I see 2023 as an investing year in two halves, though it won’t necessarily be exactly two half-years. I see the first half still good for what companies did well in 2022 — resources, energy and quality companies, such as the banks. (UBS likes Santos, IGO, BHP, Orica and South 32 to star again in the resources space. For financials, it likes ANZ, QBE, Steadfast and Suncorp, which are bound to do well in the first half of the year, if UBS’s smarties have done their homework.)
However, when inflation is really falling and interest rate rises are over, the out-of-favour tech and industrial stocks will be re-loved.
I always play the long game with stocks to get good prices but it does involve me having patience. Last year you might recall I kept saying that we’d have to wait for the December quarter before we saw the start of a rebound and our S&P/ASX 200 has put on a nice 15% since October 1!
S&P/ASX 200
As you know, I’m expecting an eventual rebound for tech (which is more likely in the second half) but in the past I’ve ignored industrials. Last week, UBS revealed what they like for 2023 and compiled a neat list of industrial companies that have potential.
So I thought I’d subject these to the analysts on FNArena and this is what I’ve found:
1. Aristocrat (ALL)
The average consensus rise is 26.4% and 7 out of 7 analysts like the company. Morgans and Macquarie tip a 29.83% gain ahead.
2. Amcor (AMC)
The average consensus rise is 4% but UBS is tipping a 9.7% gain.
3. IDP Education (IEL)
IEL has an average upside tip of 11.8% but Morgan Stanley sees a 23.8% gain.
4. Qantas (QAN)
The average rise is seen as 17.4% but Morgan Stanley is flying the highest with a 37.2% call.
5. Seek (SEK)
The job board business has a 19% average rise tipped but Credit Suisse says to expect a 46.49% gain. However, Morgan Stanley tops that, predicting a 50.25% rise.
6. Super Retail Group
The average rise is only 1.6% but Morgans sees a much better 12% jump out there waiting to happen.
7. Seven Group
Here the average gain is 4.6%, though UBS is more optimistic, seeing a 12.24% potential rise for the free-to-air TV business.
8. Telstra (TLS)
TLS has a nice 8.3% gain tipped on average but Morgan Stanley trumped that, with nearly double-higher at 15.57%!
9. Transurban (TCL)
According to the analysts, you can only expect a humble 0.7% gain, but UBS predicts a rise of 10.22%. Citi says expect a 13.85% gain!
10. Treasury Wine Estate (TWE)
TWE only offers a 0.2% gain, if the analysts are right, but Morgans is raising its glass to a potential 10.7% gain.
11. Wesfarmers (WES)
WES has fewer friends, with the consensus of analysts coming in at minus 2.5%. On the other hand, Morgans tips 12.69%, while UBS sees the stock price going 13.5% higher.
12. Worley (WOR)
WOR has even fewer supporters, with the consensus number coming in at minus 7.5%, but UBS can see a 7.32% higher share price out there, while Credit Suisse thinks the company stinks with a minus 32.45% call on the business’s potential!
That’s a nice collection of businesses to invest in, with only Aristocrat and IDP Ed having all analysts giving these two companies the thumbs up. Amcor had three supporters and two analysts tipping the current share price was just about right.
Qantas has six out of seven analysts flying high with its share price. Only Citi saw a 11.89% fall ahead. For Telstra, five out of six raters liked the company and the only dissenter i.e. Macquarie saw a 2.68% fall ahead.
I think most of these companies are investible, though I’ve had concerns about Worley in the past. But if you were looking for good industrial plays, you could do worse than ALL, IEL, QAN, SEK and TLS.
But remember, you might have to wait until later in the year before you think how smart Switz and his analyst buddies are!
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.