Rudi's View | Oct 23 2024
In Weekly Insights this week:
-Australia's Most Highly Recommended Stocks
-FNArena Talks
By Rudi Filapek-Vandyck, Editor
Australia's Most Highly Recommended Stocks
Risk comes in multiple shapes and forms.
A lot is being written about top notch valuations for global share markets, but the risk that is showing itself yet again this month in Australia is the risk for disappointing operational performance. On Monday, Nick Scali ((NCK)) shares are trading down -4.7% following a subdued AGM trading update.
Nick Scali's disappointment follows in the footsteps of ARB Corp ((ARB)) and EVT Ltd ((EVT)), as well as the travel sector representatives Flight Centre ((FLT)) and Web Travel Group ((WEB)) last week. For good measure, not all market updates are of a negative nature as can also be seen through the share price responses post market updates by the likes of Amotiv ((AOV)) and Bellevue Gold ((BGL)).
Maybe the safest conclusion to draw is that operational challenges remain a tangible headwind for many an ASX-listed company, smaller cap companies in particular.
For local investors, the art of successful investing hasn't changed since the August results season: it's about identifying which companies remain a great investment despite short-term weakness, plus separating out those unlikely to disappoint when communicating their latest insights.
Maybe FNArena can help with this mission?
After all, we do have access to research, opinions and views from analysts and strategists whose job it is to analyse, project and predict when it comes to share markets and individual ASX-listed stocks.
The Super Stock Report Top Twelve
The most straightforward methodology is through simply adding up all Buy/Hold/Sell ratings inside the FNArena universe, with our monthly Australian Super Stock Report providing exactly such an overview.
The October update, freshly published on the website last week, revealed a rather unique phenomenon. I say unique because in the more than two decades of compiling this Report, I cannot remember one single precedent.
The Top 40 of highest recommended stocks all have the maximum score on the FNArena Sentiment Indicator which ranks between positive 1 and negative -1. A positive 1 indicates all ratings are Buy or equivalent. A negative -1 implies all ratings are negative.
To compile our monthly Top 40 we require at least three (out of eight) brokers covering. Yet, all in the current Top 40 currently have no other ratings than Buy.
The local index is near an all-time record high, but this observation is as much a reminder to all of us the share market remains widely dispersed and polarised, with smaller cap companies representing both opportunity and risk.
Setting the minimum of analysts to five (5) generates the following twelve most highly recommended stocks on the ASX (as per last week's update of the Australian Super Stock Report):
-Universal Store ((UNI))
-Whitehaven Coal ((WHC))
-Patriot Battery Materials ((PMT))
-Accent Group ((AX1))
-GQG Partners ((GQG))
-Paladin Energy (PDN))
-Nickel Industries ((NIC))
-Worley ((WOR))
-SiteMinder ((SDR))
-Seek ((SEK))
-Flight Centre Travel ((FLT))
The first observation to make is both Seek and Flight Centre have had their share of negative news announcements this year, but sector analysts clearly do not think this removes the fact both share price are undervalued and much better times should announce themselves on the horizon.
Also, the aforementioned Amotiv and Nick Scali are equally on the long list of maximum Buy ratings, as are Superloop ((SLC)), Lindsay Australia ((LAU)), SRG Global ((SRG)), Kelsian Group ((KLS)), Beacon Lighting ((BLX)) and Zip Co ((ZIP)), among many others.
For more details, FNArena subscribers can download the monthly Report via the website, or simply use the link near the bottom of today's story.
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