There’s a broad theme emerging from this week’s experts – defend, defend, defend.

Luke Laretive
CEO, Seneca Financial Solutions

The S&P/ASX 200 Industrials Accumulations Index (ASX:XJIAI) has been notably left in the dust over the past 12 months. As a result, Laretive reckons there are some industrial names going cheap.

“We favour those companies with defensive earnings characteristics, particularly those we believe will benefit from a higher inflation and higher interest rate environment,” Laretive says. “Some of these companies are, by historical standards, trading at exceptionally low valuations…”

AUB Group (ASX:AUB): “We think AUB is a bit overlooked by the average investor, insurance broking isn’t exactly sexy and it’s a low volatility stock.”

Laretive reckons AUB’s recent acquisition of leading Lloyd’s wholesale broker Tysers might have spooked investors, and the share price is down 22% YTD to $19.90. But it actually “could be an accretive deal that surprises to the upside” and Seneca values the business at 20x FY24 earnings per share. That’s close to $30 per share.

Another big faller in 2022 has been Credit Corp (ASX:CCP), down ~50% year to date to $17.27. “The stock is worth at least $28 in my opinion,” Laretive said. He reckons there are few businesses of Credit Corp’s quality with a 5-year average including 45% EBITDA margins, 10% EBITDA growth, 15% ROE that you can buy on 11x PE or a 4.6% forecast dividend yield.


Jun Bei Liu
Tribeca Investment Partners

As Lead Portfolio Manager, Liu has built the Tribeca Alpha Plus Fund from $700m in 2019 to the $1.1bn behemoth it is today. But “today” in 2022 is a very different challenge to “today” in 2019.

Liu’s secret for navigating troubled waters is the simple – steady as she goes. Keep a close eye on the quality growth sectors, Liu says.

“These companies have been sold off because of bond yield and the expectations of future high interest rates,” Liu says, “which means their valuation has become very, very depressed.”

And the best ones are these that sit in healthcare – “businesses whose earnings are not linked to economic outlook”.

CSL (ASX:CSL): “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.”

RESMED (ASX:RMD): “Around 12 months ago its biggest competitor had a product recall, so it has gained an enormous amount of market share. We do believe it has offered them some good will for their product going forward and its earnings growth will reflect that.”

RAMSAY HEALTH CARE (ASX:RHC): “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.”


Adam Miethke
Discovery Capital Partners

Lithium, battery metals and energy are hot plays right now. You don’t need us to tell you that. Miethke’s view? “We’ve probably got less clients in those spaces.”

Yes, Discovery Capital’s just completed a raise for lithium explorer Alchemy Resources (ASX:ALY), and it was “done and dusted by lunchtime on day one”. But Miethke prefers his money in something tried, true and broadly, essential. What he calls “bread and butter stocks”.

“For us, it’s more about bottom up, picking assets for their quality,” he says. Sticking with them through 3-5 years generally helps investors get through most market cycles positively. For a long-termer, he’s plumping for high-grade uranium developer 92Energy (ASX:92E).

92E owns five projects in Canada’s Athabasca Basin, the area where Cameco owns two of the world’s largest high grade uranium mines. Next door is the hot CAD$2.44 billion dual-listed Canadian developer NexGen Energy (ASX:NXG). You’ll get 92E about 12 times cheaper than NexGen though.

His copper pick is Alvo Minerals (ASX:ALV), trading at 16c and already with a 4.6 million tonne resource under its belt at the Palma copper-zinc VMS project in central Brazil.

“They’ve also got their own nickel belt to the south in their portfolio which the company doesn’t talk about much.”

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.