In his article last week Charlie Aitken [1] answered the question that a lot of us here at the Switzer Super Report have been getting lately and that is – Is it time to take profits?
While Paul Rickard explains today why it could be a good time to consider rebalancing your bank allocations back to index weight if they have snuck considerably higher, overall the factors supporting ongoing growth in the stock market aren’t going away in a hurry.
With interest rates so low – and expected to go lower – one of the best places for cash looking for income right now is probably the stock market. And on Saturday, Peter drew our attention to the following positive numbers coming out of the December quarter retail sales data.
- Electrical, electronic and gas goods retailing was up 10.6% over the quarter and the strongest result in 14 years;
- Footwear and other personal accessory retailing were up 5.9% over the quarter, the strongest result in two years; and
- Liquor retailing was up 2.6%, the strongest result in three years.
Those numbers augur well for those sectors, which should start to show a bit more growth. US dollar-exposed companies should continue to do well as our dollar goes lower, and the US dollar higher.
To reiterate Charlie’s US-dollar high conviction stock picks, he likes:
Westfield Corporation (WFD)
Servcorp (SRV)
CSL (CSL)
Resmed (RMD)
Brambles (BXB)
Macquarie Group (MQG)
Mesoblast (MSB)
Treasury Wine Estates (TWE)
Platinum Asset Management (PTM)
Magellan Financial Group (MFG).
(In the banks, ANZ (ANZ) generates the greatest proportion of US dollar earnings)
His preferred stock picks for non-bank dividend growth are:
AMP (AMP)
APA Group (APA)
ASX (ASX),
Challenger (CGF)
Goodman Group (GMG)
GPT (GPT)
IAG (IAG)
IOOF (IFL)
Medibank Private (MPL)
Perpetual (PPT)
Transurban (TCL)
Suncorp (SUN)
Tabcorp (TAH)
Telstra (TLS)
Wesfarmers (WES)
So as long as it looks like the next move in interest rates is down – with more people expecting a 1 in front of the cash rate at some point this year – the hunt for yield will continue to support those companies.
Peter has also recently joined the rate cut camp, so don’t expect him to be taking profits anytime soon.
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.