Rudi’s View: Small Caps, Quality, Gold, Balance & Maximum Diversification

Array
(
    [0] => Array
        (
            [0] => ((CNI))
            [1] => ((MAH))
            [2] => ((GDG))
            [3] => ((PPS))
            [4] => ((AMA))
            [5] => ((BGA))
            [6] => ((CCL))
            [7] => ((CWP))
            [8] => ((DVP))
            [9] => ((ELD))
            [10] => ((IDX))
            [11] => ((KYP))
            [12] => ((NIC))
            [13] => ((UNI))
            [14] => ((NST))
            [15] => ((PRU))
            [16] => ((GMD))
            [17] => ((VAU))
            [18] => ((NEM))
            [19] => ((TLS))
            [20] => ((WBC))
            [21] => ((DXS))
            [22] => ((SDF))
            [23] => ((BHP))
            [24] => ((BSL))
            [25] => ((GMD))
            [26] => ((ORI))
            [27] => ((ORG))
            [28] => ((GMG))
            [29] => ((IAG))
            [30] => ((MGR))
            [31] => ((NHF))
            [32] => ((COH))
            [33] => ((COL))
            [34] => ((HVN))
            [35] => ((MTS))
            [36] => ((NXT))
            [37] => ((REA))
            [38] => ((RMD))
            [39] => ((SGH))
            [40] => ((SLC))
            [41] => ((TNE))
            [42] => ((VGN))
            [43] => ((WTC))
            [44] => ((CHC))
            [45] => ((EVN))
            [46] => ((ANZ))
            [47] => ((APA))
            [48] => ((AZJ))
            [49] => ((ASX))
            [50] => ((CBA))
            [51] => ((ING))
            [52] => ((REH))
            [53] => ((TPW))
            [54] => ((PNI))
            [55] => ((XRO))
            [56] => ((CAR))
            [57] => ((RMD))
            [58] => ((SGP))
            [59] => ((ALL))
            [60] => ((AMP))
            [61] => ((ANZ))
            [62] => ((BSL))
            [63] => ((GLF))
            [64] => ((GMG))
            [65] => ((ILU))
            [66] => ((SEK))
            [67] => ((TLC))
            [68] => ((XRO))
            [69] => ((ANZ))
            [70] => ((CBA))
            [71] => ((NAB))
            [72] => ((WBC))
            [73] => ((MQG))
            [74] => ((AMP))
            [75] => ((GDG))
            [76] => ((SUN))
            [77] => ((GLF))
            [78] => ((GMG))
            [79] => ((GPT))
            [80] => ((SCG))
            [81] => ((SGP))
            [82] => ((ALL))
            [83] => ((APE))
            [84] => ((CAR))
            [85] => ((DMP))
            [86] => ((TLC))
            [87] => ((WES))
            [88] => ((XRO))
            [89] => ((JHX))
            [90] => ((ORI))
            [91] => ((QUB))
            [92] => ((SEK))
            [93] => ((COL))
            [94] => ((CSL))
            [95] => ((RMD))
            [96] => ((TLS))
            [97] => ((TCL))
            [98] => ((TUA))
            [99] => ((BHP))
            [100] => ((BSL))
            [101] => ((ILU))
            [102] => ((NEM))
            [103] => ((RIO))
            [104] => ((S32))
            [105] => ((STO))
            [106] => ((WDS))
        )

    [1] => Array
        (
            [0] => CNI
            [1] => MAH
            [2] => GDG
            [3] => PPS
            [4] => AMA
            [5] => BGA
            [6] => CCL
            [7] => CWP
            [8] => DVP
            [9] => ELD
            [10] => IDX
            [11] => KYP
            [12] => NIC
            [13] => UNI
            [14] => NST
            [15] => PRU
            [16] => GMD
            [17] => VAU
            [18] => NEM
            [19] => TLS
            [20] => WBC
            [21] => DXS
            [22] => SDF
            [23] => BHP
            [24] => BSL
            [25] => GMD
            [26] => ORI
            [27] => ORG
            [28] => GMG
            [29] => IAG
            [30] => MGR
            [31] => NHF
            [32] => COH
            [33] => COL
            [34] => HVN
            [35] => MTS
            [36] => NXT
            [37] => REA
            [38] => RMD
            [39] => SGH
            [40] => SLC
            [41] => TNE
            [42] => VGN
            [43] => WTC
            [44] => CHC
            [45] => EVN
            [46] => ANZ
            [47] => APA
            [48] => AZJ
            [49] => ASX
            [50] => CBA
            [51] => ING
            [52] => REH
            [53] => TPW
            [54] => PNI
            [55] => XRO
            [56] => CAR
            [57] => RMD
            [58] => SGP
            [59] => ALL
            [60] => AMP
            [61] => ANZ
            [62] => BSL
            [63] => GLF
            [64] => GMG
            [65] => ILU
            [66] => SEK
            [67] => TLC
            [68] => XRO
            [69] => ANZ
            [70] => CBA
            [71] => NAB
            [72] => WBC
            [73] => MQG
            [74] => AMP
            [75] => GDG
            [76] => SUN
            [77] => GLF
            [78] => GMG
            [79] => GPT
            [80] => SCG
            [81] => SGP
            [82] => ALL
            [83] => APE
            [84] => CAR
            [85] => DMP
            [86] => TLC
            [87] => WES
            [88] => XRO
            [89] => JHX
            [90] => ORI
            [91] => QUB
            [92] => SEK
            [93] => COL
            [94] => CSL
            [95] => RMD
            [96] => TLS
            [97] => TCL
            [98] => TUA
            [99] => BHP
            [100] => BSL
            [101] => ILU
            [102] => NEM
            [103] => RIO
            [104] => S32
            [105] => STO
            [106] => WDS
        )

