Rudi’s View: Ausdrill, Lynas, IPH ltd And Noni B

rudi-views
Always an independent thinker, Rudi has not shied away from making big out-of-consensus predictions that proved accurate later on. When Rio Tinto shares surged above $120 he wrote investors should sell. In mid-2008 he warned investors not to hold on to equities in oil producers. In August 2008 he predicted the largest sell-off in commodities stocks was about to follow. In 2009 he suggested Australian banks were an excellent buy. Between 2011 and 2015 Rudi consistently maintained investors were better off avoiding exposure to commodities and to commodities stocks. Post GFC, he dedicated his research to finding All-Weather Performers. See also "All-Weather Performers" on this website, as well as the Special Reports section.

Rudi's View | Oct 11 2018

In this week's Weekly Insights (published in two parts):

-Investing Used To Be So Much Easier
-Conviction Calls
-Rudi On TV
-Rudi On Tour


[Non-highlighted parts appeared on Wednesday]

Conviction Calls

By Rudi Filapek-Vandyck, Editor FNArena

On September 13, I noted analysts at CLSA had made rare earth minerals miner with an Malaysian chip on its shoulder, Lynas ((LYC)), one of their High Conviction Buys for the year ahead, with a price target of $4.10. Since then the share price has fallen a lot deeper with risk rising there will be unwelcome action put in place by the Malaysian government.

Investors waiting for the share price to recover might take some heart from the fact CLSA analyst Dylan Kelly travelled to the country and reports back that nobody, from politicians, to protest groups, to government ministeries expects the production facility in the country to shut up shop.

One motivation is Malaysia does not want China to have a global monopoly on the supply of rare earth elements, reports Kelly. A solution shall thus be found. This means the share price cannot stay this low indefinitely. On CLSA's assessment, Lynas' share price now effectively implies a total loss of the Malaysian operation, hence no surprise CLSA reiterates its High Conviction Buy rating for the stock, with an unchanged $4.10 price target.

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Goldman Sachs' Conviction Buy list currently consists of the following names: Afterpay Touch ((APT)), ANZ Bank ((ANZ)), Aristocrat Leisure ((ALL)), Bingo Industries ((BIN)), Crown Resorts ((CWN)), Huon Aquaculture ((HUO)), IMF Australia ((IMF)), Lend Lease ((LLC)), Lifestyle Communities ((LIC)), Metcash ((MTS)), Origin Energy ((ORG)), Orora ((ORA)), and Telstra ((TLS)).

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Stockmarket strategists at stockbroker Morgans have for a while expressed the view that elevated valuations imply further upside potential looks harder and harder to achieve for the Australian share market, and this view has been repeated in recent updates.

Morgans has been suggesting to its clientele to seek further gains, and downside protection, through portfolio rotation. As reported earlier, Morgans' projection is for the ASX200 to finish calendar 2018 near 6300, with the added remark that vulnerability is rising due to global macro-economic risks.

The stockbroker's selection of High Conviction Stocks now includes Reliance Worldwide ((RWC)) while removing Atlas Arteria ((ALX)) following share price strength in September.

Other names on the list are OZ Minerals ((OZL)), Westpac ((WBC)), Volpara Health Technologies ((VHT)), PWR Holdings ((PWH)), Noni B ((NBL)), Kina Securities ((KSL)), CML Group ((CGR)), and Australian Finance Group ((AFG)).


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