3 of the stocks we like at current levels
Another day in the sun for Aussie stocks with the mkt backing up yesterday’s bullish move with another +60pts on the upside today. In May / June the market pulled back by -5.5% versus the average pullback since the GFC of -6.9% - so a little shallower than usual but certainly in the range none-the-less. As we wrote this morning (and yesterday afternoon), On balance, we believe the seasonal pullback is complete and the market is well positioned with July, the seasonally second strongest month of the year, only a few weeks away – we will maintain this positive stance while the ASX200 holds over 5690.
Ten network appointed voluntary administrator’s today after their major shareholders failed to guarantee company liabilities – obviously a sad story and one that shows that the guys with deep pockets also make mistakes – costly ones at that. The fate of Ten now largely rests with the Govt and whether or not they’ll change archaic media ownership rules which restricts both Murdoch or Gordon from taking the company over. Right now, Gordon can’t buy Ten due to the 'reach rule' which prevents a television network from broadcasting to more than 75% of the population – while Murdoch can’t buy Ten because of the 'two out of three rule' which prevents the ownership of a TV network, a paper and a radio station in the same market.
That legislation is clearly outdated given the huge number of ‘new media outlets’ that have cropped up. Whatever the case, if the law can be changed then Ten is clearly in play and could be privatised in time by Gordon and Murdoch - however the timing is the issue. For equity holders, probably too little too late.
A quick chart of the media space in Oz over the past few years. Ten , Nine and Seven – the fate of Ten has been well documented for some time and clearly should not come as a surprise – however it’s hard to be optimistic on any in the sector given clear structural headwinds.
Media Stocks Daily Chart – Normalised
On the broader market today, it was the healthcare stocks that really stood out with the likes of CSL, Ansell, Resmed all having corkers while our friends at Telstra led the Telcos in the wrong direction – dropping by -0.46% to $4.36 - an overall range of +/- 63 points, a high of 5836, a low of 5773 and a close of 5834, +61 pts or +1.06%. – a good day across the board and again some obvious pent up buying demand playing out.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
Stocks we like at the moment from current levels…
Suncorp (SUN) has been one of our favourite stocks since MM commenced and it’s our largest holding in the portfolio – we remain bullish, targeting the $16 area i.e. over 10% higher however in line with our recent comments on the overall financial sector, we do intend to realise profits when / if SUN reaches our target area.
Suncorp (SUN) Daily Chart
Fortescue Metals (FMG) – a stock we bought recently going against the grain and it continues to look good for a shorter term move. We paid $4.66 targeting mid $5’s with the stock closing today at $4.87. Today we had a negative move in China + weak Iron Ore price early on yet the stock rallied. A good sign and we continue to see value here…
Fortescue Metals (FMG) Daily Chart
We reduced Janus Henderson from 8% to 5% and added 5% of the MM Portfolio in BT into the recent Westpac induced weakness, and from current levels, this is a stock we continue to like. JHG is less compelling now than it was at lower prices hence our more bullish stance on BTT from here.
BT Investment Management (BTT) Daily Chart
Have a great night
The Market Matters Team
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