Rudi’s View: Strategists Touting Opportunities

Rudi's View | 4:28 PM

Share market strategists are looking beyond the short-term, as the war in Iran is not expected to last beyond month's end.

By Rudi Filapek-Vandyck, Editor

Bell Potter strategists Rob Crookston and Paul Basha's latest strategy update takes a rather sanguine point of view around this year's share market malaise thus far.

While current conditions are annoyingly frustrating, with ongoing uncertainty about duration and objectives even after the US president addressed the nation on Thursday, Bell Potter strategists remind investors share market drawdowns of -10% are nothing exceptional.

Looking at historical precedents, markets typical generate "robust positive returns" over six, twelve and 18 months once that "correction" has run its course.

In case there was any doubt: Bell Potter is not worried. Instead, Thursday's strategy update highlights the US economy continues to operate from a position of relative strength, the Federal Reserve retains significant dry powder to provide support if/when necessary, and we haven't even seen the fiscal stimulus kick in from the "One Big Beautiful Bill".

Then there's AI... the correlated capex boom is unlikely to be deterred by whatever is happening in Iran, the strategists argue, and thus continues to provide support to the US economy.

It's a pity, but Bell Potter's assessment is focused on the USA where quality companies have been de-rated substantially and excessively. Bell Potter's advice to investors is to grab your chance, while looking through short-term volatility.

As a hint, the strategy report highlights six of the Mag7 (excluding Tesla) are currently trading at or near decade-low valuation multiples.

Conclusion:

"While the next few weeks/months will undoubtedly bring continued uncertainty regarding the direction of the conflict and its impact on the global economy, it is important to look at history.

"Market moves of the magnitude we have recently witnessed are, on a probability weighted basis, buying opportunities.

"History has shown time and again that the highest returns are often generated by those who have the fortitude to increase exposure when the outlook appears most clouded.

"By prioritising fundamentals over headlines, disciplined investors can transform periods of volatility into significant long term returns."

Within this context, and to add some ASX-specific content to the suggestion put forward, I looked up the ten highest ranking stocks on FNArena's R-Factor filter:

• Amcor ((AMC))
• Nine Entertainment ((NEC))
• Regis Resources ((RRL))
• Atlas Arteria ((ALX))
• Dexus ((DXS))
• Bank of Queensland ((BOQ))
• Flight Centre Travel ((FLT))
• Perpetual ((PPT))
• Vault Minerals ((VAU))
• Beach Energy ((BPT))

For those not familiar with how our R-Factor works: rankings are based on forecast growth for two years ahead (mostly FY26 and FY27) relative to PE multiples and dividend yields.

Hence, it can be concluded on that basis, these are currently the ten "cheapest" stocks on the local bourse.

R-Factor also allows to ignore dividends, and this, obviously, generates a different ranking. Plus: forecasts are never set in stone.

For example: on Thursday morning analysts at Morgan Stanley are flagging margin risks for Super Retail ((SUL)), Accent Group ((AX1)), Myer ((MYR)), and Premier Investments ((PMV)).

For more info: https://fnarena.com/index.php/analysis-data/consensus-forecasts/the-rfactor/