Eleven Top Stocks For 2018-19

FYI | Jul 04 2018

By Peter Switzer, Switzer Super Report

11 top stocks for 2018-19 from top stock pickers!

As one financial year ends and another one starts, let's see if I can give you a range of stocks that might help you beat the 13% our overall stock market returned, if you throw in dividends. To make sure I'm not influenced by my own bias, I've recruited a lot of my smart mates, including Charlie Aitken, Geoff Wilson, Mary Manning and a whole lot more, who I've asked to give me one stock that they think will perform well in 2018-19.

I've always said that 2019 would be a year that would start to test out my positivity towards stocks. But I'm more worried about the second half of that year because 2020 could be the year when economies start to feel the pinch of rising interest rates, slower commodity price rises, slowing economic growth around the world and rising debt levels powered by political leaders like Donald Trump.

So, let's get on with it

Kicking off with a surprise selection was WAM's founder Geoff Wilson, who opted for a retail business that many might not even know! This is what he said: "Specialty Fashion (SFH): Market cap $190 million; PE 11.6x; $15 million net cash post asset sales. Profit growth is expected to be 20% plus. The catalyst for a re-rating is potential earnings upgrades. Also, the shares are significantly under owned by institutions. We expect the company to change its name to City Chic, the only business left in the group after the recent asset sales. City Chic is a niche market and it's interesting to note that online sales make up over 30% of revenues."

Our own Tony Featherstone has given BHP (BHP) another year! This is what he said: "It's as much a micro idea as a macro one: BHP will have plenty to give back to shareholders via special dividends, or perhaps through buybacks when the sale of its shale assets concludes and is doing a good job on cost-cutting/capex front. I like its more streamlined structure/disciplined approach outlined in May.

Re the macro, I expect another solid year for global growth, once the market gets past current worries about trade tensions, Italy, etc. although perhaps not as strong as FY18. I reckon talk about a US recession is overdone and any slowdown there is still a way off."

CMC's Michael McCarthy is always trying to avoid ‘dog' stocks but he's got something to woof about with Ramsay Health Care (RHC). This is his take on this once faultless stock: "Still working through the year end, but Ramsay Health Care (RHC) is sticking out like the dog's proverbials to me.

In my view RHC has cleared the decks, and the industry is suffering a setback in the longer term demographically-driven demand for healthcare services. RHC is trading at its lowest share price in four years, and the lowest PE (after downward earnings revision) in six years. Happy to nominate this higher quality operator at depressed pricing."

Bell Direct's Julia Lee has made an educated guess on a local business and I have to say she has a good record at picking up and comers. She likes IDP Education (IEL).

"With a weaker $A, it should make Australia an attractive destination for education," she says. "We don't focus on education as much as things like iron ore when it comes to talking about stocks, but it is Australia's fourth largest export. This company is well placed to ride the growth of emerging nations such as India as well as the crackdown on visas by the US."

When it came to Charlie Aitken, I gave him two bites of the cherry — one for the locals and one for overseas. This is his thinking: "I think Europe/UK and China are very cheap right now and offer good prospects for FY19. On that basis, my ASX-listed idea is Clydesdale Bank (CYB), which will complete the transformational merger with Virgin Money to create a mid-scale UK challenger bank. Merger synergies are underestimated and I see CYB as a cheap financial growth stock now that is potentially 50% undervalued versus medium term earnings forecasts."


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