Just in case you’re not using The Switzer Report as well as you should, I decided to make an objective assessment of what we offered you to hopefully prick your conscience into being a little more proactive with your investments. Of course, if you’re happy with your portfolio and don’t want to make changes, then you should at least read what we have to say in case we can change your mind.
A few weeks ago, we suggested reducing your exposure to banks. The CBA is down over 4% in that time and is likely to lose more when rate cuts here look close and the rotation into other stocks speeds up.
This is a trend that’s now happening in the US, with the rally broadening out and is less reliant on the big tech names that have been driving the Nasdaq and the S&P 500 higher over the past year. The former is up 36% over the past 12 months, while the latter has risen 34%. Six months ago, the Nasdaq’s rise was much bigger than the S&P500, but now big tech’s rise is slowing while other companies in the S&P500 are picking up steam. This is what the rotation means.
In this context, Tony Featherstone’s look at interest rate sensitive sectors is timely. Falling interest rates make infrastructure ETFs attractive. Like me, Tony thinks the Aussie dollar will rise over the next few years. So, he recommended the iShares CORE FTSE Global Infrastructure (AUD Hedged) ETF (ASX: GLIN)
This is a great suggestion for anyone looking for steady income, as term deposits fall in terms of returns. This article is a must-read for income seekers.
Tony’s second idea for income chasers as interest rates fall is the VanEck FTSE International Property (AUD Hedged) ETF (ASX: REIT). The aptly named REIT invests in a portfolio of about 320 real estate investment trusts. Almost three-quarters of the REIT is invested in the US – a favoured market for REIT exposure, as US rates fall this year and next.
Importantly, only 5.6% of this REIT is invested in office property, which has struggled after COVID-19 as many people continue to work from home.
Looking to the next big theme for stocks, James Dunn has got on the right ‘train’ looking for businesses that sell ‘shovels’ to miners.
This is how he pitches his argument: “In a rapidly changing global economy, commodities are positioned for a huge surge, driven by demand for metals in crucial sectors such as clean-energy, defence and industrial production. Over the long term, there are clear structural factors that will likely continue to push commodity prices upward”.
So, the thrill seeker speculates on which lithium producer will win from the Electric Vehicle and battery lives ahead, while others might punt on BHP and Rio, with the latter forking out $10 billion for Arcadium Lithium. The former has gone long on copper to cash in on the prospects of these commodities of a hi-tech future.
History has taught us that while the individual miners in the old gold rush days generally failed to make a fortune but those retailers selling picks and shovels were the consistent winners out of the goldfields.
James found three companies that look set to benefit from the improving outlook for commodities, thanks to falling global interest rates and China getting back into stimulus policies.
I thought I’d look at what the experts at FNArena thought about these outfits.
- Mitchell Services (MSV, 37 cents): only one brokerage looks at MSV, but Morgans is good on the mining sector, so their 44.7% upside call makes this an interesting prospect.
- Worley (WOR) is an old stager in the mining services area. Here, five analysts have run their eye over the company and five give it a big thumbs up!
Once again, I think James has hit paydirt with this one!
His final call is Imdex (IMD). This time he’s at odds with the analysts, where the consensus call is 3.1% down. Two out of five like the company but it has spiked 54% in a year, so where there’s smoke there could be fire. Certainly, a few players have had the ‘hots’ for this company that employs tech solutions to the needs of mining companies.
As James points out: “It’s the largest global supplier of core orientation tools and sensors, specialty drilling fluids and orebody knowledge software to the mining industry. Imdex says the entire product suite is designed to improve the process of identifying and extracting mineral resources, all the way along the production chain”.
To the “hot” stocks covered by Maureen Jordan tapping into the insights of the likes of Morgan’s Raymond Chan and Fairmont Equities’ Michael Gable.
Michael told us last week that Catapult Group (CAT), which helps high performance athletes and teams, looks interesting. Only one analyst covers CAT and Bell Potter sees a 3% fall, but, once again, the company has had a great run of late, a 150% gain in a year!
Catapult Group International
The other “hot” stock last week was Regal Partners (RPL), which is an alternative investments fund manager. This time, the analysts like this company, with a 19.6% rise tipped. Meanwhile, three out of three company watchers give RPL the thumbs up, Bell Potter is the most enthusiastic with a 29.33% call.
RPL has been trying to buy Platinum Asset Management of late.
In Questions of the Week, Paul Rickard looked at Metcash (MTS), RIO, NextDC and Resmed (RMD), responding to inquiries that investors have about these in-the-news stocks.
The bottom line conclusion is that The Switzer Report has even given me ideas that I plan to put into action for my own portfolio and for those of my financial planning clients!
While that’s a good assessment of what my colleagues have offered you, it’s now up to you to take action.
As JFK once advised: “There are risks and costs to action. But they are far less than the long-range risks of comfortable inaction”.
Important informati on: 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. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.
