“I like ASX 200 Index Put options”, Michael McCarthy says. “Put options go up in value when the market falls.
“Investors can buy a June put option at the 6650 level (i.e. 95% of the current level) for 115 points.
“If an investor has a portfolio that matches the index, this means they can protect 95% of its value, until 18 June, at a cost of 1.7% of their portfolio,” he adds.
However Michael doesn’t like CSL’s share price. “I love the company but the share price is way too frothy,” he says.
“Over the last decade, the PE averaged 25. It’s now at 46x — the highest ever.
“The stock is priced for perfection, and any slip at this week’s results announcement could send it tumbling,” he adds.
Meanwhile, Julia Lee likes Adelaide Brighton (ABC). “The housing market has moved from falling house prices and uncertainty in 2018/early 2019 to rising house prices, improving loan growth and positive trends in house and unit approvals,” she says.
“While the bushfires and flooding in early 2020 are likely to have dampened demand in the short term, this should also mean a rebound, as rebuilding takes place.
“In addition, with the Barro family owning 43% of ABC, there is upside risk from any potential takeover.
“Any bad news here should be seen as an opportunity to accumulate,” she adds.
“Given the commentary from leader REA Group on the back of a weaker residential performance, DHG looks to disappoint,” Julia says.
“Domain is close to having signed up available agents and listings and hence growth comes from residential listings.
“The main drag on performance is the weak listings volume in Australia.
In this tough market, DHG looks like there are harder times to weather before an improved outlook.
“Risk to this negative view comes if there is an earlier improvement in listing volumes,” she adds.
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