)

This story features CENTURIA CAPITAL GROUP, and other companies.
For more info SHARE ANALYSIS: CNI
The company is included in ASX200, ASX300 and ALL-ORDS

Updates on Most Favoured, Best Buys, Conviction Calls and Model Portfolio changes.

By Rudi Filapek-Vandyck, Editor

Morgan Stanley

Morgan Stanley is tempering investors’  enthusiasm for the year ahead as US economic growth is forecast to slow in 2026 while inflation is expected to remain sticky.

No recipe for disaster, as the in-house view is equally that all market talk about AI bubbles and pending sell-offs is too bearish.

The number of rate cuts from the Federal Reserve will probably disappoint and yield curves will stay biased toward steepening.

All in all, Morgan Stanley’s favour rests with larger cap and quality companies, as well as with gold.

‘Maximum portfolio diversification’ is the new buzzword. Expectation is for 5%-10% gains for US equities in 2026, placing the S&P500 at 7200.

One statement stands out: “it’s an active trader’s market, not an investor’s market”.

And also: “We do NOT think that we are in an AI capex bubble yet but we are closer to the seventh inning than the second”.

In terms of portfolio exposures, the recommendations are to be Underweight unprofitable technology as well as Underweight small caps.

Instead the preference lays with midcap growth companies insulated from tariffs, as well as financials, energy, domestic industrials, healthcare, and media.

Morgan Stanley’s regional allocations are Overweight US and Emerging Markets and Underweight other developed markets (this would include Australia).

T Rowe Price

Portfolio managers at T Rowe Price are not buying the small caps hype that has erupted since August, led by the US.

Sure, they can see some reasons to back some smaller cap companies in the US following the recent passing of the One Big Beautiful Bill, a resurgence in M&A activity, and the Trump administration’s push on deregulation, among other factors, but what about economic growth slowing?

T Rowe Price suggests a more balanced approach will probably work best, combining some smaller caps with tested and proven large cap performers.

The asset manager currently has a Neutral stance on equities, again, on trying to balance “decent fundamentals” with “expensive valuations”.

Potentially, the better opportunities might well be outside US equities, albeit not necessarily in Australia.

The lack of corporate earnings growth locally in combination with signs of peaking economic momentum  –and this was before the latest hawkish statements from RBA representatives—suggests to T Rowe Price the ASX might well be relatively more “expensive” than US markets.

T Rowe Price prefers to remain Underweight the Australian market, with Overweight portfolio positions reserved for Europe and Emerging Markets.

Bell Potter

Strategists at Bell Potter have no such hesitation; they are fully on board with ‘Smalls is the new Large’.

It’s been predominantly about resources thus far this year, but momentum can still broaden into industrials, in their view, also carried by ongoing expectations of RBA rate cuts and better economic momentum next year.

Four nominations for attractively priced, undervalued small cap stocks are:

• Centuria Capital Group ((CNI))
• Macmahon Holdings ((MAH))
• Generation Development ((GDG))
• Praemium ((PPS))

Bell Potter’s preferred small cap stocks:

• AMA Group ((AMA))
• Bega Cheese ((BGA))
• Cuscal ((CCL))
• Centuria Capital Group
• Cedar Woods Properties ((CWP))
• Develop Global ((DVP))
• Elders ((ELD))
• Generation Development
• Integral Diagnostics ((IDX))
• Kinatico ((KYP))
• Macmahon Holdings
• Nickel Industries ((NIC))
• Praemium
• Universal Store ((UNI))

UBS

Analysts at UBS have –yet again—upped their gold pricing forecasts and with the public debate raging about yet another ‘bubble’  forming, or not, UBS remains firmly on the ‘ not’ side of the debate.

