It’s been almost impossible to avoid the hype around NVIDIA (NASDAQ: NVDA) in the financial media in recent times. It’s been pinned as the poster child for the AI revolution–a title its shareholders must be loving. The NVDA share price has risen a staggering 19 times over the past 5 years (despite a more than 60% decline in 2022), including adding a record US$277 billion in market capitalisation after its most recent financial results release last week. It has been nothing short of a nightmare for short-sellers attacking the company’s meteoric rise, with Bloomberg reporting a whopping US$3 billion in (short selling) losses following just the last quarterly earnings. With NVIDIA on everyone’s lips, what’s the state of play?
In a market captivated by megacaps like Nvidia (NASDAQ: NVDA) and the allure of AI, our focus remains steadfast on the fruitful terrain of ASX small and mid caps. Two recurring themes have emerged in our portfolio: unearthing small-to-mid-sized businesses with improving fundamentals that have either been overlooked or remain unrecognised, and identifying potential takeover targets within this group.
While these ASX small caps are a drop in the ocean compared to the earnings anticipation of global behemoth NVIDIA Corporation (NASDAQ: NVDA) the below-mentioned companies continue to produce exceptional results in the face of challenging environments.
This report examines three notable companies within the TAMIM Australia Small Cap Income portfolio that have recently reported strong results. In today's fast-paced world, the demand for instant gratification has permeated almost every aspect of life, including investing. The allure of quick gains often overshadows the virtues of patience and long-term thinking.
As markets surge, with the S&P 500 reaching new heights, it's easy to get caught up in the short-term frenzy. As company earnings reports roll in, investors will see multiple examples of why it pays to be an optimist and to ignore apocalyptic forecasts. For much of late 2022 and 2023, the media was fixated on rising interest rates and the potential of a damaging recession. As a result, while some retailers had seen share prices recover strongly as the world emerged from the pandemic, the momentum reversed as increased costs and slowing sales emerged.
The gaming sector, having navigated the turbulence of the COVID-19 pandemic, is on the brink of resurgence.
Firstly, the pandemic-induced restrictions significantly curtailed the operations of casinos, gaming venues, and related establishments, causing a temporary dip in revenue for many gaming companies. Yet, as the world steadily emerges from these constraints, an anticipated surge in consumer engagement with gaming activities is expected to fuel sector recovery. Global equity markets finished the year on a tear as investors gained confidence that inflation had abated and interest rate hikes were in the rear vision mirror. There was a clear bifurcation however, with the bounce led by a small number of suspects (we’re looking at you big tech) while 70% of companies in the S&P500 underperformed the index in 2023.
As we highlighted in our previous article back in November, the so-called “Magnificent 7” contributed a substantial proportion of the S&P 500 gains during 2023. Come the beginning of 2024, it was time to see whether these blockbuster share price performances were justified. Nvidia (NASDAQ: NVDA) is the only one of the 7 yet to report, with this scheduled for 21 February (there shouldn’t be a need to mark your calendar as there will likely be considerable media coverage). The remaining six (Alphabet, Amazon, Apple, Meta, Microsoft and Tesla) each reported their earnings for the October to December period in the last week. Often viewed as a group, their performance was, in fact, quite varied. Let’s start with the good and take it from there.
Note: All figures are quoted in U.S. Dollars. EML Payments Ltd (ASX: EML) has indeed charted a tumultuous course over the last five years, captivating investors with its roller-coaster share price and stirring the investment community with its complex structure and bold acquisitions. Peaking at an enviable high of over $5 in April 2021, the company's valuation has since experienced a significant recalibration, prompting diverse perspectives and intense scrutiny.
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TAMIM Asset Management provides general information to help you understand our investment approach. Any financial information we provide is not advice, has not considered your personal circumstances and may not be suitable for you.
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