Retirement village operators

[Beagle]

I also hold RYM and SUM, and I think the sector is sound, especially with the baby boomers adding to an aging population.
I'm just wondering if it's currently overbought because of the MET offer.

Would it be wiser to wait for the takeover news and cash overflow to settle down first and then reinvest in the sector, say in the new year ?

Tough question to answer. No question some people are already investing additional capital into the sector from cash reserves knowing their cash is highly likely to be replenished, so at the risk of overstating the completely obvious, the proposed MET takeover is already having a significant effect.

My view on this is that 1.5 billion or thereabouts is a heck of a lot of money looking for a replacement home and that a fair bit of that will get reallocated by institutions to other companies in the retirement sector. That's quite a tailwind for the sector going into 2020 to go with the pretty strong tailwind of a resurgent property market, especially in Auckland. I have posted in detail in the SUM thread where I think it could go in the next few years and that is one of the stocks that is not expensive based on its past well proven track record of growth. Add in the tailwinds now prevailing and I think SUM is going to have a truly outstanding year in 2020. Bear in mind it was ~ $8 way back in August 2018 so its very easy to make the case that you haven't missed the boat on that one.

ARV's slower eps growth, has averaged late single digits over the years leaves me underwhelmed and thinking $2 is getting quite pricey but there's such a tailwind in the sector it could easily go higher still. RYM is around 32 times next years underlying earnings and is also very pricey in my view. OCA a dark horse of the field and tough one to know how its going to go.
I have been buying SUM with existing cash reserves, knowing they are highly likely to be replenished from the MET takeover so am backing my opinion with action. That's my 2 cents worth, and what I am doing, hope it helps.

[limmy]

Tough question to answer. No question some people are already investing additional capital into the sector from cash reserves knowing their cash is highly likely to be replenished, so at the risk of overstating the completely obvious, the proposed MET takeover is already having a significant effect.

My view on this is that 1.5 billion or thereabouts is a heck of a lot of money looking for a replacement home and that a fair bit of that will get reallocated by institutions to other companies in the retirement sector. That's quite a tailwind for the sector going into 2020 to go with the pretty strong tailwind of a resurgent property market, especially in Auckland. I have posted in detail in the SUM thread where I think it could go in the next few years and that is one of the stocks that is not expensive based on its past well proven track record of growth. Add in the tailwinds now prevailing and I think SUM is going to have a truly outstanding year in 2020. Bear in mind it was ~ $8 way back in August 2018 so its very easy to make the case that you haven't missed the boat on that one.

ARV's slower eps growth, has averaged late single digits over the years leaves me underwhelmed and thinking $2 is getting quite pricey but there's such a tailwind in the sector it could easily go higher still. RYM is around 32 times next years underlying earnings and is also very pricey in my view. OCA a dark horse of the field and tough one to know how its going to go.
I have been buying SUM with existing cash reserves, knowing they are highly likely to be replenished from the MET takeover so am backing my opinion with action. That's my 2 cents worth, and what I am doing, hope it helps.

Thanks Mr. Beagle for a very good response. I've held RYM, SUM and MET since 2015, thinking these are the 3 highest market capitalised stocks. If the MET takeover goes ahead, I'll be down to only RYM and SUM. I'm beginning to lean towards replenishing my investment in the sector with more SUM and less RYM with the potential capital return for MET.
I think this will be the right approach, since ARV and OCA both do not have a lengthy proven track record.
Thanks again for helping me derive this clarity.

[couta1]

Lol theres no way I could bring myself to buy any of these stocks at current prices especially since a certain milky one is currently in a suppressed state ready for its next run up, if you are long and bought cheaper then that's a different story.

[winner69]

Lol theres no way I could bring myself to buy any of these stocks at current prices especially since a certain milky one is currently in a suppressed state ready for its next run up, if you are long and bought cheaper then that's a different story.

You probably the only wise one here today mate

Rest of us are all over excited

Look back in a year and Couts will probably be telling us ‘I told you so’

[couta1]

You probably the only wise one here today mate

Rest of us are all over excited

Look back in a year and Couts will probably be telling us ‘I told you so’

Pays to filter out the irrational noise at both ends of the spectrum, the truth more often than not lies in the middle.

[winner69]

Pays to filter out the irrational noise at both ends of the spectrum, the truth more often than not lies in the middle.

Agree Couts me old mate - you do have to wonder what you are actually buying when you pay nearly 9 bucks for less than 5 bucks of assets eh

[limmy]

Lol theres no way I could bring myself to buy any of these stocks at current prices especially since a certain milky one is currently in a suppressed state ready for its next run up, if you are long and bought cheaper then that's a different story.

Yes, I hold ATM as well. Buying more ATM could be a good strategy also, especially if more people realise that the retirement home sector is overbought and that the A2 company has more potential to grow its margins, now that the former CEO, Geoff Babidge is back in charged.

I suppose the retirement sector will stay in focus until the next downturn in Auckland property prices or if the bigger companies report a slow down in greenfield projects ?

[Beagle]

PEG of ATM is about 1.0 which suggests fair value. PEG of SUM is 0.4 which suggest its extremely good value based one earnings growth.

Coutts me ol mate. A PEG is not something you hang your wife's washing out with
https://www.investopedia.com/terms/p/pegratio.asp

[couta1]

PEG of ATM is about 1.0 which suggests fair value. PEG of SUM is 0.4 which suggest its extremely good value based one earnings growth.

Coutts me ol mate. A PEG is not something you hang your wife's washing out with
https://www.investopedia.com/terms/p/pegratio.asp

Lol mate you get too hung up on all these ratios.

[Beagle]

Lol mate you get too hung up on all these ratios.

You should try and understand them mate. Its how you measure relative value between shares.