7 High conviction picks for February

Attention turns from global factors to the domestic reporting season this month. Heightened trading volumes indicate many investors are adjusting their portfolios prior to the first opportunity to understand how macro events have affected earnings. Reporting season commentary from management will be a critical factor to frame the outlook for 2016. Despite the market reversing almost 2 years of gains over the past 6 months we still err on the side of caution. We make four changes this month ahead of reporting season, removing Amcor, Ramsay Healthcare, Resmed and AP Eagers from our high conviction list. Longer term we think the potential for further rate cuts, a more supportive level of currency and earnings momentum turning around in the non-mining parts of the economy will provide support for the equity market. Our high conviction stocks are those we think offer the highest risk-adjusted returns over a 12-month timeframe. Here are our seven (three ASX100 stocks and four ex-ASX100 stocks) high conviction picks for February. (VIEW LINK)