Today in hot stocks, Michael McCarthy might be on holidays, but we’ve got a few extra suggestions from Bell Direct’s Julia Lee.
Likes
Julia likes big four bank ANZ (ANZ). She says their shares are oversold and are due for bounce.
“With a yield 6.3% or 9% on a fully franked basis, shares are looking relatively cheap. While the banks face many headwinds including slowing mortgage growth, rising regulatory and compliance costs, the market has overreacted to these factors. With ANZ due to go ex-dividend in November, this stock should be well supported to year end,” she says.
She also likes Vocus Group (VOC) for its recovery story. With new management in place, this year will be a transitional year for the company, which she says sets the stage for earnings growth over the next 3 to 5 years.
“In addition, the tilt back to an increase in defensive sectors should see the telecom sector outperform over the next 12 months. One of the most highly leveraged plays in the telecom space is Vocus,” she adds.
Dislikes
Julia does not like Nick Scali (NCK), which has been hit by the softness in the housing market.
“With a recovery in housing 18-24 months away, there is no reason to be in this stock,” she says.
“In addition, the value added from retail companies is from the roll out of stores while sales are expanding. The softness in housing-related products means that the old strategy of expanding through store roll outs will need to be put on hold or the company could see an increase in risk measures.”
She is also down on Perpetual (PPT) and says that with the growing popularity of passive funds, together with the added volatility in markets, Perpetual needs to change or shrink.
“With a new CEO and CFO, the company needs to find its feet quickly to adapt to a rapidly changing and competitive environment. Weaker markets makes change more difficult as most changes come with costs and rising costs are unpopular in a weaker growth environment,” she explains.
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 regard to your circumstances.
