Argonaut | The Natural Choice in Resources

Argonaut is a full service advisory, stockbroking & research and investment house with offices in Perth and Hong Kong. Argonaut is technically driven & focused on natural resource companies & businesses that service the metals, mining, energy and agri-business sectors. Argonaut has an established track record of creating significant wealth for clients.

Morning Notes

Declines in biotechnology shares dragged down the Nasdaq Composite, pressuring an index that has soared so far this year. The Nasdaq fell 0.5% intraday but is up more than 8% in 2017, outperforming both the Dow Jones Industrial Average and the S&P 500, which are up more than 5%. The tech-heavy index has closed at a fresh high 19 times so far this year-its most records in a year since 1999, according to the WSJ Market Data Group. The Nasdaq Biotechnology Index shed 0.4% while technology shares also slipped, putting the Nasdaq Composite on course for a second straight day of declines. The S&P 500 rose less than 0.1% and the Dow industrials rose 0.2% intraday, on course to close at a fresh high. The U.S. gold price also rose overnight up 1.0% at 1,249.30 US$/oz. Stocks have climbed since Election Day, as corporate earnings have improved, data has shown growth in the U.S. economy and investors have bet the new U.S. administration will implement tax cuts and fiscal stimulus. Some investors remain cautious, however, noting stocks are getting expensive. Companies in the S&P 500 traded at about 22 times their past 12 months of earnings as of Wednesday, above their 10-year average of 15.8, according to FactSet.

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Latest Research

The financial year to date has seen ASL seal ~$1.2b in contract wins and extensions, with Africa being the key growth area. We expect the impact to start to be felt in 2H17, but the real gains will be evident in FY18 where we are factoring in strong earnings growth. With gearing the lowest it’s been in 5 years, ASL is well positioned to fund these wins. The rationalization strategy has been well executed, and momentum positive despite ongoing challenges in Australia. Buy maintained on a $1.75 valuation (prior $1.50).

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Latest News

Edward Rigg, Argonaut’s Managing Director & Head of Corporate Finance, will join Liam Twigger (PCF Capital) and Bryan Dixon (Blackham Resources) to share their views on the Market Outlook for 2017 from a Resources Perspective, at the WA Mining Club’s first luncheon for 2017. The luncheon will take place at the Hyatt Regency, Perth on Thursday 16 February 2017.

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