Charts and caffeine: Three outperforming stocks in an outperforming sector

Charts and Caffeine

Livewire Markets

Welcome to Charts and Caffeine - Livewire's pre-market open news and analysis wrap. We'll get you across the overnight session and share our best insights to get you better set for the investing day ahead.

MARKETS WRAP

  • S&P 500 - 3,825 (+1.06%)
  • NASDAQ - 11,586 (+0.71%)
  • CBOE VIX - 27.80 

Note: US markets will be closed tonight for the July 4th Independence Day holiday.

  • FTSE 100 - 7,169 (unch)
  • STOXX 600 - 407.14 (unch)
  • USD INDEX - 105.12 (+0.42%)
  • US 10YR - 2.889% (sitting below 3% for the first time since early June)
  • GOLD - US$1813/oz
  • WTI CRUDE - US$108.46/bbl

THE CALENDAR

Eurozone headline inflation came in at 8.6% - beating the consensus estimate from economists by a hair's breadth. All attention now turns to the next ECB meeting - where the first rate hike in 11 years is a done deal. The question is - will it be 25bp or 50bp!

The coming week is dominated by two things - labour force data out of North America and the next Reserve Bank meeting. 

Let's deal with the RBA first. The pattern of the last few months is being widely expected by economists. Both ANZ and Nomura have 50 basis point hikes pencilled in for next Tuesday at 2:30pm. 

What is up for debate is the impact of rate hikes on the labour market. 

This is the first meeting of the board since the Fair Work Commission decided the minimum wage would rise by 5.2% - faster than inflation's 5.1%. It will be interesting to see what the RBA's projections are for a jobs landscape where it (should) be easier to get a pay rise but inflation will still bite.

In the US, we'll get the latest Federal Reserve minutes following that meeting two weeks ago. 

Finally, the US and Canadian labour reports are released on Friday night - and both should show what we are seeing in Australia.

THE CHART

Perhaps another reminder of the importance of "staying invested" - is the performance of the Dow Jones index through the last 100+ years. The moral of the story is that for every downturn (no matter how prolonged), a period of outperformance has generally followed. Will this time be different? Historians could point to this to argue it won't be different. (Source: Twitter/mayhem4markets)

THE STAT

9.5%: The ASX healthcare sector has delivered EPS growth that far outpaces any other sector on the local bourse. 
(Source: Macquarie)

STOCKS TO WATCH

With this stat in mind, I thought I'd take a look at the ASX healthcare sector. Macquarie's estimates suggest the healthcare sector has indeed outperformed the rest of the local sharemarket every year.... for 15 straight years.

Well that's just swell, isn't it? Look how far healthcare is, in comparison to the rest of the competition! (Source: Macquarie)

The sector also has the highest "realisation" rate. This suggests what you see is most likely what you'll get come February and August reporting season.

The figure is higher in the brokers' two favourite picks: Resmed (ASX:RMD) and CSL (ASX:CSL). In fact, of the major health companies, only one has failed to deliver consistent growth - Healius (ASX:HLS).

Consistency, consistency, consistency (Source: Macquarie)

So if you're after long-term consistency, this may be the winner among winners. 

GET THE WRAP

We're trying something new around here - a daily market preview with an intelligent twist. If you've enjoyed this edition, hit follow on my profile to know when I post new content and click the like button so we know what you enjoy reading.

If you have a chart and/or a stat that you would like to see featured in a future edition of the newsletter, drop us a note at content@livewiremarkets.com.

........
Livewire gives readers access to information and educational content provided by financial services professionals and companies (“Livewire Contributors”). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

Charts and Caffeine
Markets Wrap
Livewire Markets

Charts and Caffeine is Livewire's daily pre-market news and analysis wrap. Every day, Livewire's team of market journalists and editors get you across the overnight session and share their best insights to get you better set for the investing day...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.