Rudi’s View: To Sell Or Not To Sell

This story features APA GROUP, and other companies. For more info SHARE ANALYSIS: APA

The company is included in ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

By Rudi Filapek-Vandyck, Editor

Within the space of a number of weeks only, the prospect of further gains for US equities looks quite remote, as the early euphoria from Trump’s election victory has quickly evaporated.

There are still voices in the market who believe the ‘tough guy’ President will flinch first if/when the current draw down threatens to descend into a much bigger black hole for share markets, but who knows, really?

The FNArena-Vested Equities All-Weather Model Portfolio has lifted its allocation to cash to circa 15% in addition to some 7% exposure to gold.

Elsewhere, we note some portfolios have moved to 80% in cash, while pondering whether 100% is more appropriate for the uncertainty ahead.

The All-Weather Portfolio had moved to 40%-plus in cash back in 2022, when a global reset in bond yields worked as a sledgehammer on valuations for Quality and Growth stocks. We’ll do it again, and possibly more, if we are convinced a new GFC-like bear market is waiting to descend upon financial markets, but we are not yet convinced of that.

There is definitely a possibility for times to remain rough and tough for quite a while. From the Asian currency crisis, Y2K, the GFC, covid and the global bond reset; the past few decades have seen plenty of issues arising that weighed on markets for many, many months. Think also Grexit and EU-related problems.

This might well be one of such times. We don’t know for certain yet.

As far as my own experiences go, such times are ideal for upgrading and re-calibrating the investment portfolio. Throw out the misfits, the disappointments, the keep-my-fingers-crossed-it-won’t-get-worse Hail Marys, and the higher risk, small cap possibilities for a future ten bagger.

Instead, it is time to start researching those Higher Quality stalwarts you always thought were too expensively priced to buy. If the current trend remains ongoing, you’ll soon be able to purchase them at much cheaper levels. This is the true gift that share markets present when risk off dominates the global landscape.

From personal experience, I can also confirm it does wonders to one’s mindset. Of course, the value of the portfolio still goes down with every day of weakening share prices, but you’ll be surprised how much of a difference it makes to one’s mindset to have cash available for whenever the right opportunity comes along.

To the trained eye, the February result season would have provided plenty of such examples. I intend to elaborate more on this in Monday’s follow-up edition of Weekly Insights.

There remains, of course, my personal research into All-Weather Performers, including some of the smaller cap companies I believe still have a long runway of growth ahead with higher quality attributes than most of their peers.

Some changes have been made to the selections available on the dedicated section of the website:

Have been removed: APA Group ((APA)), IDP Education ((IEL)), Integral Diagnostics ((IDX)), and Redox ((RDX)) — not all from the same selections.

Have been added: Sigma Healthcare ((SIG)) and Pinnacle Investment Managers ((PNI)).

I intend to elaborate more on these changes in Monday’s Weekly Insights. (See also further below).

https://fnarena.com/index.php/analysis-data/all-weather-stocks/

Longview Stays Equities Neutral

Longview Economics removed its portfolio Equities Overweight recommendation in early February as more and more technical Sell signals accumulated but Chief Market Strategist Chris Watling had already concluded late last year the US bull market looked tired and exhausted.

Longview’s most recent strategy update, released this week, has stuck with a Neutral equities exposure alongside an Overweight allocation for US Treasuries and Underweight Cash.

It is Watling’s observation that more and more signals are pointing towards slowing economic momentum for the US economy, while Trump’s tariffs add more negative pressure, but US equities are also -6% off their recent all-time peak, and weakening daily.

Under different circumstances, reports Watling, one might be inclined to start considering a more constructive view on the markets, but not this time. Longview Economics is anticipating a relief rally of some sorts shortly, but weakness should resume soon after.

It is Longview’s assessment equity markets might be staring at multiple weeks of weakness, potentially morphing into multiple months in case of a worse outcome. Tactically Cautious is the main theme. But also: Neutral, not Sell.

Incidentally, Franklin Templeton sent out a press statement this week in which Fixed Income CIO Sonal Desai argues taking a too pessimistic view on the trajectory ahead seems “premature” at this stage, with the US economy, despite everything, still expected to grow above potential in 2025.

