Here’s a portfolio of stocks for the “scaredy-cats”, who are those investors who think President Trump will give a lie to his nickname (“TACO”) and do something really crazy that will seriously impact global markets.
I was asked to put together a portfolio of stocks for the “scaredy-cats”, for those who think that President Trump will give a lie to his nickname (“TACO”) and do something really crazy, which will seriously impact global markets. And with markets at all-time highs, the impact may be worse than “Liberation Day”.
Trump might not be the only trigger. China could invade Taiwan, or Russia might fire a nuclear armed missile. No doubt there are many others.
It’s arguable whether the scaredy-cats should just go to cash, rather than have any stocks. But let’s assume this isn’t an option (it’s certainly not an option for industry super funds and other institutional players).
I selected stocks from across the industry sectors for diversification reasons, with 10 the minimum. Resource companies mining base metals are out, but precious metals (i.e., gold) are in. The price of oil could go either way (there are scenarios where the price tanks, and scenarios where it absolutely takes off), so I have left energy companies out of the mix.
Here are my 10 stocks:
1. Commonwealth Bank (CBA)
Source: nabtrade
While everyone agrees Commonwealth Bank is “super expensive”, in a market sell-off, this is the bank the market will turn to first. Its head and shoulders in front of its peers.
Each of the leading broker analysts currently has a “sell” or “reduce” recommendation. The consensus target price (according to FN Arena) is $109.25, a massive 40.1% lower than Friday’s closing ASX price of $182.46. Morgan Stanley is the “most bullish” with a target of $128, Morgans the least with a target of $97.49. For income seekers, CBA is trading on a prospective yield of 2.7%, fully franked.
2. Medibank (MPL)
Source: nabtrade
Private health insurer Medibank operates in an environment that is not subject to cyclical or external pressures. While there is a long-term shift out of private health insurance, Medibank has increased market share, expanded into adjacencies and improved margin. Trading near its all-time high, Medibank is priced at a PE multiple of 22.1x.
Broker recommendations are mixed with 2 “buys”, 3 “neutrals” and 1 “sell”. The consensus target price is $5.04, practically the same as the last ASX price of $5.02. Morgan Stanley is the “most bullish”, with a target of $5.57, Macquarie the least with a target of $4.50. For income seekers, MPL is trading on a prospective yield of 3.6%, fully franked.
3. Suncorp (SUN)
Source: nabtrade
While a third from the ‘financials’ sector and another insurer, Suncorp offers a relatively high dividend yield plus relative price stability. Being in the domestic general insurance business (cars, homes, CTP, boats etc), it shouldn’t be impacted by overseas factors. It could be impacted if interest rates were slashed, or an overseas event gave rise to an increase in re-insurance costs.
The brokers are more positive on Suncorp, with 2 “buy” and 4 “neutral” recommendations. The consensus target price is $22.43, 8.7% higher than the last ASX price of $20.63. Morgan Stanley is the “most bullish” with a target of $25.20, Macquarie the least with a target of $19.60. Suncorp is trading on a prospective yield of 4.9%, fully franked.
4. Telstra (TLS)
Source: nabtrade
Boring old reliable Telstra is the fourth stock. Leading market position, earnings growth (single digit) and good dividend. Plus, the potential for a sweetener if the infrastructure division or remaining share of the mobile towers business is spun out. Probably a bit pricey (the run up has been more than I expected), but then, the whole market is pretty pricey!
The brokers see Telstra as close to fully priced, with 3 “buy” and 3 “neutral” recommendations. The consensus target price is $4.87, 1.8% lower than the last ASX price of $4.96. Macquarie is the “most bullish” with a target of $5.28, UBS the least with a target of $4.60. TLS is trading on a prospective yield of 3.9%, fully franked.
5. Coles (COL)
Source: nabtrade
Another “boring” stock, supermarket Coles makes it to the list.
Still slightly cheaper (on a PE basis) than category leader Woolworths, it gets the guernsey because it has been increasing market share and for investors offers steady earnings, a reasonable dividend and relative price stability. While its liquor division is struggling to grow sales, it doesn’t have the challenges that Woolworths faces with its BigW division.
