MoneyTalks: Four copper and tech stock picks to bolster your portfolio in 2023

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 senior investment advisor Adam Dawes.

What’s hot right now?

“We are keeping an eye on the tech space, it was one of the most beaten down sectors last year and is going to do a lot better with interest rates potentially slowing down midway through this year,” Dawes says.

“The growth will come but it will be patchy – if you look at the NASDAQ, it lost 30 per cent at the end of December 2022 and there has to be a rebound somewhere so investors should be buying in now.”

Dawes says Shaw and Partners are also keenly watching the copper space as it looks to go into shortage within the next couple of years.

Experts say the world is going to need 700 million tonnes of copper over the next 22 years, the equivalent of all the copper ever mined in history.

And according to mining legend Robert Friedland, there is not going to be any electric car industry or any technological revolution without this copper.

Top picks

SANDFIRE (ASX:SFR)

Following BHP’s (ASX:BHP) move to acquire OZ Minerals (ASX:OZL) for $9.6 billion, Dawes believes money is set to flow into the next largest pure play copper stock on the ASX.

“And that is Sandfire,” he says.

There are a couple things going for it such as a new international focus (now that it holds the keys to the MATSA copper complex in Spain) and a 36% drop in its share price from 2018 highs.

“Sandfire would be our number one pick in the space,” Dawes adds.

XERO (ASX:XRO)

“Xero is a top 100 company; it is the biggest tech business in Australia,” Dawes explains.

“The company is an accounting software business and sits in the back end for small to medium and large businesses.

“No matter what the economy is doing, Xero will do well because that accounting software needs to be there.

“In 2021 the stock peaked at $150 but it now sits around $80.

“Earnings will continue to grow, and we think this pick is right for a re-rate to the upside.”

On the smaller end of the tech space….

Dawes says he likes Fineos (ASX:FCL) and Readytech (ASX:RDY).

“We expect a good second quarter cash flow for Fineos, at their recent AGM the company said their total accessible market is roughly $2 billion in the US which is a big target for these guys,” Dawes says.

“It’s a boring tech business but sometimes boring is good.

“Meanwhile Readytech recently ceased discussions with Pacific Equity Partners regarding a proposed takeover, allowing it to focus on its own growth strategy.

“This has created an attractive buying opportunity – our expectation is that the stock price will re-rate to a valuation multiple as it currently trades at 24.5x FY23 cash EBITDA.”

The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead.
Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.