Rudi’s View: Charter Hall, Superloop And Whispir

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 | Jul 05 2019

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

-Do I Have A Few Surprises For (Most Of) You!
-M&A Is Back; Who's The Next Target?
-Three Charts To Mark Mid-2019
-Conviction Calls
-Caveat Emptor: Retail Landlords

-Rudi On Tour
-Rudi Talks

By Rudi Filapek-Vandyck, Editor FNArena

M&A Is Back; Who's The Next Target?

The latest Australian equities strategy update by stockbroker Morgans has identified no less than 48 M&A candidates listed on the local exchange.

While the broker's market strategists acknowledge buying equity in a company purely on the expectation that a takeover approach is soon to be unleashed is far from a fail safe strategy (to put it mildly), Morgans nevertheless argues M&A appeal can offer some downside protection for companies under pressure and/or operating in structurally challenged sectors, including mining services, aged care and retirement village operators, as well as bricks & mortar retailers.

The list of selected (potential) targets ranges from AGL Energy ((AGL)) to Neuren Pharmaceutical ((NEU)) and Nufarm ((NUF)), to Perpetual ((PPT)), Red 5 ((RED)), Hub24 ((HUB)), Rhinomed ((RNO)), Bapcor ((BAP)) and Santos ((STO)).

The stockbroker has highlighted six standout opportunities for investors looking to explore the theme; APA Group ((APA)), Emeco Holdings ((EHL)), Superloop ((SLC)), Qube Holdings ((QUB)), and Senex Energy ((SXY)).

Three Charts To Mark Mid-2019

As we've moved past mid-year calendar 2019 this week, I found the three charts below combined, all from various Morgan Stanley research reports, offer a great summary of the swift change in global market dynamics after 2018 ended on such a sour note.

First there is the observation the "all assets in the negative" by the end of 2018 has swiftly been followed up with an "all assets gain".

The second chart shows the origin of this shift: the US bond market quickly shifted from pricing in three more rate hikes, to now four rate cuts by the Federal Reserve.

Chart number three shows how weak manufacturing PMIs have subsequently become with both headline and new orders sinking into negative territory in June. We're back, or even below, levels last seen during economic and financial markets turmoil of early 2016. Can we have the same recovery? That's the $20m question that will determine the outlook for equities in the six and twelve months ahead.

Conviction Calls

To state that Countplus ((CUP)) has had a tough time in years past would be a grave understatement. The listed umbrella for accountants and financial advisors witnessed its share price trading near $2 up until mid-2014, but then prospects soured pretty quickly.

Countplus shares entered calendar 2019 hovering around 50c but have posted a strong rally towards 90c in recent weeks. Maybe Wilsons elevating the stock to its Conviction Calls might have something to do with it?

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