Rudi's View | Mar 20 2025
By Rudi Filapek-Vandyck, Editor
A reminder from the research desk at Macquarie: ASX-listed contractors on average delivered solid, resilient performances in February, carried by "good" margins, cash flow and share buybacks. In addition, most inside the sector are somewhat insulated from global risks and uncertainties with operations concentrated domestically.
Macquarie has Outperform ratings for five companies in the sector:
-Ventia Services ((VNT))
-Monadelphous ((MND))
-Worley ((WOR))
-SGH Ltd ((SGH))
-Service Stream ((SSM))
Macquarie's forecasts are projecting "healthy" growth in EPS for the companies mentioned between FY25-27.
In an unrelated, earlier sector update analysts at Morgans identified ALS Ltd ((ALQ)) and Monadelphous as their two favourites.
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Bell Potter strategists Paul Basha and Rob Crookston, together with analyst Chris Savage have released an ongoing positive forecast for the price of gold, which, all else remaining equal, should continue to bode well for ASX-listed gold producers as the prospect for rising bullion prices isn't yet priced into share prices.
Bell Potter's Top Pick to play the theme is Evolution Mining ((EVN)). Also viewed positively is Northern Star ((NST)), with both preferred over Newmont Corp ((NEM)).
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Some interesting statistics from the strategy team at UBS: about one quarter (25%) of share market corrections turns into a bear market, with the data analysis only going back to 2010.
Looking back over the past 55 years, all bear markets can be traced back to economic recessions, with exception of 2022 and 1987.
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Ord Minnett Head of Asset Allocation, Malcolm Wood: "Despite recent market weakness, we remain cautious and are awaiting a more material correction before looking to add risk assets. We are monitoring policy responses to pressure from Trump, particularly in China".
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