The silence from China since the Donald Trump decision to support the pro-democracy protestors in Hong Kong with two pieces of US legislation is a little too eerie for me. I hope it means that getting a trade deal is more important to the Chinese than it is to have dominance over Hong Kong, free of US interference. But that’s me in Dusty Springfield mode — “just wishin’ and hope’n”.
And with our market now at record highs, I know lots of market players are wondering if they need to gear up for a sell off. If the trade deal falls over because of the Hong Kong affair, I’d expect a sizeable dumping of stocks but right now, no one of significance is predicting this and long may that remain that way.
AMP Capital’s Dr Shane Oliver is betting that Hong Kong won’t stop the trade deal. “Our assessment remains that the pressure on both sides to ease trade tensions – even if it’s just for 6-12 months – is now far more intense than has been the case over the last 18 months.”
So based on this, what stocks are in favour with experts right now?
On Friday, the Wilson Asset Management Group put on an investment conference and Matt Haupt, who looks after the blue chip strategy, gave AMCOR (AMC) the thumbs up. He made the point that the stocks is trading about 16 times forward earnings, but Haupt expects growth of 10-12%, which is higher than what the company predicts at 5-10%.
Looking to FNArena for a leg up and the consensus is a 4.9% upside view for the stock and if history is a guide you’d expect at least a 4% dividend or higher.
While on Wilson Asset Management and the founder Geoff Wilson on November 20 gave AMA Group (AMA) a big thumbs up. FNArena still thinks this company is 21% short of the target set by the consensus of analysts.
The year-to-date story has been positive, as the chart below shows:
AMA Group
Source: au.finance.yahoo.com
At the Wilson conference, Gabriel Radzyminski from Sandon Capital, plucked Consolidated Operations Group (COG) out of thin air.
Consolidated Operations Group (COG)
Source: au.finance.yahoo.com
This company runs the largest broker network for SME finance, with the AFR putting it at 16%. Gabriel thinks the face-to-face broker model still has an advantage over the fin-tech app model at this stage and if our economy improves over 2020 (as the RBA expects), then small business borrowing should rise.
FNArena doesn’t survey the company but the chart above shows when the economy was stronger, the share price reflected it. I suspect this stock will be very sensitive to an economic rebound of the Oz economy.
Last week I told you how Tribeca Investment Partners’ Jun Bei Liu liked a2 Milk (A2M) and here’s the five day showing:
a2 Milk
Source: au.finance.yahoo.com
Well last Friday at the Wilson conference, Jun Bei gave the big tick to Tyro, which lists on Friday and our own Paul Rickard has been on its board. Paul is too close to give a tip but it’s interesting to see the Tribeca team positive on the listing.
This is what the AFR’s James Thomson reported: “Bei Liu says the firm has won favour with retailers for providing a highly functional and integrated payments platform with less downturn than those provided by the big banks, and has already grabbed a 2.7 per cent share of a market she says is worth $651 billion, and growing at 7.5 per cent a year.
“Tribeca believes Tyro can get its market share to 5 per cent, which would triple its revenues.”
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