Buy Newcrest Mining (NCM)
With volatility likely to stay, $A gold prices should do well through a combination of a rise in the gold price and a fall in the $A. Currently, NCM trades at a discount to its peers but as production turns around at Cadia, this gap should close. Newcrest Mining has tier 1 long life assets and is a top 10 producer of gold globally. The Red Chris purchase adds more strength to the growth assets that it holds. This company is still inexpensive and in times of volatility looks like an easy add to a portfolio.
Sell Sydney Airports (SYD)
With weaker trends continuing in international passenger growth and now domestic passenger growth, Sydney Airports look like its shares have peaked for the time being. While lower bond yields should be positive for financing costs, the weaker travel trends are of concern. With forecast international airline capacity flat to down 1%, it’s looking like a difficult 12 months ahead for the business. I would consider accumulating SYD for the longer term around $6.00.
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