This week, our technical chart expert Gary Stone has placed health care stocks in his likes and dislikes lists.
Regis Healthcare has come off second best, but ResMed is in favour due to promising signs in its share price movement.
“The RMD share price has risen to a resistance zone between $8.10 and $8.25,” he says.
“A resistance zone is typically where the share price would be expected to fall. However, this is ResMed’s fourth rise to this resistance zone over 12 months, increasing the probability that this time it will push through resistance.”
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Where will it go from there?
Stone says $9.00 is the first target level, but if it shoots and misses, a visit down to the support zone at $7.10 to $7.20 could occur.
IG Markets analyst, Evan Lucas, is taking a thematic approach to his stock selections this week.
He likes those that see growth from the low rate environment in construction and material providers.
Among his key picks are James Hardie Industries and Boral, as both have low rates and Australian dollar tailwinds due to their US exposures.
“They remain [in the short term] leveraged to the upside and may see further outperformance,” Lucas says.
He also believes markets are currently overvaluing some discretionary stocks due to the low-rate environment.
While he has no issue with their underlying businesses, he says consumption has been slower than estimated. The looming Federal election has also left trade in a “state of limbo.”
“Harvey Norman and JB Hi-Fi are overvalued and I believe a pullback is likely,” he says.
Lincoln Indicators’ Elio D’Amato is looking to the telecommunications sector this week as he believes Vocus Communications has strong financial health.
D’Amato describes the business as “a particularly agile competitor operating a challenger brand in the telecommunications space, and differentiates on price and its focus on the business sector.”
He says the recent acquisitions of Amcom and M2 Group with the telco provider of Internet, fibre data centres and unified communications across Australia and New Zealand is anticipated to support its future strategy.
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