In the first episode of Buy Hold Sell for 2017 we take a look at the most popular bigcap stocks from the Livewire Reader Outlook Survey: BHP, NAB, CSL, Macquarie, and QBE, which cumulatively attracted 13% of all reader votes. We’re only one month into 2017, however, there has already been plenty to keep investors on their toes. The average price change across the stocks is +3.2% vs ASX200 at -0.5%). This is driven in large part by CSL (+11.7%) on the back of a surprise profit upgrade, and BHP (+8.0%) on strong operational metrics. Rising interest rate expectations have seen financials well bid, and takeover rumours around QBE has added some spice. Join Ben Rundle from NAOS Asset Management and Chris Stott from Wilson Asset Management to see if the wisdom of crowds aligns with that of professional investors.
Below is an edited transcript of the Buy Hold Sell video.
BHP Billiton (BHP)
Stott: Sell James. The easy money's been made in resources, over the last six to nine months in particular so sell.
Rundle: It's a hold for me. I think they'll still report quite well and they're still churning out a lot of the commodities that have done reasonably well in terms of price. They'll punch out as much volume as they can so the cash flow will be good.
National Australia Bank (NAB)
Rundle: NAB's a buy. I think the banks are all right at the moment. Net interest margins look like they're turning upwards and they're raising rates out of cycle, which is positive for them so buy for NAB.
Stott: Hold. Update we'll be watching for next week. The banks have certainly had a large run in the last quarter so hold for now.
CSL Limited (CSL)
Stott: Sell. Sell the upgrade. Good little upgrade from CSL but it still looks quite expensive on a relative basis for us so sell for now.
Rundle: Sell for me. I agree with Chris too. I think the drivers behind that upgrade, you won't see them coming through in the second half. So sell.
Macquarie Group (MQG)
Rundle: Macquarie's a buy, I think. It's well run now. They've got some good structural growth options and it's pretty cheap. Cost of capital is still pretty attractive so buy.
Stott: Agree with Ben. Buy. They're in an upgrade cycle and a few of their sectors look ripe for the picking over the next few years. So a good spot at the moment, buy.
QBE Insurance (QBE)
Stott: Buy but after the result. We think that clearly this takeover speculation could be in play but generally they tend to disappoint on result day so cautious on result day but perhaps buy after that.
Rundle: Buy. I'd agree on Chris' point after the result too because typically they don't report all that well. Rate premiums certainly look to have improved a little bit and maybe they'll get a kick off improved bond yields from their investment portfolio too. It's a buy.
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Episode Recorded on 30/1/2017
Disclaimer: The information contained in this presentation is general in nature and should not be relied upon. Before making any investment of financial planning decisions, you should consult a licensed professional who can advise you whether the decision is appropriate for you. Contributors to this show may have commercial or financial interests in the companies mentioned.