Under The Radar, page-205

“Why is the market punishing good businesses?Perenti Global Ltd (ASX: PRN) and Macmahon Holdings Limited (ASX: MAH) are both mining services providers.According to Forager analysts, they’re “scratching their heads” as to how these stocks have “almost halved” since the start of 2021 to now hit a forward price-to-earnings ratio of just 6.“Both companies delivered perfectly acceptable half-year results. Both have a newfound commitment to capital-allocation discipline,” their memo read.“Macmahon, in particular, has been delivering consistent and improving results for the past 4 years.”Even their sector outlook is favourable, with resources shares shining bright currently while other industries struggle for investment.“Commodity prices [are] high and a significant pipeline of new potential mines [are] in the offing,” the Forager team said. “And yet their share prices seem to only go down.”Despite the frustrations, the Forager team is betting that their share prices will soon start reflecting the companies’ clear profitability.“Something has to give,” the memo read.“[We] have increased the fund’s holdings in both through February. Combined they represent 6% of the portfolio.”Macmahon and Perenti are not the only ones suffering from a lack of attention despite positive business performance. Technology shares Whispir Ltd (ASX: WSP) and Bigtincan Holdings Ltd (ASX: BTH) have both been swept up in the recent correction to growth stocks.“Both reported better-than-expected results and strong outlooks for the current year. While less obvious, they are also showing their potential to be highly profitable once the growth taps are turned down,” said the Forage team.“If they keep getting pummelled in the short term, you should expect a substantially increased allocation to these.”





Article written in March, some comfort as I question my investment here.