Sunset Strip | Aussie market had another boring low volume flat day due to lack of global sentiment. Aussie market was down 0.15% with turnover was just above $3.6b. We expect the market to be positively surprised in the reporting season compared to the current Valley of Death outlook. We continue to expect current low valuations on cyclicals, bank dividends flowing back into the market, institutional investors sitting on cash, overvalued currency and M&A will help improve sentiment while sectors with high risk to earnings have already come to the market and declared their sins. Central banks continue to hold rates low while flattening property prices will force investors to diversify and add more equities. We continue to like TMT stocks like FLT, SEK, CRZ, IPP, SWM, SXL, PRT, TLS and TEL. If you are looking for a turnaround smokey in TMT...SXL looks interesting on the charts. (VIEW LINK)
This is the big problem right now for stock picking. If a stock gets belted enough, M&A becomes a potential. It's almost like US economy and QE for th epast few years. I think in that space WEB has moved up and will stay strong, but FLT is by far the best in class. Backing FLT to hit $55 despite few brokers going negative.
I remain a big fan of TMT stocks in the next 12mths. Stocks that have missed the recovery cycle in the last 12mth compared to their peers are CRZ, SXL and TEL. Given the regulatory changes are coming, SXL for one is going to be front and centre in terms of M&A target.
SXL had a good day today, in terms of out of favour SXL is definitely bumping along the bottom in that category.
I know it is a different sector but the WTF takeover highlighted that the laggards have got bullseyes all over them. Cheaper to buy it than build it in this market.