Livewire readers demonstrated their investing flair in our 2018 reader survey, with the three most tipped stocks, Afterpay, CSL and BHP, gaining 52% on average through 2018 - an amazing result in a very tough year. So, for the first Buy Hold Sell of 2019, we asked our panellists, James Gerrish from Market Matters / Shaw and Partners, and Joe Magyer from Lakehouse Capital, to review the five most popular stocks in the 2019 reader survey.
Readers heavily backed Afterpay, CSL and BHP again this year, as well as Macquarie Group and Aristocrat Leisure, with these 5 stocks taking over 20% of the 2500 tips between them.
Tune in for this episode and hear if 'the wisdom of crowds' matches up with the the experts’ view for these five hot stocks.
James Marlay: Welcome to Buy Hold Sell. Today we're talking about the five most tipped stocks in the Livewire reader survey. I'm joined by James Gerrish from Shaw and Partners and Joe Magyer from Lakehouse Capital. Joe, I'll start with you. CSL, buy, hold, or sell?
CSL (ASX: CSL)
Joe Magyer: Hold. I'm not a blood plasma expert, but the business is 15% off recent highs, and wonderful history of capital allocation.
James Marlay: James, it's been a consistent and a great performer. Buy, hold, or sell?
James Gerrish: I'm a sell on valuation grounds, I think it's run too high too fast. Thirty times earnings, those earnings were growing 30% last year, the next three years they're going to growing more, 12, 13%, so on something like 26 times it's worth about $165. So a sell at this level, James.
AfterPay Touch (ASX: APT)
James Marlay: Okay, another one that's been going pretty hard and pretty fast is AfterPay Touch. Buy, hold, or sell?
James Gerrish: Phenomenal company, but I've got a sell on it at this point in time. Sixteen dollars, if you recall that it has dropped from $23 down to a low of $11, and it's bounced back to $16, there's not a lot of fund managers out there that don't own AfterPay, that have still got a growth focus. So the marginal buy is not there for me, I'm a sell at this point in time, James.
James Marlay: Growth has been staggering in the U.S., Joe. Buy, hold, or sell AfterPay?
Joe Magyer: It's a buy for us. I know plenty of people that hate this stock. It's gaining share of a growing market, rolling into new verticals, rolling into new markets, lots of optionality with the business model.
BHP Billiton (ASX: BHP)
James Marlay: Okay. One of the bright spots in the Aussie market has been the resource sector. BHP, it's big, buy, hold, or sell?
Joe Magyer: Hold. BHP's a low-cost index fund of high-quality resource assets, but I feel like you need to be bullish on China to have a really positive view on this, and I don't right now.
James Marlay: Okay. Buy, hold, or sell on BHP, James?
James Gerrish: Yeah, I'm a hold. Obviously capital management's driven the share price in the last little while. Commodity price tailwinds have helped. I think China's now at the headwind for BHP going forward, so it's a hold for me, James.
Macquarie Group (ASX: MQG)
James Marlay: Okay. Macquarie Group. It's been a very consistent and a very high quality performer. Buy, hold, or sell? New management.
James Gerrish: Yeah, absolutely a great performer, I've got a hold on the stock simply on valuation grounds, going into an upcoming report. They upgraded guidance for profit growth of 15%, the market takes that and adds a bit to it, so the market today is at 18%. I think it's unlikely that they're going to make market expectations, so for now It's a hold, I should say, and a buy into further weakness.
James Marlay: Joe, you got a view on Macquarie, buy, hold, or sell?
Joe Magyer: Yeah, hold. Brilliant team at the Silver Donut, great execution. That said, fairly opaque business and price to tangible book is around the highest it's been since before GFC.
Aristocrat Leisure (ASX: ALL)
James Marlay: Okay, last one. Aristocrat Leisure. Gaming, it's been a bit beaten up. Buy, hold, or sell?
Joe Magyer: I'm going to say sell. Gaming is not my thing, but they've really stretched the balance sheet to make some big acquisitions. Don't like that.
James Marlay: Buy, hold, or sell on Aristocrat?
James Gerrish: I think it's a buy here. I think the concern about the market has been those big acquisitions in the gaming space. I think that's overblown, it's going to be a stock that'll deliver 20% earnings growth next year it's on 17 times, so it looks good to me, James.
James Marlay: Okay. Well, you guys love these stocks. Our two fund managers here today, not so much.
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Great to be back for 2019! Our cast of hosts including Matthew Kidman, Sam Willis, Ben Clark and Jeremy Hook will all be back this year. We will have familiar guests and as always we will endeavour to find some fresh faces.
It's always great to watch these videos. Looking forward to more good insights for 2019.
I hope these segments are not going back to the "rapid fire" format again. I prefer longer, more fleshed out videos, even if that only means an extra 2 or 3 minutes.
Sr V - we actually don't change the format. Some shows go longer than others. The brief is the same for each show... We have, however, noted your comments. Thanks for watching!
Please continue with the written report as well as the video. I would much prefer to read the article than watch the videos. I find it interesting and well presented. Richard Rouse
Agree, written report please. Its much easier to absorb the information
Articles are better than Videos as they are clear and well presented.
We can provide the transcript, just keep in mind that the written version does not exist if the video isn't produced.