Hot stocks – Lithium and BHP

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Among this week’s likes and dislikes are a lithium producer, an insurance firm and the world’s biggest miner.

Michael Gable of Fairmont Equities likes BHP Billiton this week, which he believes is set to continue heading higher after breaking new ground this year.

“Material stocks are very cyclical. You need to be on board when they’ve got upwards momentum, and hop off when they start falling,” said Gable.

“Oil prices remain strong and the Australian dollar continues to soften. All of these provide a tailwind for a company like BHP. I expect it to push through $30 very shortly.”

BHP Billiton

bhp

Source: ASX

In his not-so-good books this week is QBE Insurance (QBE), which he said has seen a poor run for number of years now.

“The prospect of higher interest rates in the US has not been enough to paper over all the cracks. I can only see QBE worth buying when everyone finally gives up on the stock and it is trading down near $8. The QBE chart continues to look weak and I couldn’t rule out a future capitulation in the share price with any further bad news.

QBE Insurance

qbe

Source: ASX

Michael McCarthy of CMC Markets likes Orocobre (ORE) this week, he said encouraged by “the current mania for Lithium stocks.”

“The shares have doubled since August, yet the short position has only reduced to around 10%, meaning there is still 21 million shares or around 11 days average turnover to buy back,” said McCarthy.

“This should support any pullbacks, and may offer a lower risk exposure to lithium,” he notes.

Orocobre 

ore

Source: ASX

On the other hand, he doesn’t like Newcrest Mining (NCM). “(It) has rallied back to resistance at $24.

The combination of rising risk appetites and a stronger US dollar could pull the skids from under gold and NCM over the coming months,” he said.

 

Newcrest Mining

ncm

Source: ASX

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.

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