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 23 March 2020. You can access the full version of the article HERE.
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The recent market falls will prove to be an opportunity to pick up CSL at more attractive levels. The effect of the virus on their business will be smaller than other companies. When the market recovers, investors are likely to rush into buying CSL, which had always seemed out of reach. This means that it should bounce strongly during any market recovery.
For similar reasons to CSL, ResMed is one of those companies that investors are likely to flock to at lower levels. This means that it should bounce well when the market recovers. Demand for their respiratory products will have a positive effect on their earnings for the year. The shares have also been outperforming the broader market.
FPH shares have recently pushed onto to new highs as they see increased demand for their respiratory masks. Their share price has continued to outpace the market and it remains a relatively safe place to keep an exposure to as share market move through the current crisis.
Resource stocks have been hit hard in the recent market sell-off, but with China moving back to capacity, we could see a situation here we investors view BHP as being oversold. There is a good chance that the share price can recover a bit from here. For the next few months though we still expect volatility, which could make BHP a good trading stock.
Although it may bounce in the short term, we believe that any rallies will be sold in to. Investor appetite for tech stocks with high valuations will take time to recover and this could leave APT’s share price languishing for a while. There is also a concern that a slowing economy could see use of APT’s products take a hit.
Although the share price has already fallen a lot, we still have no idea when consumers will be willing to book holidays again, even if travel bans are lifted. With the company already cutting stores to reduce costs, there is likely to be more pain ahead.
Michael Gable is managing director of Fairmont Equities.
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