Rudi’s View: Best Buys & Conviction Calls In July

This story features WOODSIDE ENERGY GROUP LIMITED, and other companies.
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In Today's Edition:

• IPO Mania; Not What It Looks Like At Face Value
• Picture Of FY26
• Best Buys & Conviction Calls

By Rudi Filapek-Vandyck, Editor

IPO Mania; Not What It Looks Like At Face Value

It is one of the narratives doing the rounds in global equity markets: beware the future, because 2026 might just see the largest ever IPO deals come to the US market.

But is this yet another oversimplistic interpretation?

Global strategists at UBS think so. Their counter-argument is that IPOs, in isolation, tell us nothing about markets and their outlook.

One must dig deeper and consider the broader context.

While this year’s estimated US$160bn in IPOs will certainly be the largest on record, UBS counters that, when measured against the overall size of the US market, it looks rather medium-sized.

Not much is coming to the US market this year outside of a few giant fresh listings, but that’s hardly watertight evidence of unbridled investor exuberance. In actual numbers, 2026 is cruising along its 30-year trend.

Adjusted for market size, UBS points out, the credit market is seeing much larger corporate issuance than equity, and even there, credit spreads are not signalling any form of market stress.

When one also includes the fact many US companies continue buying back their own shares, the net effect — even including the giant IPOs — is less supply of US equities.

And buybacks, says UBS, are projected to remain substantial this year.

To spell it out: net equity supply is negatively related to equity valuations, while buybacks are positively related to them.

Having said all of that, UBS does acknowledge valuation support might diminish somewhat as US companies are spending significantly on the AI infrastructure buildout and, as each dollar can only be spent once, this might reduce their capacity for further buybacks.

Still, it is UBS’s view this is not where the real risk is situated for today’s market. Instead, the broker suggests investors need to keep a close eye on the return on investment (ROI) on the large sums being spent on AI.

A second important indicator is whether corporate margins — currently at all-time record highs — can be maintained.

Picture Of 2026

If one perfect graphic can capture a thousand words, the one below surely does a fine job of describing the financial year past for investors in the ASX.

The black line on top is for the Materials sector. Energy is in blue.

Near the bottom, we find healthcare and technology.

The ASX returned a total of 6.10% for the year, with dividends contributing more than half.

Best Buys & Conviction Calls

Energy companies may no longer be the flavour of the moment, but RBC Capital‘s Global Energy Best Ideas list continues to feature Woodside Energy ((WDS)) — target price $35 — alongside the likes of ConocoPhillips and Cheniere Energy.

The list contains 16 ideas, with Woodside the sole ASX-listed stock included.

RBC Capital’s preferred stock for exposure to the upcoming super cycle for the uranium sector is Paladin Energy ((PDN)).

The price target is $13.50.

Ord Minnett‘s Analysts’ Conviction List contains the following unchanged 13 mid- and small-cap stocks:

• Alkane Resources ((ALK))
• Breville Group ((BRG))
• Cuscal ((CCL))
• Energy One ((EOL))
• GrainCorp ((GNC))
• Lindsay Australia ((LAU))
• Qoria ((QOR))
• Service Stream ((SSM))
• Shape Australia Corp ((SHA))
• Regis Healthcare ((REG))
• SiteMinder ((SDR))
• Viridis Mining & Minerals ((VMM))
• ZIP Co ((ZIP))

Goldman Sachs‘ selection of Conviction Buy ideas throughout the Asia-Pacific includes three ASX-listed representatives:

• ALS Ltd ((ALQ))
• Fisher & Paykel Healthcare ((FPH))
• Ramelius Resources ((RMS))

Other names on the list of 28 stocks in total include Alibaba Group, Tata Consumer Products, TSMC and Yum China Holdings.

The North American selection has 21 names on it, including Block Inc ((XYZ)), alongside the likes of Air Products & Chemicals, Broadcom, DoorDash, Interactive Brokers Group, ServiceNow and UnitedHealth Group.

Bell Potter‘s strategy update zooms in on Consumer Discretionary companies. The idea is to get set in a beaten-down market segment while sentiment is low and so are expectations for the years ahead.

The preference lays with:

FMCG & OOH exposures

• Bega Cheese ((BGA))
• Collins Foods ((CKF))
• Guzman y Gomez ((GYG))

Discretionary exposures

• JB Hi-Fi ((JBH))
• Universal Store Holdings ((UNI))
• Nick Scali ((NCK))

Gaming

• Light & Wonder ((LNW))

Strategists at stockbroker Morgans have jumped to the defence of the local gold sector, arguing this year’s retreat is just that, and the bullion bull market has a lot more oomph in store.

Large-cap favourites, in order of preference:

• Evolution Mining ((EVN))
• Newmont Corp ((NEM))
• Northern Star ((NST))

For mid-caps:

• Ramelius Resources ((RMS))
• Catalyst Metals ((CYL))
• Regis Resources ((RRL))

Mining & Metals analysts at UBS have equally lined up their gold sector favourites:

• Newmont Corp ((NEM))
• Genesis Minerals ((GMD))
• Capricorn Metals ((CMM))
• Catalyst Metals ((CYL))

Elsewhere, they lined up their favourites for uranium exposure:

• NexGen Energy ((NXG))
• Bannerman Energy ((BMN))

For lithium:

• Liontown ((LTR))
• IGO Ltd ((IGO))

Other favourites include:

• Alcoa ((AAI))
• Lynas Rare Earths ((LYC))

Morgan Stanley‘s Australia Macro+ Focus List consists of the following ten stocks, with the last changes made last September:

• Aristocrat Leisure ((ALL))
• AMP Ltd ((AMP))
• ANZ Bank ((ANZ))
• BlueScope Steel ((BSL))
• GemLife Communities ((GLF))
• Goodman Group ((GMG))
• Infratil ((IFT))
• Iluka Resources ((ILU))
• Sigma Healthcare ((SIG))
• Santos ((STO))

As a side note: Aristocrat Leisure is the longest-dated inclusion, having first been added to this list back in November 2022.

Morgan Stanley‘s 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 ((GLF))
Goodman Group ((GMG))
Scentre Group ((SCG))

Aristocrat Leisure ((ALL))
Domino’s Pizza ((DMP))
The Lottery Corp ((TLC))
Wesfarmers ((WES))
Xero ((XRO))

James Hardie ((JHX))

Orica ((ORI))
SGH Ltd ((SGH))

Coles Group ((COL))
Sigma Healthcare ((SIG))

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

Infratil ((IFT))
Transurban Group ((TCL))
Telstra ((TLS))
Tuas Ltd ((TUA))

BHP Group ((BHP))
BlueScope Steel ((BSL))
Iluka Resources ((ILU))
Newmont Corp ((NEM))
PLS Group ((PLS))
Rio Tinto ((RIO))
South32 ((S32))

Ampol ((ALD))
Paladin Energy ((PDN))
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.)  

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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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