.
Insurance Australia Group Limited (ASX: IAG)
Insurance Australia Group Limited, in the first half of 2024, reported strong results across its Direct Insurance Australia (DIA), Intermediated Insurance Australia (IIA), and New Zealand segments.
In FY23, Insurance Australia Group Limited had reported a remarkable increase in net profit after tax, reaching $832 million compared to $347 million in FY22. This significant growth translates to a diluted earnings per share (EPS) of 32.20 cents, up from 13.33 cents in FY22.
Furthermore, diluted cash EPS for FY23 surged to 18.40 cents, a substantial increase from 8.49 cents in FY22. This growth in cash earnings reflects the company's robust Financial Performance and effective management of resources.
IAG's cash earnings also saw a remarkable rise, reaching $452 million, representing a remarkable 112% increase compared to $213 million in FY22.
In the first half of 2024, Insurance Australia Group Limited (IAG) achieved a significant milestone with a reported Gross Written Premium (GWP) growth of 12.5%. This growth was underpinned by a robust increase of 10.2% in Gross Earned Premium (GEP). Looking forward to the second half of 2024, IAG anticipates continuing this positive trend, with expectations for further expansion in GEP. These developments reflect the company's strategic initiatives to enhance its market presence and drive sustainable growth.
IAG declared an interim dividend of 10 cents per share, 40% franked, up from 6 cents per share, 30% franked in 1H23. The dividend payout ratio is 59% of 1H24 NPAT, down from 68% in 1H23. IAG's dividend policy aims to distribute 60-80% of NPAT. As of 31 December 2023, the company had a $321 million franking balance and $43 million in franking credits available for distribution.
IAG announced an on-market share buyback of up to $200 million, reflecting its confidence in its financial position and commitment to enhancing shareholder value.
De Grey Mining Limited (ASX: DEG)
De Grey Mining Limited (ASX: DEG) announced significant developments in their drilling efforts at the Eagle and Diucon deposits within the Hemi project.
Its primary focus has been on expanding the Mineral Resource Estimate (MRE) originally outlined in November 2023, particularly at Eagle and Aquila, suggesting additional potential beyond initial feasibility studies.
De Grey Mining Limited has strategically advanced its business development by securing an Exclusive Option Agreement to acquire Kalamazoo Resources' Ashburton Gold Project. De Grey Mining closed the quarter with a strong financial position, holding $319 million in cash reserves and maintaining a debt-free status.
The company has consistently expanded its revenue base year-on-year while increasing its cash and cash equivalents. Notably, it has effectively minimized its debt to negligible levels, solidifying its strong financial position.
The company has also improved inventory management, leading to a reduction in inventory days, highlighting its financial strength and enhanced operational effectiveness.
The company has solidified its position through the formal endorsement of the Definitive Feasibility Study (DFS) for the Hemi Gold Project, signaling clear progress towards production. This milestone is bolstered by the strategic acquisition of the Ashburton Gold Project, which not only diversifies the company's resource base but also enhances its competitive standing in the Australian Gold Market.
Integrated Research Limited (ASX: IRI)
Integrated Research Limited (ASX: IRI) released its trading update for the 10 months ended April 30, 2024, along with guidance for FY24. It highlighted significant growth across key financial metrics compared to the same period in the previous year.
Year-to-date Total Contract Value (TCV) rose by 8% to $59.1 million, while revenue increased by 11% to $61.4 million.
Most notably, there was a remarkable 93% growth in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), reaching $13.9 million. In the latter half of FY24, IRI secured $8.4 million in new business TCV, attracting six new customers, primarily in the Americas region and within their Collaborate product portfolio.
IR's positive outlook for FY24 is underpinned by their expectations of robust growth in contract value, revenue, and profitability. In May and June 2024, the company is poised to capitalize on a pipeline of new opportunities, spanning new contracts, expansions with existing clients, and renewals. This proactive approach is anticipated to drive significant advancement compared to FY23 across key financial indicators.
IRI's year-on-year increase in cash and cash equivalents, coupled with a reduced debt profile, signifies improved Financial Health. Moreover, the projected increment in Free Cash Flow (FCF) and sufficient liquidity position the company to deliver good value to investors. The projected Return on Equity (ROE) of 18.32% and Return on Invested Capital (ROIC) of 30.3% for FY24 reflect efficient utilization of resources and a healthy return for shareholders. Furthermore, the EV/Revenue ratio of 1.2x indicates a reasonable valuation relative to their revenue.
Source: Company's Report
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