Viewpoint: Bullish
MQG has followed the market lower in 2022 which enabled MM to go long with decent risk / reward. This is a great company that has a history of reinventing itself to suit the ever changing macro backdrop and we believe it will again as interest rates and volatility rise. Similar to CBA assuming the market can hold together into FY end we wouldn’t be surprised to see new all-time highs over the months ahead, or at least 15-20% higher.
BOQ is forecast to pay a 17c fully franked dividend in April putting the stock on a 7% grossed yield. We believe the stocks good value around $8 after correcting 24%, but the markets not embracing our thoughts just yet.
ANZ is one of the main 3 banks trading ex-dividend in the next few months and while its rarely on peoples favorites list after correcting over 16% we believe the risk / reward looks attractive.
CBA has been the stalwart of the sector over recent years and although its by far the most expensive bank both locally and internationally it continues to deliver. Assuming the market can hold together into FY end we wouldn’t be surprised to see new all-time highs over the months ahead.
Historically, or seasonally as its often referred to, Australian banks outperform the market through February to April as dividends sit front and center in many investors’ minds – it’s easy to understand and perfectly illustrated by the NAB chart below.
When we tweaked our Growth Portfolio on Wednesday one stock we considered increasing exposure to was CSR Ltd (CSR) which of course then proceeded to rally 4.5% yesterday – fortunately Qantas (QAN), ResMed (RMD) and CSL Ltd (CSL) all outperformed but I did think to myself yesterday “no guts no glory” as we could have been even more aggressive. However while we do still like CSR under $6 considering our target is only 12% higher MM is likely to stick with our existing position size.
The ASX200 rallied strongly yesterday to close up 1.1% with over 80% of the market closing up on the day, if it hadn’t been for some profit taking in the energy & mining stocks it would have undoubtedly been a rare triple digit gain for the local index. Much of the strength flowed down from a pullback in oil prices following comments from the Ukraine that’s it’s open to peace talks with Russia, travel stocks…
US stocks enjoyed an aggressive rebound overnight as bargain hunters came out to play in force following the war-induced plunge, the recently strong commodities market started to unwind with oil plunging 12% and copper & precious metals around 3%. However the dip buyers were the most prevalent in Europe where many indices rallied 7-8% around hopes that the worst of he regions conflict is behind us.
One stock which really caught our attention yesterday was TLS which rallied a healthy 3.2%, this is definitely a defensive play unless we all cut our addiction to mobile phones and data, hard to imagine! With a sustainable fully franked yield estimated around 4% any dip in bond yields & / or further flight to defensives is likely to see TLS rally towards $4.50 hence MM can see our Growth Portfolio, joining its income friend, in 2022 as a holder of TLS.
ORG +1.38%: Provided a ‘strategy refresh’ today and talked about the next leg of growth for the company, very much with the energy transition in mind. ORG are good at this, talking up future opportunities, they just have a bad habit of surprising on the downside when it comes to linking those opportunities with actual earnings. In any case, they did say they would buy back $250 million shares…
