MoneyTalks: Adam Dawes says these 3 stocks reflect a broad ‘buy’ across ASX tech, financial and health sectors
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MoneyTalks is Stockhead’s regular drill down into what stocks investors are looking at right now. We’ll tap our extensive list of experts to hear what’s hot, their top picks, and what they’re looking out for.
Today we hear from Shaw and Partners senior investment advisor Adam Dawes.
While all sectors were very much in the red last Friday, Dawes says Shaw and Partners are keeping a close eye on the defensive healthcare sector.
This means the healthcare sector has a low correlation to global macro trends and tends to be more resilient to economic swings – no matter what happens, people still get sick and need to buy medicines.
Other sectors Dawes is keeping a watch on are the tech and financial spaces.
“The trend is down, especially in the tech space,” he said.
“The current valuation on some of these tech stocks is that they have been been oversold but it just keeps getting hit harder and harder and it’s a little difficult to pick the bottom.
“But we are looking for that value play in some of these beaten-up stocks.”
Dawes’ three picks include Xero, which he says represents the growth component, healthcare play Resmed, which is the defensive component and Macquarie Group – “an overall fantastic business”.
“These picks will give investors growth and reflect a broad-based ‘buy’ across a couple sectors of the market which have been oversold,” he said.
“XRO has been down 42% for the last six months – I went into Xero at $90 and thought I was a hero but now we are even lower so I’m keeping a close eye on the Xeroes of the world,” he said.
“The stock represents value, traditionally a bear market is down 20% and now XRO is down 42% but it is the best tech play on the ASX.
“With a $13bn market cap, the company is an accounting software business, the software sits in the back end for small to medium and large businesses.
“No matter what the economy is doing they will do well because that accounting software needs to be there; doesn’t matter if they are having a good day or a bad day – the software tracks the spending and tracks all the receipts for the end of financial year.”
The company is set to report next Thursday and Dawes reckons it will be a goodie.
RMD is a San Diego, California-based medical device company, providing cloud-connectable CPAP devices and masks for the treatment of sleep apnea, as well as devices and masks for treating chronic obstructive pulmonary disease, neuromuscular disease, and other respiratory-related conditions.
While the stock got hit recently after releasing ‘a bad quarterly’, Dawes says Shaw and Partners have been doing some buying in the company.
“I think there is really good value there – it is currently trading at $28.85 but it has been up as much as $38.”
The stock is also a pick of Fairmont Equities managing director Michael Gable – “RMD is another high growth business, which has suffered, but I think that should recover pretty well over the course of the year.”
According to Stockhead’s Eddy Sunarto, the stock tumbled 7% last Friday despite delivering a 56% jump in profit for the full year FY22, to $4.706bn.
The bank has however sounded a warning, saying that it remains cautious on economic outlook.
Dawes say he’s definitely keeping an eye on this one after last Friday’s fall – he believes MQC is oversold as “it is a fantastic business and they have a very good dividend as well.”