Crestone Downgrades To Neutral

Scott Haslem, Chief Investment Officer at Crestone, has equally stuck with a Neutral allocation to both Australian equities and government bonds, having trimmed Overweight allocations in February, while retaining an optimistic view overall for the US economy and corporate profits.

Locally, while the February reporting season proved far from fantastic, Haslem argues significant downside scenarios seem unlikely and the remainder of 2025 should see moderate guidance upgrades overall from corporate Australia.

Crestone retains Overweight positions for US and Japanese equities.

Crestone’s Best Sector Ideas are an attempt to identify the best in breed business models for major industry group sectors for long-term oriented investors. Anticipated performance over the next three years is part of the key considerations.

The latest updated selection consists of 18 companies, with Cochlear added to the prior list of 17 (unchanged).

-Aristocrat Leisure ((ALL))
-Ampol ((ALD))
-APA Group ((APA))
-Beach Energy ((BPT))
-Brambles ((BXB))
-Cochlear ((COL))
-CSL ((CSL))
-Goodman Group ((GMG))
-IGO Ltd ((IGO))
-James Hardie Industries ((JHX))
-Lottery Corp ((TLC))
-Macquarie Group ((MQG))
-Metcash ((MTS))
-Monadelphous Group ((MND))
-REA Group ((REA))
-ResMed ((RMD))
-Suncorp Group ((SUN))
-Xero ((XRO))

Crestone’s selection of sustainable dividend growers consists of 22 names. Historically, the stock pickers remind investors, companies that grow dividends consistently can offer superior long-term return for those who own them.

This selection has seen no changes.

-Amcor ((AMC))
-Ampol ((ALD))
-APA Group ((APA))
-Atlas Arteria ((ALX))
-Beach Energy ((BPT))
-BHP Group ((BHP))
-Car Group ((CAR))
-Coles Group ((COL))
-Dalrymple Bay Infrastructure ((DBI))
-Iress Ltd ((IRE))
-Lottery Corp ((TLC))
-Macquarie Group ((MQG))
-Metcash ((MTS))
-Mirvac Group ((MGR))
-Pro Medicus ((PME))
-QBE Insurance ((QBE))
-RAM Essential Services ((REP))
-ResMed ((RMD))
-Suncorp Group ((SUN))
-Tabcorp Holdings ((TAH))
-Telstra ((TLS))
-Westpac Banking ((WBC))

Cit’s Focus On Healthcare

The interim update disappointed and Integral Diagnostics’ ((IDX)) share price received an absolute shellacking, but healthcare analysts at Citi, for one, are keeping the faith.

They have elevated the stock to their number one preferred exposure in Australian healthcare, now beating CSL ((CSL)), Australian Clinical Labs ((ACL)), ResMed ((RMD)), and Cochlear ((COH)).

Ratings for all three of Integral Diagnostics. ResMed and Cochlear were upgraded to Buy this week.

ResMed’s share price weakness following a strong performance operationally in February has equally caught the attention of stock pickers at Goldman Sachs.

ResMed has now been added to the broker’s APAC Conviction List, where the stock joins Worley ((WOR)) and Iluka Resources ((ILU)) as the only other representatives from the ASX.

Healthcare sector analysts at Wilsons have selected ResMed, Telix Pharmaceuticals ((TLX)), Clarity Pharmaceuticals ((CU6)), Clinuvel Pharmaceuticals ((CUV)), and CSL for most potential upside.

Wilsons Adjusts Focus Portfolio

The February results season has seen Wilsons’ Focus Portfolio sell out of Steadfast Group ((SDF)) and trim exposure to Xero ((XRO)), although the latter did not release any financials during the month as it reports in between the main seasons.

The proceeds from both changes have been used to add exposure to WiseTech Global ((WTC)) and also add Brambles ((BXB)) into the mix.

Other changes made involve more exposure to Goodman Group ((GMG)) through its capital raise, with minor negative adjustments to portfolio weightings of Aristocrat Leisure ((ALL)) and Hub24 ((HUB)).

RBC Capital Prefers Coles

This week, RBC Capital initiated coverage on Australia’s two dominant supermarket operators with a preference for Coles Group ((COL)) over Woolworths Group ((WOW)).

That preference revolves around the simple observation that positive momentum, for the time being, is with the smaller operator of the two, a fact yet again confirmed during the February results season.