“We believe conditions for gold to drop are unlikely.” Instead, the analysts see ongoing support from de-dollarisation and macroeconomic/geopolitical risks.

UBS’s key gold picks on the ASX:

• Northern Star ((NST))
• Perseus Mining ((PRU))
• Genesis Minerals ((GMD))
• Vault Minerals ((VAU))

Elsewhere, UBS’s selection of Most Preferred ASX-listed stocks has seen the addition of Newmont Corp ((NEM)), Telstra Group ((TLS)) and Westpac ((WBC)).

Have been removed: Dexus ((DXS)) and Steadfast Group ((SDF)).

The list of Most Preferred ASX-listed stocks:

Resources

• BHP Group ((BHP))
• BlueScope Steel ((BSL))
• Genesis Minerals ((GMD))
• Newmont Corp
• Orica ((ORI))
• Origin Energy ((ORG))

Financials & REITS

• Goodman Group ((GMG))
• Insurance Australia Group ((IAG))
• Mirvac Group ((MGR))
• nib Holdings ((NHF))
• Westpac

Industrials

• Cochlear ((COH))
• Coles ((COL))
• Harvey Norman ((HVN))
• Metcash ((MTS))
• NextDC ((NXT))
• REA Group ((REA))
• ResMed ((RMD))
• SGH Ltd ((SGH))
• Superloop ((SLC))
• TechnologyOne ((TNE))
• Telstra
• Virgin Australia ((VGN))
• WiseTech Global ((WTC))
   

UBS also compiles a list of Least Preferred ASX-listed stocks.

Here Charter Hall Group ((CHC)) and Evolution Mining ((EVN)) have been removed, with no fresh inclusions.

Least Preferred ASX-listed stocks:

• ANZ Bank ((ANZ))
• APA Group ((APA))
• Aurizon Holdings ((AZJ))
• ASX Ltd ((ASX))
• CommBank ((CBA))
• Inghams Group ((ING))
• Reece ((REH))
• Temple & Webster ((TPW))

Wilsons

Strategists at Wilsons Advisory are zooming in on high quality ASX-listed companies for whom the post-August results season has turned into a disappointing experience.

This, they emphasise, has occurred despite robust underlying fundamentals.

Companies that are firmly on the radar include:

• Pinnacle Investment Management ((PNI))
• Xero ((XRO))
• Car Group ((CAR))
• ResMed ((RMD))

Wilsons equally nominates Stockland ((SGP)) for attractive exposure to the Australian  housing cycle.

Wilsons’ Model Portfolio is currently slightly Underweight both local and international equities in favour of fixed income and alternatives, including private credit and gold.

In light of UBS’s comment earlier, here’s Wilsons’ view: “While the recent price action in gold hints at the potential for a pullback or consolidation, we continue to see the medium to longer-term outlook for gold as favourable and maintain our allocation”.

Wilsons’ view on equities: “We remain a touch underweight global equities, indicating some ongoing tactical caution. However, we are also cognisant that the twin drivers of strong corporate profitability and Fed easing could continue to support equities for an extended period”.

And locally: “We have trimmed our Australian equity position marginally due to likely headwind from stretched valuations, alongside less scope for RBA easing to stimulate earnings growth over the coming year”.

Morgan Stanley

Morgan Stanley’s Australia Macro+ Focus List currently consists of the following ten:

• Aristocrat Leisure ((ALL))
• AMP Ltd ((AMP))
• ANZ Bank ((ANZ))
• BlueScope Steel ((BSL))
• GemLife Communities Group ((GLF))
• Goodman Group ((GMG))
• Iluka Resources ((ILU))
• Seek (((SEK))
• The Lottery Corp ((TLC))
• Xero ((XRO))

The Australia Macro+ Model Portfolio:

• ANZ Bank ((ANZ))
• CommBank ((CBA))
• National Australia Bank ((NAB))
• Westpac ((WBC))
• Macquarie Group ((MQG))
• AMP Ltd ((AMP))
• Generation Development ((GDG))
• Suncorp Group ((SUN))
• GemLife Communities Group ((GLF))
• 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))
• Xero ((XRO))
• James Hardie ((JHX))
• Orica ((ORI))
• Qube Holdings ((QUB))
• Seek ((SEK))
• Coles Group ((COL))
• CSL ((CSL))
• ResMed ((RMD))
• Telstra ((TLS))
• Transurban Group ((TCL))
• Tuas Ltd ((TUA))
• BHP Group ((BHP))
• BlueScope Steel ((BSL))
• Iluka Resources ((ILU))
• Newmont Corp ((NEM))
• Rio Tinto ((RIO))
• South32 ((S32))
• Santos ((STO))
• Woodside Energy ((WDS))

(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