With Charlie still on his much needed sabbatical, I’ve gone searching for a team of highly-regarded experts to make up for the hole left when CA needs a break. So for your benefit, I’ve tapped into the investing thoughts of Lincoln Indicator’s Elio D’Amato. FNArena’s Rudi Filapek-Vandyck and Bell Direct’s Julia Lee, in the wake of the Trump trade war truce knocked up over the weekend.
Now this was before the inverted yield curve concerns pointing to a recession next year in the States, which I think is rubbish speculation, and the usual silliness from President Trump who disagreed with his economic advisor, Larry Kudlow, who told us that the truce started on January 1. To Larry’s and the market’s surprise, Donald tweeted that the truce had a December 1 start date!
Wall Street hates uncertainty and on Wednesday, our market copped the backwash from those two uncertainty curve balls and we did well to only fall 0.78% when the Dow slumped 3%.
I maintain that we’re in a correction and, as Elio pointed out, there are some good buying opportunities as a consequence.
So let’s see what they like and then see if the consensus of brokers and analysts agree with their calls.
Julia’s interest has gone to the property sector, where she points out it has a yield of 4.7% and has had a good quarter and, she argues, a good outlook. She warns us to dodge retail and residential property plays but commercial and industrial look promising.
For industrial, she likes the Goodman Group and Charter Hall for the office space play.
But the one she likes most of all is Dexus because of its exposure to Sydney office buildings, with rents on the rise, which, she says, tends to provide support for profits for a few years following the rent rises.
Elio concurs with Julia on Charter Hall as Lincoln Indicators preferred play in this space. He even likes Charter Hall Education Trust, which they acquired from Folkestone Education. In the tech space, he like Promedicus and Nanosonics. And to good old ‘real’ businesses, he likes Bluescope, because of their recent support for their guidance and that the CEO took his incentive payment in shares rather than cash! “I love someone who backs their own horse,” he adds. And being a quality performer himself, Elio backed a ‘kindred’ company in flying the flag for CSL. And from outside my square, he even threw in Jumbo Interactive, which is in the online distribution channels business for lotteries in Australia, Europe and the Americas.
Rudi says Bluescope is “cheap” and he’s a big supporter of CSL. But who isn’t?
He likes Goodman Group, which, he said, is “my favourite in that sector.” He points out the company leverages off Amazon and online sales businesses because it provides the warehousing that’s critical in the fulfilment process.
He says too many quality mid-cap companies have been over-beaten since the correction and names Bapcor, ARB, LINK and GUD. “And Aristocrat Leisure is stupidly cheap at these levels,” he said. “And I can’t believe it fell by 10% after a slightly disappointing financial result…I’m prepared to put my head on the chopping block and say it will go higher!”
On the Trump trade war truce, Julia is looking to play an ETF for key Chinese stocks. “China operates off a different cycle and looks to be at the bottom of the cycle.” Following on from an expectation that China’s outlook is on the improve, Julia suspects commodity prices will improve so she likes BHP and Rio.
So there you have it — a long list of stocks in the good books from my 24/7 stock-watching experts but what is the consensus view on these stocks?
Here’s a table summing it up:
|Bapcor (BAP)||+ 2.5%|
|Charter Hall (CHC)||+3.7%|
|Goodman Gp (GMG)||+1.7%|
|Promedicus (PME)||No view|
This little survey offering a swag of quality companies, which look desperately under-priced, may prove to be a damn good Christmas present, provided Donald doesn’t do a Grinch and steal the Santa Claus rally and the usual nice run for stocks from November to April, as the chart below shows.
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