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 John So, co-founder at VP Capital.


What’s hot right now?

It’s reporting season and with that comes an opportunity for investors to take a position in stocks that will have a positive business outlook going into FY23.

As Australia continues to open back up to international travellers, So says ASX stocks in sectors such as international education services, online employment services and hospitality will benefit from the idea that business activity is resuming.

“I will call them reopening stocks,” So says.

“These are the stocks that will benefit from people returning to Australia, looking for jobs and going out and about.

“We’ve already seen the initial spike in consumer spending because of reopening, which has some tailwinds because cost of living is going up as well as interest rates, but I think the companies that will benefit are the ones not directly exposed to the consumer but exposed to businesses and corporates.

“The resumption of ordinary business activity is driven by companies, corporates and governments needing to get people back to school and work, and therefore are advertising for work as students return.

“Investors should look at these re-opening trade stocks and potentially take a position ahead of the results with the expectation that they will probably have some positive commentary about what their businesses will look like going into FY23.”


Top stocks

IDP Education (ASX:IEL) is leading player in international education services, helping international students study in English-speaking countries.

The company also co-owns the International English Language Testing System (IELTS), the world’s most popular high-stakes English language test. So believes IDP will see a return of students, which will strengthen their FY23 outlook.

Companies like Seek (ASX:SEK) will benefit in this tight labour market, he says.

“You can imagine employers are more willing to advertise and use these platforms to fill their job vacancies right now.

“A similar company is PeopleIn (ASX:PPE) – they do a lot of advertising for roles in the hospitality and healthcare industry where there is a significant shortage of workers in Australia.

“Some other stocks such as SG Fleet Group (ASX:SGF) and Smartgroup (ASX:SIQ) do vehicle salary packaging – offices are drawing workers back in so you’ll begin to see a pick-up in activity with companies needing to do salary packaging on vehicles as well,” he explains.

Another good example, he says, is Endeavour Group (ASX:EDV).

“They own the liquor retailer Dan Murphy’s as well as a number of pubs around Australia – as the consumer goes back out and spends on these not-overly-expensive discretionary items, I think you will see earnings surprise.

“It is worth taking a position in these stocks early in anticipation that there may be preliminary guidance ahead of results coming out because the services they provide will once again be needed in the economy.”

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