As the new year begins, Evan Lucas from IG notes that fund managers will be heading to cash to mitigate any risk exposures as “the reaction to China’s markets and currency devaluation will play havoc with strategy.”
Lucas likes healthcare giant CSL (CSL), given it is a niche US dollar exposed business with growth in the right global markets.
“CSL will be riding through the current downtrend well. Although it is a premium price, the fact it is likely to continue to show it is the leader in IG, serums and blood products global will put CSL in good stead,” Lucas says.
“A price below $100 is likely to be a price worth paying.”
Lucas does not like BHP Billiton (BHP).
Although he expects a bounce following the release of the miner’s half-year numbers in mid February, he says the “current macro risks are likely to send the Big Australian further into the red as crude leads the bear market charge of its four pillar strategy.”
“If its dividend policy is altered as expected, BHP is going to remain a teen stock for the first half of 2016,” Lucas says.
Raymond Chan from Morgans likes Transurban (TCL) because of its defensive growth profile given that toll roads are less affected by the economic cycle.
He is still concerned about the debt profile of Fortescue Metals Group (FMG) and hence does not like the stock.
Elio D’Amato also likes a defensive play – Spark Infrastructure Group (SKI). Spark is an infrastructure fund that has stakes in the Victorian and South Australian power networks and most recently bought a 15.01% stake in NSW’s TransGrid.
“The power networks in South Australia and Victoria continue to perform strongly and contribute to Spark’s revenue growth, D’Amato says.
“Even with the recent acquisition, the company has guided for between 3-5% distribution growth per year till 2018,” he says.
D’Amato does not like Slater and Gordon (SGH) and sees better opportunities for growth in the consumer discretionary sector.
“While the company continues to look cheap at these levels we feel there currently is enough risk involved to outweigh the potential gains,” he says.
Our Super Stock Selectors is a survey of prominent analysts, brokers and fund managers. Each week we ask them to name a stock they like, and one they don’t like. We purposely ask for ‘likes’ and ‘dislikes’ instead of recommendations, so it provides an idea of what the market is looking at, rather than firm buys or sells.
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