Buy Hold Sell: 4 quality stocks for value AND growth

In this episode, Alphinity's Mary Manning and Forager's Chloe Stokes analyse four quality growth stocks trading at attractive prices.
Buy Hold Sell

Livewire Markets

According to Christian teachings, the Holy Trinity refers to the idea that God is one being but can be seen in three different lights.

And although this anonymous writer is an atheist, there is another Holy Trinity I believe investors should get behind - the intersection of Quality, Value, and Growth. 

Instead of following just one factor (for example, the great war between good and evil - or as I like to call it, value and growth), why not invest in a high-quality company that boasts both characteristics? 

So in this episode, Livewire's Ally Selby was joined by Alphinity Investment Management's Mary Manning and Forager Funds Management's Chloe Stokes for their analysis of two quality stocks with growing revenues or earnings, trading at an attractive price. 

Plus, our guests also each name one "holy trinity" stock of their own. 

Note: This episode was filmed on Wednesday 22 February 2023. You can watch the video, listen to a podcast, or read the edited transcript below.

Edited Transcript 

Ally Selby: Hey, how are you doing? And welcome to Livewire's Buy Hold Sell. I'm Ally Selby, and as I'm sure you're well aware, it's been a very volatile 12 months, with growth, value and quality all outperforming at various times. So why not invest in all three, the Holy Trinity of investing, if you will. And to do that, we're joined by Mary Manning from Alphinity and Chloe Stokes from Forager. 

Okay, first up, we have Meta Platforms, formally Facebook. Mary, starting with you, is Meta a buy, hold or sell?

Meta Platforms (NASDAQ: META)

Mary Manning (SELL): A sell, for ESG reasons. Meta is one of the companies that scores very badly when we do our ESG analysis, particularly on the governance side. So it's on a screen-out list for us. The fundamentals have turned around. Meta had a very good fourth-quarter report, and the stock rallied in line with the number of cost cuts that were announced and some of the other things that they're working on. But for us, regardless of that, it's still a sell for ESG reasons.

Ally Selby: Despite that recent rally, it's still 15% in the red over the last 12 months. Over to you, Chloe. Is it a buy, hold or sell?

Chloe Stokes (HOLD): It's a hold for us. We were definitely buyers down at the US$90 mark. There was a lot of emotional selling going on down there, but I think the price is a lot more reasonable now. As Mary said, they had some good results. I wouldn't be surprised to see some more cost cuts throughout the year. We liked the US$40 billion buyback they announced, and we are pretty optimistic about the prospects of Reels, which is their short-form video content. It's a headwind to revenue at the moment, but I don't think it will be for too much longer, and engagement's going really well. I'm not a hundred per cent sold on the Metaverse investment yet though, so that's why it's a hold for us.


Ally Selby: Okay. Next up we have LVMH, the house of brands such as Louis Vuitton, Dior, Tiffany & Co, Hennessy and Moet & Chandon. Mary, is it a buy, hold or sell?

Mary Manning (BUY): Buy for this one. LVMH is the largest holding in our portfolio, so I am literally putting my money where my mouth is. LVMH has by far the most diversified and unique set of brands of all luxury companies. So it performs across fashion and leather goods, wine and spirits, and lots of other categories. And it is quite a unique stock in terms of it's a beneficiary of all the travel that's going on in Europe and the recovery post-COVID. And now, the second part of the story is that it's a major beneficiary of China's reopening. And despite what I've said in terms of the quality of the brands, the quality of the products and the growth trajectory, it's quite attractively valued at about 24 times PE. So buy for LVMH.

Ally Selby: Its share price has been quite resilient over the past 12 months. Despite the weakening economic outlook, it's up 21% over the past year. Chloe, over to you, is it a buy, hold or sell?

Chloe Stokes (HOLD): It's a hold for us. It is a fantastic business and they've proven their resilience again and again, but we think it's in the price. So they recently announced rapper Pharrell Williams as the new creative director for men's at Louis Vuitton, which I thought was an interesting choice, but I'm really excited to watch how that plays out. And I am watching this business closely from the sidelines because it is one I would love to own at the right price.

Zebra Technologies (NASDAQ: ZBRA)

Ally Selby: Okay, Chloe, we asked our guests to bring along one quality stock with growing earnings that is trading at an attractive price. What have you brought for us today?

Chloe Stokes (BUY): So I brought US-listed Zebra Technologies. It's a logistics solutions provider that helps to manage inventory for some of the world's biggest retailers. We think it's trading at a really reasonable valuation and its products are becoming more and more important over time with the rise of e-commerce, home delivery and click and collect. We think these are tailwinds that are not going to go away over the next five to 10 years. So we think they will continue to drive growth for this business. And we think that the market's expectations for the growth of this business are just too low.

Starbucks Corporation (NASDAQ: SBUX)

Ally Selby: Okay, over to you, Mary. What have you brought for us today?

Mary Manning (BUY): I've brought Starbucks, the stock, not the coffee - I know no one in Australia likes Starbucks' coffee. But as a stock, it's in a very attractive position right now because Howard Schultz, who is the founder, came back as the CEO for the third time. He developed an entirely new execution plan and they've hired a new CEO who starts April 1st. So there's a really exciting turnaround business in the US Starbucks. And then also China is Starbucks' second biggest market. And during the lockdowns, 20% to 30% of their stores were closed for large portions of the last two years, and now that's opening up. So the combination of momentum in the US business and the reopening of the China business makes it a very attractive stock to own at this time.

Ally Selby: Okay. Well, that's all we have time for today. I hope you enjoyed that episode of Buy Hold Sell. If you did, why not give it a like? Remember to subscribe to our YouTube channel. We're adding so much great content every week.

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Buy Hold Sell is a weekly video series exclusive to Livewire. In each episode two fund managers give their views 'Buy, Hold or Sell' on five ASX listed companies. Not recommendations, please read the disclaimer and seek advice where appropriate.

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