What Worked Australia - 17 Feb 2017 - Forward PER showing good results

What Worked – PER has been providing some solid outperformance over the last 2 months (since mid-December 2016), and continued into this week. Although the last couple of weeks this signal has been somewhat ignored, the cheapest names in the market by forward PER have generated more than 5% outperformance, while the most expensive names have generated -3.2% excess returns over the benchmark. Forward PER had a horror run through 2015, and was a bit of a roller-coaster ride through 2016, but the trend seems to be to the positive at the moment.  Low PER names doing well this week included Qantas Airways (QAN, +3.0%), Whitehaven Coal (WHC, +2.9%) and St. Barbara Limited (SBM, +4.3%), while the more expensive side saw a number of names posting losses for the week - NextDC (NXT, -5.6%), Nanosonics (NAN, -1.9%) and Domino’s Pizza (DMP, -12.3%) among them.

 While very short term momentum (the generally reverting kind) was flat this week, 3M month momentum continued to be sold off this week, making it the worst performing over the last month. While the 3M laggards hovered around the benchmark, it was the winners over the last 3 months that have sold-off heavily. Over the last month the top names measured by trailing 3M momentum have lost out -3.8% to the benchmark. Names down this week include Galaxy Resources (GXY, -7.8%), DUET Group (DUE, -2.1%) and Bega Cheese Limited (BGA, -3.9%). 12-Month momentum on the other hand has been providing some solid performance figures over the last month, and continued to do so this week with Resolute Mining (RSG, +7.2%), Fortescue Metals (FMG, +6.3%) and Mineral Resources (MIN, +1.6%) all continuing to maintain their spots at the top of the index’s 12 month winners table.

Who Moved – A lot of names moved this week on volume – 29 out of the 200, one of the biggest percentages of the market in a while. Names off this week backed by significantly higher than normal volumes include Primary Health Care Limited (PRY, -16.2%), Domino’s Pizza (DMP, -12.3%) and IOOF Holdings (IFL, -7.6%); while in the winner’s circle South32 Ltd (S32, +5.9%), SIMS Metal Management (SGM, +3.9%) and Computershare (CPU, +4.1%) topped off the names in the black on volume this week.

Please take a look and let me know if we can do anything else.


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