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 18 May 2020. You can access the full version of the article HERE.
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This producer of building products has rallied strongly in the last couple of months as the market starts to realise that the economy will start to open up sooner than expected. The company has a strong balance sheet and is expected to maintain a strong earnings profile. We expect it to rally towards the high $20’s over the coming months.
Like many other companies, the market is coming to realise that this retailer was oversold in March. It has started to trade higher again as the market prices in a swifter recovery. Along with other beaten down retailers, HVN shares should have further upside from here.
We have been bullish on MQG’s prospects for several weeks now and the share price continues to deliver. It has made a significant break above $100 which is a positive sign from a charting point of view. On the back of a well-received full year result in early May, we continue to expect good buying support for the shares.
Similarly to MQG, MFG continues to trade very well compared to the broader market. This fund manager has also seen its Funds Under Management hold up well against expectations and this has lent it some extra buying support.
Whilst the hoarding of food several weeks ago has been a positive for Coles, it is natural that its earnings will revert back to its longer term path. With many other higher growth companies still trading well down from the start of the year, we cannot see much upside in Coles when the market liquidity will flow into other higher growth companies.
Similarly to Coles, Telstra is a low growth company that is now trading alongside more exciting companies which have had a larger share price drop. The weight of money in the market that is looking for a return is rushing to higher growth stocks and Telstra’s share price is being left behind.
Michael Gable is managing director of Fairmont Equities.
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