Buy Hold Sell, by Livewire Markets

How to find the highest quality large-cap stocks on the ASX

There are plenty of famous pairs in life. John Lennon and Paul McCartney, Tom and Jerry, Mario and Luigi just to name a few. When it comes to investing and specifically investing in stocks, large cap stocks are generally paired with the term "quality". 

That's because these companies tend to have sturdier balance sheets, larger and more reliable customer bases, and dominant market positions. 

And as volatility and uncertainty have spiked across markets, investors have been running into these quality names in droves. But what does quality mean in this environment - and which large-caps are the most worthy of your cash right now? 

Livewire's Buy Hold Sell is here to help separate the good from the bad and the great from the good in the large end of the market. Moderator Hans Lee is joined by Andrew McKie from Elston Asset Management and Rob Crookston from WILSONS to discuss how they find "quality" companies on the ASX. 

And just to show our fund managers can put their money where their mouth is, we asked them to pick their favoured large-cap among five pairs of options.

Note: This episode was taped on Wednesday 12 July 2023.

Buy Hold Sell: 5 large-cap stocks with rock-solid balance sheets

It's been a remarkably volatile time in financial markets over the last 18 months in particular. Investors have been riding a wave that started with fresh highs for the index before the ASX 200 fell 13% in six months. Along the way, there have been astounding and outstanding share price moves. 

This volatility, the ongoing fear of a global recession, and concerns over rising interest rates have created a notable shift in investor strategy. People want quality companies with recurring revenues, sturdy product offerings, and a strong track record for growth.

But too many people rushing into the same kind of trade can lead to disappointment. How quickly can we forget the Buy Now Pay Later craze of 2021, or the China reopening trade of earlier this year, or the Wall Street Bets/ASX Bets craze which saw investors pile into junk companies en masse?

We're combining those two themes - rock-solid balance sheets and overcrowded trades - in today's edition of Buy Hold Sell. Livewire's Hans Lee is your moderator. He is joined by Andrew McKie from Elston Asset Management and Rob Crookston from WILSONS. 

Together, they will analyse three stocks that are widely perceived to have those rock-solid qualities and assess whether they have become overcrowded. As a bonus, the fund managers bring along one quality company of their own.  

Note: This episode was taped on Wednesday 12 July 2023.

Buy Hold Sell: How bad will the fixed-rate mortgage cliff be (and 2 stocks that could still benefit)

Much has been made of the pending mortgage cliff, and fair enough. The RBA cash rate has gone from the pandemic low of 0.1% to 4.10% in a little over a year, and the central bank estimates half of all fixed rate loans that enjoyed that 4% buffer will expire this year.

Whilst that sounds ominous, there are some things to remember. Only about one-third of Aussie adults have a mortgage (the rest being owners or renters) and at the peak in 2021, only about 35% of mortgages were fixed rate.

Whilst half of the 35% will expire and face a mortgage cliff this year, many Aussies who own outright or rent, won’t be affected at all.

So, are the banks really in that bad a position? And what about companies that actually benefit from higher interest rates, like the insurers?

As always, tarring any sector with the same brush is pointless and thankfully we have Andrew Martin from Alphinity Investment Management and Michael Maughan from Tyndall Asset Management to help sort the financial wheat from the chaff. 

Note: This episode was filmed on Wednesday 28 June 2023. 

Buy Hold Sell: Why energy stocks are cheaper than they’ve been in years (and 2 stocks on the rise)

In a high-inflation environment, energy stocks typically perform well due to the ongoing need for energy.

It’s no surprise, therefore, that the energy sector began a strong rally in 2021 when inflation took off.

That rally extended into early 2022, when the Ukraine war was added to the equation and energy security concerns, and prices, kicked even higher.

But as inflation and war morphed into higher interest rates and concerns about global growth, oil and coal prices have come off sharply in the past 12 months.

And all of this is to say nothing of the large-scale energy transition that is taking place and tipping the sector on its head.

So, what is one to make of all of this and, more importantly, where are the risks and opportunities?

To answer those questions, James Gerrish from Market Matters and Joe Wright from Airlie Funds Management joined Livewire’s energy sector special of Buy Hold Sell.

Note: This episode was filmed on Wednesday 28 June 2023.

Buy Hold Sell: 2 big tech buys and the fundies debate the sector’s next steps

It's safe to say that mega-cap tech companies have carried global markets this year, with the NASDAQ 100 returning almost 40% this year. And most of that performance can be attributed to seven behemoths. 

This exuberance around tech has fed across into the Australian market. Year to date, the S&P/ASX All Technology Index has returned over 21%.

Will this run continue or are investors about to hit the brake pedal?

What of the unprofitable hype companies that have characterised the sector through the past decade of free money and growth at any cost?  

In this episode, Sam Koch from Wilson Asset Management and Shane Fitzgerald from Monash Investors pick apart those questions, before providing their thoughts on three local technology companies. As you'll see, it's a stock pickers' market and opinions are divided. 

Finally, they each lay out the investment case for their highest conviction pick from the sector. 

Note: This episode was recorded on Wednesday 28 June 2023. 

