Rudi’s View: Retail REITs, Resources, And Lynas

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 | Apr 12 2019

In this week's Weekly Insights (this is Part Two):

-Cautious, Cashed Up, Looking For Direction
-Not The End, Says Prudential
-Conviction Calls
-Retail REITS And The (Invisible) Risk

-Have Your Say - The CSL Challenge
-Rudi On TV
-Rudi On Tour

[Non-highlighted parts appeared in Part One on Thursday]

By Rudi Filapek-Vandyck, Editor FNArena

Conviction Calls

The March quarter saw Australian equities post their strongest quarterly performance since Q3 of 2009, notes stockbroker Morgans, and the medium term outlook remains positive, but now is probably a good moment to start dialing back somewhat on exposure to risk.

A lot is priced in at present index level and earnings growth on average is unlikely to exceed 4% per annum for the coming years (plural).

The latter average is ex-resources, but is indicative of ongoing tough operational challenges for most companies in Australia. Apart from a more conservative portfolio composition, stockbroker Morgans is also advocating investors should keep a larger than usual proportion of cash on the sidelines.

As long as investors don't get spooked by prospects of inflation flaring up, the outlook for equities should, on balance, remain attractive, suggests Morgans. There simply doesn't appear an inflation problem on the horizon, even though central bankers the world around would like to see some (more) of it.

Time also to dust off the broker's Conviction Calls, as that should be one way to achieve further (out)performance.

Among large cap stocks, Morgans carries Buy ratings with Conviction for ResMed ((RMD)), Sonic Healthcare ((SHL)), Reliance Worldwide ((RWC)), Westpac ((WBC)), and Oil Search ((OSH)).

Outside the ASX100, the broker's selective list consists of Volpara Health Technologies ((VHT)), PWR Holdings ((PWH)), Kina Securities ((KSL)), Senex Energy ((SXY)), and Australian Finance Group ((AFG)).

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