Rudi’s View: Coles, GemLife, Harvey Norman, Lynas, Orica, Reece, Seek & More

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This story features NEXTDC LIMITED, and other companies.
For more info SHARE ANALYSIS: NXT
The company is included in ASX100, ASX200, ASX300, ALL-ORDS and ALL-TECH

Update on expert views, favourite stocks and Top Picks post the August results season in Australia.

By Rudi Filapek-Vandyck, Editor

The key conclusion at my presentation to members of the Australian Shareholders’ Association (ASA) in Canberra on Monday was that megatrend AI is already changing the world as we know it.

At this early stage of development, this is generally a positive.

Clearly, global macro strategists at Citi agree with that statement. Ahead of this week’s FOMC -25bp rate cut, their conclusion was that Fed policy easing in combination with a booming AI capex cycle translates into a soft landing for the US and the global economy.

Irrespective of all the fears, threats and worries out there, such an outcome is a positive for equities, assuming more cuts will follow and nothing untoward disrupts the AI megatrend.

I think counter-scenarios are definitely possible, but not very plausible at this point.

Market strategists at Macquarie spelled it out in more detail on Thursday morning: the Federal Reserve is adding more liquidity in a market where growth is OK.

Taking a leaf from history, Macquarie is anticipating stocks will outperform bonds, cyclicals (including technology) will outperform defensives, and Growth (including technology) will beat Value.

Ahead of this week’s rate cut (delivered as expected), Macquarie’s Model Portfolio added more exposure to technology through NextDC ((NXT)) and Seek ((SEK)) and to Growth via Lovisa Holdings ((LOV)) and Webjet Travel ((WEB)).

Reduced exposures include defensives, bond proxies and US housing. The latter decision is inspired by perceived risk of higher yields.

Macquarie research signals cyclicals that should benefit from renewed Fed rate cuts and stronger US growth (even with a weaker USD) include Block ((XYZ)), Aristocrat Leisure ((ALL)), Light & Wonder ((LNW)), Breville Group ((BRG)), Car Group ((CAR)), Flight Centre ((FLT)), and Credit Corp ((CCP)).

Other beneficiaries should be gold companies and smaller caps.

Now that we’ve mentioned small caps… Wilsons analysts highlighted this week earnings growth expectations are highest in Australia for profitable small cap companies (note the addition of ‘profitable’).

Wilsons’ two favourites are Ridley Corp ((RIC)) and Nanosonics ((NAN)).

Other ‘noteworthy’ opportunities, according to Wilsons research, include Maas Group ((MGH)), GemLife Communities ((GLF)), Autosports Group ((ASG)), Jumbo Interactive ((JIN)), ARB Corp ((ARB)), and Tyro Payments ((TYR)).

****

More supportive conclusions for bullish equity views were unearthed through historical precedents this week by strategists at Canaccord Genuity.

Their digging into the past found seven prior periods since the 1970s when the Fed resumed a rate-cutting cycle after a long pause (126 days or more).

Near term returns for the S&P500 were rather inconclusive, with median gains of 1.4% over one month and 2.9% over three months, though index performances proved positive 71.4% and 57.1% of the time, respectively.

Bulls would want to focus on longer-term outcomes as they proved both stronger and more consistent: nine- and twelve-month gains have occurred 85.7% of the time, with median returns of respectively 4.7% and 14.5%.

****

See also last week’s: https://fnarena.com/index.php/2025/09/11/rudis-view-us-equities-csl-macquarie-technology-xero-more/

****

Another factor that was highlighted on Monday is result seasons have noticeably become a lot more volatile. Share prices moving by 5% on the day of reporting now occur in about 50% of all market updates and for 30% of companies the market reaction involves at least 10% in either direction.

This triggers the question: how does sharply increased volatility impact on the usual post-season patterns? Can a share price that jumps by, say, 10% still outperform on the back of a surprisingly great result in the following weeks and months?

Analysts at Macquarie asked the same question and did some deeper digging in the hope they might find some answers. Not surprisingly, one of the observations is that strong gains can fade more quickly in modern times.

Having said so, Macquarie research also suggests consecutive earnings surprises tend to accumulate into a stronger-for-longer winning streak with 46% of companies still beating market expectations after three consecutive releases of better-than-expected results.

Goes without saying, such a positive streak tends to translate into “tangible excess returns” over a longer period of time. Investors and traders like backing winners, no doubt about it.

Equally important: repeated disappointments tend to also feed upon itself, resulting in compounding under-performance.

Post result season trends are mostly, though not always, underpinned by revisions in analysts’ forecasts.

Combining these observations has led to the selection of the following stocks that are likely to offer opportunity in case of short-term share price weakness: Brambles ((BXB)), Coles Group ((COL)), Seek, Qantas Airways ((QAN)), and REA Group ((REA)).

In contrast, Macquarie also identified some companies that disappointed in August and are currently experiencing poor earnings forecasts revisions, suggesting underperformance ahead for the likes of Endeavour Group ((EDV)), Fortescue ((FMG)), and Reece ((REH)).

****

A recovery in consumer spending was one of the stand-out features of the August results season and the latest survey by UBS for the September quarter (conducted in August) shows Australian consumers to be the most positive on their spending intentions since the survey began six years ago.

