Share tips and stock recommendations for the Australian (ASX) share market – buy, hold, and sell. Michael Gable is an expert guest commentator for the stock market newsletter thebull.com.au.
This post is an extract from the newsletter dated 17 April 2023. You can access the full version of the article HERE.
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The share price has been trending higher since October, and the weakness in March brought the shares back to a strong area of support. That weakness was mainly due to concerns of banking sector risks. However, we feel that those fears were overblown, and these prices provide an opportunity.
The share price remains in a long-term uptrend. In the short-term, it has eased back to the bottom of the trend and this now provides a new entry point. We continue to be positive on commodities and expect Chinese demand and a falling US dollar to offer price support to the sector.
We expect iron ore prices to strengthen throughout this year on the back of rising Chinese demand and a falling US dollar. The FMG share price has held in remarkably well in the past two months as share markets generally have gone backwards. This means that once markets become more optimistic, FMG shares could go on to make new highs.
We have been optimistic on the energy sector for a while now as a lack of supply and investment should keep a floor under the share price. WDS has seen some solid buying support in the past few weeks, and news of supply cuts from OPEC should only increase the buying support for WDS for a while yet.
Magellan looks like a value trap. It appears to be good value, but if it continues to lose funds under management, then those valuations are justified. Their funds will need to provide attractive performance figures for many months, or even years, before they will be able to rebuild their funds under management.
The share price has had a great run in the past several months. However, our charting analysis is suggesting that a top may now be in place. Whilst the stock may not look expensive, it is not cheap enough to warrant the potential uncertainty around retails sales and department store’s performance in general.
Michael Gable is managing director of Fairmont Equities.
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