What you see above is a list of the top 20 companies in the S&P/ASX 200 index, an index that I expect will beat the 6633 level we saw in August this year. No, I’m not going to repeat the 7000 call that I fearlessly supported last year, before Donald Trump uttered the words “trade war” and the Turnbull Government gave its ‘blessing’ to a Royal Commission into the financial sector!
Yep, if I’d known these were coming, then I certainly wouldn’t have been so courageously stupid!
Recently, when I interviewed my colleague, Paul Rickard, on my TV show Money Talks, Paul said he pointed out how the Top 20 stocks had done well compared to smaller companies. He figured that along with income-paying stocks, they would perform in 2019. This prediction has been mirrored by others whom I respect when it comes to stocks, both here and in the US stock market.
So let’s see what companies have the biggest upside, based on FN Arena’s analysis of the analysts, brokers, etc. The companies will be looked at alphabetically rather than based on their importance.
- Amcor (AMC): the experts’ target price would be $15.22, or 14% higher. Nearly all the experts who watch the stock have this one in the “buy”, “outperform”, “accumulate” category, while one has a “hold” on it. Many of my expert guests, such as ST Wong from the fund manager Prime Value, being a case in point, regularly mention AMCOR.
- ANZ is another in the good books, with the share price tipped to move from $25.24 to $29.06, which would be a 15.1% gain. Last week, Goldman Sachs nominated the bank as its preferred selection among the big four. Macquarie, Citi and Ord Minett were also big fans of ANZ but no analyst/broker were anti the bank.
- BHP: with a current price of $32.79 and a future price of $35.96, there’s a potential 9.7% upside for the big miner. One analyst wants to go from “hold” to “sell”, while seven others are buyers or holders.
- Brambles (BXB): The consensus view is that this company’s future share price will be $11.02, so that implies a 4.7% upside. This has been an underwhelming performer in recent years but no analyst wants to sell and four out of eight analysts were happy to increase their exposure.
- Coles (COL): this is an interesting one, with a 12.9% upside predicted from the current price of $11.53 and if Citi’s view on the company is right, the share price would spike a huge 27%! No analyst is mad keen on Coles but no one is for dumping it!
- CBA: The upside for this company has been affected as it’s facing the triple whammy of the Royal Commission, the Government’s response and then Labor’s punishment reforms. Even so, the target price is 0.6% higher and only Morgan Stanley is a seller, with a target price of $64.50!
- CSL: this darling of the ASX is now at $195.20 and the experts are looking for $213.32, or a 9.3% upside. There are no sellers or downgraders but Macquarie and Credit Suisse are the most enthusiastic, with a target price of $230!
- IAG: The insurer is now priced at $7.04 but the analysts target price is $7.61, so that’s an 8.1% upside. Only Macquarie is reducing its exposure to the company.
- Macquarie (MQG): The target price of $128.17 has to be linked to the positive view that many stock watchers have for the US economy. We’re talking about a 13.2% upside and there were no analysts with a hankering to sell the top performing bank.
- NAB: Wasn’t so lucky with two out of eight analysts wanting to reduce their exposure to the bank. That said, for those who like the business, the target price was $28.85, which means a 17.5% upside lies ahead, if these experts are right!
- RIO: This miner, like BHP, remains in favour with analysts. The target price is $86.61 so that implies a future price 8.7% higher. Only one — Credit Suisse — wants to reduce its holdings of the company.
- Scentre Group (SCG) is a $4.07 stock now and the target price is $4.33, so that would be a 6.6% gain, if the expert guess-makers are on the money. Interestingly, there was only one seller.
- South 32: remains the mining business that everyone seems to like. The current price is $3.40, while the target price is $3.91 so that’s a 15% upside. Once again, there were no sellers.
- Suncorp (SUN): is currently priced at $12.20 but the target price is $14.71, which suggests a 20.6% gain lies ahead, if these guys are right. One out of eight analysts downgraded the stock from “Buy” to “Neutral” but the overall vibe is supportive of the company.
- Telstra (TLS) is not impressing our board of company experts. The current price of $2.92 only has a 1.8% upside factored in. Only one — Ord Minett — wants to hold more TLS and three out of six want to reduce their exposure.
- Transurban (TCL): The toll operator has a 4.3% upside for its share price factored in by the experts. Only one — Citi — is in the mood to sell the company.
- Wesfarmers (WES): Despite their unloading of Coles, the company is still in the good books. The target price of $33.69 is 5.4% higher than the current price of $31.95. That said, four out of eight analysts are into reducing their exposure to the stock.
- Westpac (WBC): The current share price is $25.61 and the target price is $28.86, so that’s a 12.7% upside, if the experts are right. Only one out of eight is a seller.
- Woodside (WPL): has a 12.8% upside, with a target price of $37.51 and all analysts want more exposure to the company.
- Woolworths (WOW): this is the only company that has a negative outlook, with the target price down 1.2% but only two analysts actually want to reduce their holdings and Citi wants to be a buyer. Interestingly, Citi, which has a pretty solid retail assessment team, seems to have a positive view on both of our big supermarkets!
Let’s assume you decided to buy the top 20 stocks in equal measure and these experts are right, then your potential capital gain would be 9% and then there would be a pretty healthy dividend, which I’d tip would be well over 5% before franking credits worked their magic.
And if I should be wrong? Well, you’d be holding 20 of the best companies this country has to offer and many of them are fairly recession proof!
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.