The brokers are moderately positive on Coles, with 5 “buy” and 2 “neutral” recommendations. The consensus target price is $22.05, 7.1% higher than the last ASX price of $20.59. UBS is the “most bullish” with a target of $23.50, Morgans the least with a target of $20.95. Coles is trading on a prospective yield of 3.4%, fully franked.
6. Northern Star Resources (NST)
Source: nabtrade
Following Newmont’s purchase of Newcrest, Northern Star Resources (NST) is Australia’s largest producer of gold, around 1.9m oz per annum. Recent production guidance disappointed (lower production, higher costs and more capex), and the shares got sold off. Now trading on a more attractive multiple of around 16x FY25 earnings and 12.7x FY26 earnings.
According to FN Arena, there are 4 “buy” and 3 “neutral” recommendations. The consensus target price is $20.95, 26.8% higher than the last ASX price of $16.52. Macquarie is the “most bullish” with a target of $27, UBS is the least with a target of $17.60. Northern Star is trading on a prospective yield of 3%. The final dividend for FY25 is expected to be partially to fully franked.
7. APA (APA)
Source: nabtrade
Gas pipeline operator and owner of electricity assets, APA, has enjoyed a reasonable 2025 with its share price appreciating. However, the current level is still well down from where it was a few years’ back. The regulatory environment plus too much debt and miniscule earnings growth have proved too much for some investors. However, there seems to be a slightly more optimistic tone about its outlook.
The brokers are cautious about APA, with 2 “buy”, 2 “neutral” and 1 “sell” recommendation. The consensus target price is $7.89, 4.8% lower than the last ASX price of $8.28. Macquarie is the “most bullish” with a target of $8.14, UBS the least with a target of $7. APA is trading on a prospective yield of 6.9%. Although currently unfranked, APA is now starting to pay tax, and some partial franking is expected.
8. Transurban (TCL)
Source: nabtrade
Toll roads in Sydney, Melbourne and Brisbane are pretty immune from global events, but a global shock accompanied by a local recession would see marginally lower traffic volumes, offset to some extent by the prospect of lower interest costs over the medium term. For the last several years, Transurban has been trading in a range between $12 and $14.50. I expect this to continue.
With the exception of UBS, the brokers are neutral on Transurban, There is 1 “buy”, 3 “neutral” and 1 “sell” recommendation. The consensus target price is $13.91, 1.6% higher than the last ASX price of $13.69. UBS is the “most bullish” with a target of $14.85, Morgans the least with a target of $13.04. Transurban is trading on a prospective yield of 4.7%. A small component (approx. 20%) is expected to be franked.
9. Sonic Health Care (SHL)
Source: nabtrade
From the healthcare sector, global pathology provider Sonic Health Care is the ninth choice. Again, pathology services should be immune from an economic shock. On a company specific nature, Sonic has been somewhat of a laggard post Covid as margins came under pressure. With inflation easing, an improvement is expected. Over the last 12 months, Sonic has traded in a pretty tight range between $25 and $29.
According to FN Arena, there are 2 “buy” and 4 “neutral” recommendations. The consensus target price is $29.33, 6.3% higher than the last ASX price of $27.61. Bell Potter is the “most bullish” with a target of $33.70, Ord Minnett the least with a target of $26.50. SHL is trading on a prospective yield of 3.8%. No or very limited franking is expected in FY25.
10. Amcor (AMC)
Source: nabtrade
Plastics packaging giant Amcor completes the 10, a representative from the materials sector. It has been under a little bit of pressure since announcing its takeover of Berry Global. An increase in market share hasn’t been enough to offset weak consumer demand, with net sales growth of only 0.4% for the first nine months. There has been a small improvement in margin, with further gains expected as cost synergies from the takeover are delivered.
The brokers are cautiously bullish on Amcor, expecting EPS (earnings per share) growth of up to 12%. There are 5 “buy” and 1 “neutral” recommendation. The consensus target price is $17.57, 18.9% higher than the last ASX price of $14.77. Morgan Stanley is the “most bullish” with a target of $20.31, Ord Minnett the least with a target of $14.50. Amcor is trading on a prospective yield of 5.3% (unfranked).
