Buy, hold, sell: Five stocks battling for blue chip status

Selby Allies: It trades at a P/E of 17 times, and has a market cap of $17.4 billion. Hugh, it’s up to you. Is it buy, hold or sell?

Hugh Dive (BUY): I don’t agree with Hugh. I think this is a purchase. Raising interest rates with a tough premium cycle. This is very positive. They have actually seen some return on their investment stream for the first time in 10 years.

Also, business has been much simplified. We didn’t expect anything bad from QBE. No Argentine workers’ compensation, Ecuador’s crop insurance or Columbia’s third-party motorcycles, which have been defrauding investors for years. This is a much simpler story.

I think this is a solid buy. And you also have the falling Aussie dollar, which is a big beneficiary for QBE, unlike domestic insurers.

Selby Allies: Next, we have South32. Recently bought a 45 percent stake in a Chilean copper mine. Hugh, stay with you. Is it buy, hold or sell?

Hugh Dive (SELL): Sell. Catch the falling knife. Underlying an unfriendly government, which will only incur more taxes. And at the same time, commodities are heading south. There are no signs of going down with the environment slowing down. Stay away.

Selby Allies: Its share price has also fallen recently. It’s down 24 percent over the past 12 months. Hugh to you. Is it buy, hold or sell?

Hugh Giddy (SELLING): Sell ​​too. Similar reasons. Just because the stock price goes down, it doesn’t make something a buy. Commodity prices are on the nose. It hasn’t fallen big.

Sonic Health Care (ASX: SHL)

Selby Allies: Okay. Next up, we have Sonic Healthcare. It has a market cap of $16.4 billion, and is trading at a P/E of 11 times. Stay with you, Hugh. Is it buy, hold or sell?

Hugh Giddy (HOLD): I thought it was the handle. They benefit a lot from the COVID test. It fixes their balance sheet. I know other Hughs really like it, but I see it as a stock with very little organic growth. This is a solid company. You can have it. This will pay you dividends. But I can’t get excited.

Selby Allies: Okay, Hugh, we know you like Sonic. The stock price has fallen about 16 percent over the past 12 months. Have you bought the sauce?

Hugh Dive (BUY): Yes, similar to Hugh. I realized they had very good COVID-19. Massive profit increases, and they’re using it instead of paying shareholders huge special dividends to pay off their debts, have kept the company coming out of COVID-19 in great shape.

In the long term, we have an older and sicker population, doctors worry more about malpractice, schedule more tests and pathology. Unlike other health care companies that don’t require billions of dollars in FDA approval for new drugs, this is a tedious industrial process that suits me.

Selby Allies: Next, we have Brambles. These are giant reusable pallets, crates and containers. For you, Hugh. Is it buy, hold or sell?

Hugh Dive (SELL): I think it sells. Twenty five pieces of wood, 80 nails. The technology is unchanged from what the US Marines use to ship pallets to the Pacific. They made the big mistake of discontinuing Costco (NASDAQ: COST) and switching to plastic pallets. The whole market was little changed. Competitors will enter. Traded 30 times. As a fund manager, I run a concentrated portfolio, so I can only have one.

I like exposure to fast-moving consumer goods, but I prefer to have a high-quality company at a much lower tier, namely Amcor (ASX:AMC). So I have to choose between the two. You don’t want to have both in your portfolio because you will have the same exposure. Amcor is a much higher choice. I’d choose that over Brambles, so sell.

Ally Selby: The stock price has been doing well for the past year. Down about 1 percent. To Hugh. Is it buy, hold or sell?

Hugh Giddy (BUY): I see it as a purchase. I think the decision about Costco reflects the discipline around capital. Plastic pallets are very expensive. They are lower cost to repair. So the loss you get is not too much. wooden pallet. It’s not developed yet, but it’s more about the network, not the technology. It’s about having a system that works well. Well oiled system. Today’s pricing pressures have actually revealed how profitable or unprofitable each customer is. So they have set a price, and people have no alternative.

Ally Selby: Okay, last but not least today we have Computershare. This is one of those rare companies that really benefited from a rate increase. Stay with you. Is it buy, hold or sell?

Hugh Giddy (HOLD): This is the handle. I believe we had it based on the expectation that the price would go up, but it was $15. At $24-$25, I think that’s the price in the higher rates, and what’s not included in the price is the possibility that if we get a bit of a slowdown, which we seem to be getting. And with that, their core line of business will be a little slower. Financial transactions, mergers, capital raises, that sort of thing can come under pressure, even if interest rates help.

Selby Allies: Okay. It was really a success the last 12 months, up 65 percent, but expensive. It is trading at P/E around 49 times. Hugh, is that buy, hold or sell?

Hugh Dive (SELLING): I think it sells. I am much more negative than Hugh. I think looking to the future, all the good news and rate hikes have been factored in. What hasn’t been taken into account 49 times is the impact of distributed ledger technology. How will it affect the registration business in five or 10 years? Does it look the same as now? Probably not. And I don’t think investors get a margin of safety for the risk you take at a given price. Too rich for my blood.

Selby Allies: Okay. Well, that’s all we have time for today. We hope you enjoyed that episode of Buy Hold Sell. If you do, why not give him a like? Remember to subscribe to our YouTube channel. We add so much great content every week.

Buy Hold Sell is a weekly video series produced by Livewire Markets. This article was first published on Livewire Markets.

Disclaimer: The information contained in this presentation is general in nature and should not be relied upon. Before making any investment financial planning decision, you should consult with a licensed professional who can advise you whether the decision is right for you. Contributors to this event may have a commercial or financial interest in the companies mentioned.

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