Forget banks, AMP and Telstra, consider Aristocrat Leisure and Kidman Resources

Chief Investment Officer and founder of Aitken Investment Management
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I continue to believe the S&P/ASX200 will struggle to hold above 6000 and remain “tactically bearish” Australian equities at the index level. I’m even more confident in my shorter-term cautious stance on the S&P/ASX200 above 6000, now that the negative seasonality of commodity prices has started to kick in. With oil and iron ore under pressure, a classic “sell in May and go away” event in commodities, the ASX resource sector, led by BHP, will come under further profit-taking pressure. Resources have previously been doing the index heavy lifting and that is going to reverse.

More diversification

I am also of the view it is NOT time yet to buy Australian banks, AMP or Telstra. They remain in earnings downgrade cycles. Quite frankly, SMSFs all own way too many of those already and you don’t need more of them! What you need is some diversification in your portfolios, either to global equities or ASX-listed global earners, such as Aristocrat (ALL) or next generation clean energy stocks, such as Kidman Resources (KDR). I’m absolutely not interested in buying Telstra, AMP or Australian banks, but I bought more Aristocrat after they delivered very strong FY18 earnings and bought more Kidman Resources after they signed an offtake agreement with Tesla.

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