One thematic to play the election cycle

The prospect of a Labor government has far reaching ramifications for investors. However, there is one sector that stands to benefit from the election cycle whatever the result, says Matthew Haupt from Wilson Asset Management.

Matt told us: “The one area I think investors should focus on is infrastructure, both sides of government will throw out the carrot of infrastructure spends. We think companies exposed to infrastructure, which have performed well, will continue to perform well given that both will be spending in that area.” For the full story, and to hear his top four picks, access the video and transcript below.  

Edited transcript:

I think when we look at a potential change in government, if we move to a Labor government, we've really got to focus on some areas where you have a higher degree of uncertainty how it'll play out.

You can look at the private health sector as one area where they're really going to target. It makes it incredibly hard to invest in the private health insurers. In respect to hospitals as well, so private hospitals again look like a really tough area to invest in. That's on the negative side.

If you look at the positive side, infrastructure and potentially consumer discretionary would be okay as Labor generally like to give out a lot more handouts. They'll generally help consumer discretionary stocks.

The one area I think investors should focus on is infrastructure, both sides of government, no matter who gets in in the election campaign, will throw out the carrot of infrastructure spends. We think companies exposed to infrastructure, which have performed well, will continue to perform well given that both will be spending in that area. I think that's an area where you can have a high degree of certainty that they'll be spending there. I think that's an area you can focus on.

We've got a couple of key picks leveraging the infrastructure theme. Cimic is one. It's expensive. It's had a re-rate but we're think there's more opportunity there, especially around the structure. They're looking to become a vertically integrated company, too, so they might eventually become like a Transurban where they build a project but also manage the project as well. I think there's an opportunity there.

Other areas we're looking at are Lendlease, obviously they're business is a global business, but they do have an infrastructure arm in Australia, subscale at the moment. We think they can build that business up and become more profitable. Also you can look at supplies into the industry, so like Boral or Adelaide Brighton.

Wilson Asset Management take advantage of short-term mispricing opportunities in the Australian equity market, providing investors with diversified exposure to a portfolio of undervalued growth companies. Find out more