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 Firetrail Investments’ head of investment strategy, Anthony Doyle, offering Stockhead an exclusive insight into four stocks in the portfolio of the investment firm’s freshly-listed Active ETF, The Firetrail S3 Global Opportunities Fund (Managed Fund) (ASX: S3GO).
What’s hot right now Anthony?
“Actually, that’ll be our new fund. We launched the S3 Global Opportunities Fund on the ASX, about two weeks ago in fact.”
It’s a concentrated portfolio of Firetrail’s best global equity ideas, (aiming to outperform the MSCI World Net Total Return Index over the long-term) with an investment strategy which Anthony says identifies the most attractive investment opportunities with sustainable positive change characteristics.
Misunderstood, unloved or unrecognised
“S3GO is a portfolio of companies that are misunderstood or unrecognised by the wider investment community. Because of this, the portfolio is typically very different to both passive and active global equity ETFs.
“This is a fund if you’re seeking long-term exposure to a high conviction, concentrated portfolio of global equities.
“It can be used as either a core component or satellite within an investment portfolio for investors with a time horizon of five years, which allows for the positive change cycle to take place.
“We look for the future and current leaders in positive change. Investing is not about what companies are today, it’s about what they will be in the future.
“The same is true for sustainability.”
Four stocks to watch in the Firetrail S3GO portfolio
Air Liquide (EPA: AI) (-17.7%, 6 months)
“Air Liquide is an industrial gases company that produces and sells gases such as oxygen, nitrogen and hydrogen to companies all over the world. These gases are used by customers across diverse industries such as healthcare, construction, food production and electronics.
“We’ve seen industrial gas demand rebound post-COVID lockdowns. Air Liquide is well-positioned to benefit from this given its defensive earnings profile, underwritten by long-term contracts protected from energy price inflation.
“Importantly, the company is a key player in the energy transition. Air Liquide is an expert in carbon capture and storage technology (CCS) and a pioneer in the development of green hydrogen infrastructure. CCS and green hydrogen will be crucial for the world to realise its net-zero ambitions.”
Archer Daniels Midland (NYSE: ADM) past 6 months)
“Archer Daniels Midland is the largest listed agriculture company in the world by revenue. It sources agricultural commodities like wheat, soybeans, corn and nuts from farmers, and processes these to create ingredients for food, animal feed, and renewable energy (ethanol and renewable diesel).
“The company has strong sustainable positive change characteristics. ADM’s soybean business is set to benefit from structural growth in protein consumption and biofuel usage. Soy is a key ingredient in plant-based proteins, and as feed for livestock such as cows and chickens. It is also used to produce ‘renewable diesel’, a clean, 100% substitute for fossil fuel diesel.
“Crushing soybeans to make foods and renewable fuels requires specialist facilities which take years to build or expand. We believe demand for ADM’s crushed products will grow faster than supply, leading to a favourable pricing environment.”
Carrier Global (NYSE: CARR) (-19.70% past 6 months)
“We’re attracted to Carrier Global’s ability to make a positive climate change impact by reducing the carbon emissions generated from heating and cooling. We believe the market is yet to fully appreciate this.
“Carrier is a multinational heating, ventilation, and air conditioning company. It was first formed in 1915 by Willis Carrier, the man credited for inventing modern air conditioning. Carrier’s new heating, ventilation and air conditioning units are 33% more energy efficient than old units, saving customers money on their energy bills and reducing carbon emissions.
“Carrier is also set to benefit from the US’ new Inflation Reduction Act. The US is investing significantly in upgrades to commercial building heating and cooling. This means higher demand for Carrier’s products.
“US subsidies are also encouraging households to upgrade their air conditioning units. High energy costs are providing even greater incentive to switch to a newer, energy-efficient unit.
Micron Technology (NASDAQ: MU) past 6 months)
“Semiconductors are the new oil – they are used in just about everything and are crucial to the functioning of society. But not all semiconductors are the same. We are most attracted to the supply/demand dynamics of semiconductor memory chips which store data in your smartphone, data centres, and many devices you use every day.
“We like Micron Technology in the memory chip market. Industry consolidation has created a favourable competitive environment for Micron. The memory chip market has consolidated from 40+ players in the 1990s to just three with 95% market share today which are Micron, Samsung & SK Hynix.
“With long lead times to build new manufacturing plants, high demand periods can force chip prices higher. We think this will result in continued strong revenue growth for Micron as 5G and cloud computing continues to drive demand for memory.”
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.
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