NewsBite

Share tip recommendations as market endures a rocky December

It’s been a rocky December for investors so we asked four expert stock pickers what they would buy, sell and hold to get their portfolios into shape.

Sales assistant at JB Hi-Fi, NextDC boss Craig Scroggie and Woodside Energy CEO Meg O'Neill.
Sales assistant at JB Hi-Fi, NextDC boss Craig Scroggie and Woodside Energy CEO Meg O'Neill.

It’s been a rocky December for investors but our stock tip columnists still see opportunities and growth in the market.

The benchmark S&P/ASX 200’s sharp pullback continued on Friday as investors assessed the US Federal Reserve’s outlook for interest rate cuts and the likely impact of Donald Trump’s presidency on the global economy.

The benchmark index slumped 2.76 per cent over the week and is off more than 5 per cent from a record high of 8514.5 points just three weeks ago.

AMP chief economist Shane Oliver said falls came at a time when the market usually traded higher, as in 10 of the past 15 years Australian shares have bounced in the two weeks before Christmas.

“Over the last week the negatives got the upper hand and shares could still fall a bit further in the short term,” Dr Oliver said.

“However, our overall assessment remains that the trend is still up, including for Australian shares, but expect a far more volatile and constrained ride over the year ahead.”

Sequoia Wealth Management’s senior adviser, David Thang, highlights opportunities for both growth and caution in the current market. He recommends fashion jewellery retailer Lovisa for its consistent double-digit earnings growth and potential for global expansion.

Similarly, Woodside is appealing due to its strong balance sheet and robust dividend yield.

Mark Goulopoulos of Cumulus Wealth has flagged Worley as a buy after recent weakness and highlights Coda Minerals as an undervalued developer with strong growth prospects.

Sean Conlan from Leyland Private Asset Management favours electronics and white goods giant JB Hi-Fi for its strong financial performance but Mr Goulopoulos lists it as a sell due to its elevated valuation.

One of Chris Watt from Bell Potter’s top picks is NextDC due to its exposure to AI growth.

Here are their tips:

AMP Capital chief economist Shane Oliver. Picture: Jane Dempster/The Australian.
AMP Capital chief economist Shane Oliver. Picture: Jane Dempster/The Australian.

Sequoia Wealth Management senior adviser David Thang:

BUY

Lovisa Holdings (LOV)

The fashion jewellery retailer has a strong track record of delivering double-digit earnings growth. Sustained global business expansion and profitability are expected moving forward.

Woodside Energy (WDS)

Weakness in share price offers value to the patient. Strong balance sheet, coupled with a healthy dividend yield are a bonus.

HOLD

Telix Pharmaceuticals (TLX)

The radiopharmaceuticals company has a promising emerging pipeline of products. The company has transitioned from loss making to profit. Drug approvals will be a key driver for continued long-term success.

Metcash (MTS)

On valuation grounds the Australian-based wholesale distribution and marketing company is attractive. The 5.54 per cent fully franked dividend yield ticks another box.

SELL

Ramsay Health Care (RHC)

Operates hospitals and healthcare facilities in Australia and internationally. But faces high debt levels and pressure on earnings. We prefer others.

29Metals (29M)

The base metals company reported a loss that was larger than market expectations.

Other companies appeal more.

Woodside Energy CEO Meg O'Neill at the Karratha Gas plant.
Woodside Energy CEO Meg O'Neill at the Karratha Gas plant.

Cumulus Wealth partner Mark Goulopoulos:

BUY

Worley (WOR)

Recent weakness presents a compelling entry, with the company reaffirming its guidance at the AGM and solid earnings growth forecast in the coming years.

Coda Minerals (COD)

Materially undervalued copper/cobalt developer which owns the Elizabeth Creek project in South Australia. Resource expansion drilling to commence in early 2025.

HOLD

Superloop (SLC)

A growing telecommunications company rapidly capturing market share, although market expectations and valuation are elevated.

Nick Scali (NCK)

Share price has recovered recently although Company has flagged potential challenges in meeting half-year FY25 guidance due to freight and customs issues.

SELL

JB Hi-Fi (JBH)

Trading at all-time highs, although projected earnings growth does not justify the current elevated valuation.

Mineral Resources (MIN)

Concerns arise from the founder’s impending departure and potential pressure on long-term iron ore pricing, with additional supply expected in the next 18 months.

Leyland Private Asset Management senior portfolio manager Sean Conlan:

BUY

JB Hi-Fi (JBH)

JB Hi-Fi’s strong financial performance, market leadership, e-commerce growth, diversified product range, and experienced management team make it a compelling investment opportunity.

Newmont Corp (NEM)

NEM is the world’s top gold producer and is targeting an average of 6Mozpa gold production and 150ktpa copper production. The company has a solid track record of organic and inorganic growth.

HOLD

Transurban (TCL)

Falling bond yields support lowering refinancing costs and better valuation. Traditional drivers like traffic growth are improving but still neutral. Tolling reform provides the potential for early capital release.

Collins Foods (CKF)

KFC Australia is performing well in a challenging environment, although we await further evidence of a sales and margin recovery before becoming more positive.

SELL

Domino’s Pizza (DMP)

Franchisee profitability has been under pressure since FY21, driven by declining revenue. We expect this to impede store rollouts medium term.

Star Entertainment (SGR)

SGR’s ability to stabilise the business, and ultimately return to profitability in the near term is a concern. That said, we understand that everything is for sale, and a break-up play could create value above the current share price.

Leyland Private Asset Management senior portfolio manager Sean Conlan recommends retailer JB Hi-Fi as a BUY. Photographer: Liam Kidston.
Leyland Private Asset Management senior portfolio manager Sean Conlan recommends retailer JB Hi-Fi as a BUY. Photographer: Liam Kidston.

Bell Potter private client adviser Chris Watt:

BUY

Plato Global Alpha Fund Complex ETF (PGA1)

The manager utilises an ‘all-weather’ investment style, designed to deliver consistent alpha through the cycle but investing across global equities based on growth, value and quality characteristics.

NextDC (NXT)

The demand environment remains solid for AI and data centres, with Microsoft noting that Australia is a key market for it globally. While power could become a constraint for AI, it does not seem to be a roadblock at the moment.

HOLD

Pilbara Minerals (PLS)

Pilbara Minerals’ robust balance sheet continues to fund expansion initiatives, readying the company to capitalise on our forecast improvements in lithium prices.

WiseTech Global (WTC)

We have downgraded our revenue forecasts slightly for the next few years and note the delay in the release of Container Transport Optimisation just pushes back the associated expected revenue.

SELL

Platinum Asset Management (PTM)

Funds under management fell 10 per cent over November. Outflows were 6.9 per cent of opening Funds Under Management, which included the loss of an institutional mandate. Investment performance remains uninspiring.

Citi Chic Collective (CCX)

We see a longer dated recovery outlook for this name operating in mass apparel retailing, which we see as one of the most challenged categories.

DISCLAIMER: Information and opinions provided in this article are general in nature. Always seek personal financial advice tailored to your specific needs before making financial and investment decisions.

NextDC boss Craig Scroggie. Picture: Mark Cranitch.
NextDC boss Craig Scroggie. Picture: Mark Cranitch.

Originally published as Share tip recommendations as market endures a rocky December

Add your comment to this story

To join the conversation, please Don't have an account? Register

Join the conversation, you are commenting as Logout

Original URL: https://www.dailytelegraph.com.au/business/share-tip-recommendations-as-market-endures-a-rocky-december/news-story/a91b56186b8b81ff261939b26cec50c9