Extra note: cost of living remains a serious challenge for many, with UBS interpreting the survey results as “could suggest that most people have adjusted to this new reality”.

Among companies mentioned to likely benefit are Metcash ((MTS)), Harvey Norman ((HVN)) and the recently re-listed Virgin Australia ((VGN)).

Analysts at Morgan Stanley have equally jumped on the consumer spending is getting better bandwagon by offering relative preferences:

-Sigma Healthcare ((SIG)) preferred over Wesfarmers ((WES))
-Harvey Norman ((HVN)) preferred over JB Hi-Fi ((JBH))
-Guzman Y Gomez ((GYG)) preferred over Domino’s Pizza ((DMP))
-Accent Group ((AX1)) preferred over Super Retail ((SUL))

Citi’s two favourites to play the theme are JB Hi-Fi and Harvey Norman.

Over at Bell Potter, Coles Group ((COL)) has now been included in the broker’s selection of Top Picks.

Other favourites include Bega Cheese ((BGA)) and Noumi ((NOU)), as well as Harvey Norman, Universal Store Holdings ((UNI)) and JB Hi-Fi.

Light & wonder ((LNW)) is seen as a more compelling growth story than Aristocrat Leisure ((ALL)).

****

Morgan Stanley’s Asia Pacific Thematic Focus List is the latest attempt to combine all major trends, mega and otherwise, into one basket, and filter selections made down to 25 stocks across the region as best opportunities available for investors to choose from.

Three ASX-listed companies made the selection: BHP Group ((BHP)), Goodman Group ((GMG)), and Lynas Rare Earths ((LYC)).

Other names on the list are TSMC, Tencent, Samsung Electronics, and Sony Group.

****

Key investment opportunities as identified by analysts at Wilsons:

-Stockland ((SGP))
-Collins Foods ((CKF))
-Xero ((XRO))
-Pinnacle Investment Management ((PNI))
-ResMed ((RMD))

Small and MidCap investment ideas:

-GemLife Communities ((GLF))
-Autosports Group ((ASG))
-Jumbo Interactive ((JIN))
-Nanosonics ((NAN))
-Ridley Corp ((RIC))
-ARB Corp ((ARB))

Speculative ideas:

-Tyro Payments ((TYR))
-Clarity Pharmaceuticals ((CU6))

Wilsons’ Australia Equity Focus Portfolio currently includes:

-ANZ Bank ((ANZ))
-Aristocrat Leisure ((ALL))
-BHP Group ((BHP))
-Brambles ((BXB))
-Car Group ((CAR))
-Collins Foods ((CKF))
-CSL ((CSL))
-Evolution Mining ((EVN))
-Goodman Group ((GMG))
-HealthCo Healthcare & Wellness REIT ((HCW))
-Hub24 ((HUB))
-Macquarie Group ((MQG))
-Northern Star Resources ((NST))
-Pinnacle Investment Managament ((PNI))
-ResMed ((RMD))
-Sandfire Resources ((SFR))
-Santos ((STO))
-South32 ((S32))
-Stockland ((SGP))
-TechnologyOne ((TNE))
-Telix Pharmaceuticals ((TLX))
-The Lottery Corp ((TLC))
-Westpac Bank ((WBC))
-WiseTech Global ((WTC))
-Woolworths ((WOW))
-Worley ((WOR))
-Xero ((XRO))

****

Morgan Stanley’s Macro+ Focus List last changed in April this year, with the following ten making up the selection since:

-Aristocrat Leisure ((ALL))
-ANZ Bank ((ANZ))
-Car Group ((CAR))
-Goodman Group ((GMG))
-GPT Group ((GPT))
-James Hardie Industries ((JHX))
-Orica ((ORI))
-Santos ((STO))
-Suncorp Group ((SUN))
-Xero ((XRO))

Morgan Stanley’s Macro+ Model Portfolio consists of the following:

-ANZ Bank ((ANZ))
-CommBank ((CBA))
-National Australia Bank ((NAB))
-Westpac Banking ((WBC))
-Macquarie Group ((MQG))
-Suncorp Group ((SUN))

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

-Aristocrat Leisure ((ALL))
-Eagers Automotive ((APE))
-Car Group ((CAR))
-Domino’s Pizza ((DMP))
-The Lottery Corp ((TLC))
-Wesfarmers ((WES))
-WiseTech Global ((WTC))
-Xero ((XRO))

-James Hardie ((JHX))
-Amcor ((AMC))
-Cleanaway Waste Management ((CWY))
-Orica ((ORI))

-Coles Group ((COL))

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

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

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

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

****

Paying subscribers have 24/7 access to my curated selection of All-Weather stocks and related lists: https://fnarena.com/index.php/analysis-data/all-weather-stocks/

Review All-Weather Model Portfolio

The financial year ending on June 30th 2025 featured the return of Donald Trump in the White House and of extreme market volatility.

The second half of the year also saw doubt creeping into general sentiment towards AI and demand for data centres.

All in all, a gain of 13.85% (pre-fees) for the twelve months is not something to be unhappy about, right?

FY25 review of the All-Weather Model Portfolio: https://www.fnarena.com/index.php/download-article/?n=4B38C0EF-A173-8CE6-736A7AFC7B19FC49

(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.

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