Balanced Portfolio Recommendation: Energy Sector Switch WOR to ALD
Date: 28/6/2024
*** GENERAL AVICE ONLY***
Ampol Limited is a leading transport fuel supplier in Australia and New Zealand, with a comprehensive and integrated platform that includes refining, distribution, and retail. The company operates over 2,350 retail sites and has significant storage and terminal infrastructure, supported by a strong distribution network. Ampol’s strategic assets, such as its Lytton refinery and extensive pipeline system, enable efficient fuel supply and logistics operations. The company’s customer base spans across business-to-business (B2B) and business-to-consumer (B2C) markets, serving over 110,000 B2B and small-to-medium enterprise (SME) customers weekly, alongside approximately 4 million weekly retail customers. Ampol is committed to energy transition, focusing on electric vehicle (EV) charging infrastructure and other low-carbon energy solutions .
*** Trade Plan ***
Growth at reasonable yield switch
We recommend selling Worley Limited (WOR) and switching to Ampol Limited (ALD). Our initial retention of WOR was based on the expectation of a rebound from its recent lows, which has not materialized. The stock’s persistent underperformance indicates limited near-term recovery potential. To optimize portfolio performance, we propose reallocating resources to a more promising opportunity within the energy sector.
Ampol presents a compelling case for investment due to its significantly undervalued status and attractive valuation metrics, suggesting substantial upside potential. Additionally, Ampol offers a superior dividend yield of 8.5%, enhancing income for the portfolio. The company is strategically positioned within the energy sector, with strong operations, market presence, and a focus on sustainable energy solutions.
Switching from WOR to ALD is expected to enhance our portfolio’s returns and risk profile. Ampol’s valuation, yield, and strategic strengths make it a superior choice in the current market environment.
We are recommending selling Worley (3%) and Buying Ampol (3%)
Worley (WOR)
Current Portfolio Allocation:3%
Sell 3%
New Portfolio Allocation: Nil
Entry: $14.67 | Exit: $15.11 | Profit: 3%
Ampol (ALD)
Existing Porfolio Allocation: Nil
Buy 3%
New Portfolio Allocation: 3%
Entry: $32.7 | Target: $41 | Stop Loss: $28 | Trailing 15%
Disclaimer: The recommendation given is general advice only. It does not take into account your personal objectives, financial situation, or specific needs. This information should not be your sole resource when making such decisions. We strongly recommend you to seek the advice of financial, taxation, and legal professionals before finalising any investment decisions.