On the opposing side, Woolworths management certainly has a sizeable task at hand to once again righten the ship.

RBC analysts also suggest were Coles to continue on its positive growth trajectory, and with Woolworths still in struggle street, it is not inconceivable shares in Coles will revert to a relative premium from a narrowing valuation discount over the year past.

Woolworths thus starts with a $31 price target and Sector Perform rating while Coles enjoys an Outperform rating and $22 price target.

Morgan Stanley Makes No Changes

Morgan Stanley’s Macro+ Focus List in Australia is currently made up of:

-AGL Energy ((AGL))
-Aristocrat Leisure ((ALL))
-Car Group ((CAR))
-GPT Group ((GPT))
-James Hardie ((JHX))
-Macquarie Group ((MQG))
-Paladin Energy ((PDN))
-Santos ((STO))
-Suncorp Group ((SUN))
-WiseTech Global ((WTC))

****

Morgan Stanley’s Australia Macro+ Model Portfolio is currently made up of the following:

-ANZ Bank ((ANZ))
-CommBank ((CBA))
-National Australia Bank ((NAB))
-Westpac ((WBC))

-Macquarie Group ((MQG))

-Suncorp Group ((SUN))

-Goodman Group ((GMG))
-GPT Group ((GPT))
-Scentre Group ((SCG))
-Stockland ((STG))

-Aristocrat Leisure ((ALL))
-CAR Group ((CAR))
-Domino’s Pizza ((DMP))
-The Lottery Corp ((TLC))
-Wesfarmers ((WES))
-WiseTech Global ((WTC))

-James Hardie ((JHX))

-Orica ((ORI))

-Coles Group ((COL))

-CSL ((CSL))
-ResMed ((RMD))

-AGL Energy ((AGL))
-Origin Energy ((ORG))
-Telstra ((TLS))
-Transurban ((TCL))

-BHP Group ((BHP))
-Newmont Corp ((NEM))
-Rio Tinto ((RIO))
-South32 ((S32))

-Paladin Energy ((PDN))
-Santos ((STO))
-Woodside Energy ((WDS))

No Changes From Macquarie

Macquarie Wealths recommended Growth Portfolio:

-Goodman Group ((GMG))
-Seek ((SEK))
-Aristocrat leisure ((ALL))
-Northern Star ((NST))
-CSL ((CSL))
-Computershare ((CPU))
-NextDC ((NXT))
-Flight Centre ((FLT))
-Cleanaway Waste Management ((CWY))
-Steadfast Group ((SDF))
-James Hardie Industries ((JHX))
-ResMed ((RMD))
-Pexa Group ((PXA))
-Pinnacle Investment Management ((PNI))
-Treasury Wine Estates ((TWE))
-Viva Energy ((VEA))
-Xero ((XRO))
-IGO Ltd ((IGO))

Macquarie Wealth’s recommended Income Portfolio:

-Suncorp Group ((SUN))
-Telstra ((TLS))
-National Australia Bank ((NAB))
-Westpac Bank ((WBC))
-ANZ Bank ((ANZ))
-BHP Group ((BHP))
-CommBank ((CBA))
-Premier Investments ((PMV))
-Coles Group ((COL))
-Viva Energy ((VEA))
-Atlas Arteria ((ALX))
-Aurizon Holdings ((AZJ))
-APA Group ((APA))
-GPT Group ((GPT))
-Deterra Royalties ((DRR))
-Metcash ((MTS))
-Amotiv ((AOV))
-Charter Hall Retail REIT ((CQR))
-Amcor ((AMC))

For more, see: https://fnarena.com/index.php/2025/02/20/rudis-view-best-ideas-conviction-calls/

(Do note that, in line with all my analyses, appearances and presentations, all of the above names and calculations are provided for educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions.)  

P.S. I – All paying members at FNArena are being reminded they can set an email alert for my Rudi’s View stories. Go to My Alerts (top bar of the website) and tick the box in front of ‘Rudi’s View’. You will receive an email alert every time a new Rudi’s View story has been published on the website. 

P.S. II – If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

FNArena Subscription

A subscription to FNArena (6 or 12 months) comes with an archive of Special Reports (20 since 2006); examples below.

Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Click to view our Glossary of Financial Terms