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Experts
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 Jun Bei Liu, lead portfolio manager for the Tribeca Alpha Plus Fund at Tribeca Investment Partners.
“The part of the market we are keeping a close eye on is the quality growth sectors and the reason being is because of market volatility,” Liu says.
“These companies have been sold off because of bond yield and the expectations of future high interest rates, which means their valuation has become very, very depressed and some of these names are a lot cheaper now than they have ever been over the last decade.”
From Liu’s point of view, many of these companies sit within one of Australia’s biggest growth sectors – the healthcare space – where businesses manage to grow their top line twice as fast as their peers, coupled with high profit margins.
“At the moment, we will be skewed to buy businesses whose earnings are not linked to economic outlook and many of these names are in the healthcare space,” she adds.
“We all know economic activity is going to slow down, corporate earnings growth will slow down in general, especially those linked to economy, but we like businesses that have its own growth leaders.”
In the current environment, market participants are shying away from investing however Liu sees opportunities in the following three stocks.
“There is a lack of confidence around what the market outlook will look like due to the uncertainty, but to us this is where the opportunity lies.
“This is when quality companies have the potential to generate good returns if you take a longer-term view.”
Liu says one of her favourite picks in the healthcare space is CSL, a biotechnology company focused on the research, development, and manufacturing of market products in three distinct areas – rare and serious diseases, vaccines, and iron deficiency/nephrology.
“The company basically fractionates plasma and makes them into different products and are the market leader in what they do,” Liu says.
“It has been generating a fantastic track record, double digit growth for decades now and is probably the greatest Australian success story.
“The company share price underperformed and become depressed as a result of higher interest rate expectations – its earnings were also depressed by COVID as well because its blood collection was shut during that time but now it is truly on its way back up.”
Regardless of global economic activity, Liu believes the business is going to grow double digits in the next few years.
Resmed has been a good performer until recently when it got sold off with other expensive stocks on the market, Liu explains.
“The company’s sleep apnoea product has been sold around the world but what is particularly unique about this company is that around 12 months ago its biggest competitor had a product recall, so it has gained an enormous amount of market share.
“Not only is Resmed benefiting short term, but we do believe it has offered them some good will for their product going forward and its earnings growth will reflect that.”
RHC provides quality health care through a global network of clinical practice, teaching and research with a global network extending across 10 countries, with over eight million admissions/patient visits to its facilities in over 532 locations.
According to Liu, the share price has fallen quite a bit because of a private equity bid walking away, but it’s a strong franchise underpinned by premium properties, which means its valuation is very depressed.
“Elected surgery was down during COVID lockdown but we are seeing that demand returning, the waiting list for public hospitals is up to over two years now.
“As the world continues to return back-to-normal, this company will generate very strong earnings growth, and these are not the things that are impacted by the economic cycle.
“The valuation has never been cheaper for such a premium hospital chain.”
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
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