Rudi’s View: AUB Group, Endeavour, Lottery Corp & Suncorp

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 | Feb 10 2023

Analysts' and share market strategists' favourites and Conviction Calls ahead of the February reporting season.

By Rudi Filapek-Vandyck, Editor

The Australian share market is no longer 'cheap', but then it's equally not 'expensive' either.

Such is the conclusion drawn by Matthew Hodge, Director of Equity Research, ANZ at Morningstar Australia.

Like so many market observers, Hodge is surprised the market has put in the performance it has to date, given risks remain on the horizon, but maybe this is yet another great moment in time to reassess the portfolio and review the strategy?

What if markets go through another period of above-average volatility, or maybe another meaningful downturn? Hodge's advice is to prepare a wish list now.

Which stocks would you like to own, but at a cheaper price?

Hodge's personal wish list revolves around "businesses with strong competitive positions, pricing power and either robust cash flows and dividends or growth prospects at least in line with nominal GDP growth."

Candidates that instantly spring to mind have a clear Quality tag attached (revealing a large overlap with my personal research into All-Weather Performers - see bottom of today's story).

As such, Hodge would strongly consider AGL Energy ((AGL)), APA Group ((APA)), ASX ((ASX)), AUB Group ((AUB)), Auckland Airport ((AIA)), Aurizon Holdings ((AZJ)), Brambles ((BXB)), Carsales ((CAR)), Charter Hall ((CHC)), Cochlear ((COH)), CSL ((CSL)), Domain Holdings Australia ((DHG)), Deterra Royalties ((DRR)), Domino's Pizza ((DMP)), Endeavour Group ((EDV)), Fineos Corp ((FCL)), Goodman Group ((GMG)), James Hardie ((JHX), InvoCare ((IVC)), Lottery Corp ((TLC)), REA Group ((REA)), Seek ((SEK)), Sonic Healthcare ((SHL)), Steadfast Group ((SDF)), Telstra ((TLS)), Transurban ((TCL)), and WiseTech Global ((WTC)), alongside the Big Four banks.

As is always the case when considering adding Quality to the portfolio: "It’s just often hard to grab them at a decent price though."



Evans & Partners

The three person strategy team at Evans & Partners is not quite as sanguine and relaxed as is Morningstar, instead conveying the message investors should prepare for downside.

In their own lingo, this becomes: "The risks to markets look increasingly skewed to the downside given the recent run in asset prices and assumptions around future earnings growth."

Australia will avoid economic recession, but there'll be a slowing in economic activity and probably recessions elsewhere, warns E&P. Which is why the team's focus lays with high quality businesses with defensive earnings profiles, sustainable dividend yields and/or clear earnings momentum.

To please all sorts of clients and portfolios, Evans & Partners has constructed multiple lists, each with their own focus and specific filters.


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