3 dividend darlings (and 2 with adviser approval)

The recent Income Series survey, in which more than 1000 Livewire readers participated, showed that investor hunger for income-generating equities remains remarkably high.

Domestic equities are by far and away the most popular asset class for income investing, with 93% of respondents choosing this option.

This is despite bonds having bounced back from a tough 18 months and term deposits fetching investors north of 5% on a good day.

It seems investors are looking for higher returns, particularly given inflation is running hot and real yields (what you actually get after inflation) are what ultimately matter.

The survey also highlighted that 50% of respondents are looking to increase their exposure to domestic equities in the next 12 months in order to generate income.

So, what better time to focus on income-generating equities in an episode of Buy Hold Sell than right now? 

In this episode, Ord Minnett’s David Lane and Centaur Financial Services’ Hugh Robertson run the ruler over three classic income stocks, and each highlights their pick for the next 12 months. 

Note: This episode was filmed on Wednesday 14 June 2023. 

6 adviser-approved funds for income (and 2 to rid from your portfolio)

Access to income-generating investment opportunities has grown exponentially in the past two decades. Long gone are the days when investors could only invest in high-yield dividend stocks to generate suitable returns. That was a bit like buying a chicken for its eggs – and hoping that the chicken didn’t cark it in the meantime. Today there are myriad products to complement stocks, including LICs and LITs, ETFs, hybrids, and managed funds – the latter of which span the global investment universe. But with so much choice, how are investors to decide which opportunities might be useful for them? Fortunately, we’ve engaged two financial advisers – David Lane from Ord Minnett and Hugh Robertson from Centaur Financial Services – to share which products they like and why, as part of Livewire’s 2023 Income Series. For a bit of extra spice, they also share a product that they no longer believe has a place in income investors' portfolios. Note: This episode was filmed on Wednesday 14 June 2023.

The 2023 guide to income for investors of all ages

Income investing has undergone a renaissance in recent years. 

A poor cousin to growth investing for the best part of a decade, rising interest rates and higher yields, coupled with a desire to protect capital amid heightened inflation and uncertainty, has seen investors come flocking back to the investment style. 

While most of the conversation has been centred around the returns investors can get - 5% in term deposits, for example - not a lot of attention has been paid to the different cohorts of investors and their specific income wants and needs. 

After all, the needs of an investor in the early stages of their journey will be different from the needs of an investor nearing retirement, as will the products that they use. 

So, in this special episode of Buy Hold Sell, we reached out to two financial advisors - David Lane from Ord Minnett and Hugh Robertson from Centaur Financial Services - for their tips (and top products) for generating attractive passive income for all ages as part of Livewire's 2023 Income Series. 

Note: This episode was filmed on Wednesday 14 June 2023. You can read an edited transcript below: 

https://www.livewiremarkets.com/wires/the-2023-guide-to-income-for-investors-of-all-ages/ 

Buy Hold Sell: 5 stocks for your radar right now

With AI-related stocks soaring and central bank hikes continuing to take their toll on anything else in sight, it's easy to forget there are other companies making waves on the global stage. 

Take Teck Resources (NYSE: TECK), for instance, a coal, copper and zinc miner out of Canada which recently received a takeover offer from Swiss multinational giant Glencore (LON: GLEN). Or Sands China (HKG: 1928), a casino operator expected to experience a major upswing as card players return to the table. Even Heineken (AMS: HEIO), which now counts Microsoft (NASDAQ: MSFT) co-founder Bill Gates as a shareholder after pouring $1.32 billion into the company, boasts a return on equity of 14%. 

So in this episode, Livewire's Ally Selby was joined by Antipodes' Jacob Mitchell and PM Capital's Paul Moore for their analysis of these three stocks. 

Plus, our guests also name a top holding they believe investors should have on their radars over the year ahead. 

Note: This episode was recorded on Wednesday 31 May 2023. You can read an edited transcript below: 

https://www.livewiremarkets.com/wires/buy-hold-sell-5-stocks-for-your-radar-right-now 

2 stocks fundies would bet the house on

After a decade of Growth taking the market by storm, Value came back in a real way in 2022. 

Both locally and abroad, cyclical and economically sensitive stocks such as financials, materials, infrastructure and energy companies all saw their share prices soar. It was all thanks to rising interest rates, skyrocketing inflation, Russia's war in Ukraine, and a supposed "return to fundamentals". 

But since the beginning of 2023, things have changed once again. Growth darlings like Nvidia (NASDAQ: NVDA) are up 177% since the beginning of the year. 

So is this a sign that it's Growth's time to shine once again in 2023? And what is the biggest risk investors should have on their radars over the year ahead? 

To find out, Livewire's Ally Selby was joined by Antipodes' Jacob Mitchell and PM Capital's Paul Moore for their secret to finding Value in today's volatile market and the headwinds facing earnings over the next 12 months. 

Plus, for a bit of fun, we asked them to select one stock they would bet their own house on right now. And their answers are sure to surprise you.  

Note: This episode was filmed on Wednesday, May 31 2023. You can read an edited transcript below:

https://www.livewiremarkets.com/wires/2-stocks-fundies-would-bet-the-house-on-and-the-biggest-risks-to-value-investing-over-the-next-12-months/