Tru Datt: Ride the dip with these smart ASX stocks

Welcome to Tru Datt, a Stockhead exclusive featuring the insights and opportunities as per Emanuel Datt – founder and chief investment officer at Datt Capital – a Melbourne-based investment manager focused on identifying growth and special situation investments.

Investors would do well to take advantage of annual market volatility in June and buy on the dip, says Emanuel.

“Australian markets typically dip in June as investor rationalise their portfolios by selling stocks in a capital loss position, to harvest tax losses to offset against other forms of capital appreciation crystalised during the year. This has the effect of potentially reducing their taxable income or gains,” Datt said.

“As tax loss season is a very well-known phenomenon in Australian markets, we believe there is a very high probability of a positive July and are positioning our portfolios accordingly,” he added.

In its small company fund, Datt Capital will be looking to deploy a large cash holding and take advantage of good opportunities to buy the ‘blue-chip’ companies of tomorrow at bargain prices.

Instead of being scared off by this predictable volatility, Datt says that investors should follow suit and use it as a time to find good companies at low prices across all sectors of the market, not just small caps.

“This is a time of year that all investors should plan for if they can,” he said.

After all the S&P/ASX 200 (XJO), Australia’s leading share market index, has been positive around 9% this financial year, Datt said.

Although market expectations are mixed around more rate hikes this year, Datt does not expect this to influence market direction.

“Interest rates have been at normalised levels for some time now, so potential hikes will not affect the market materially in our opinion and present CPI numbers are in line with our expectations,” he said.

“Our longer-term market outlook is flat with an upward bias and higher volatility,” Datt said.

Three ASX small caps to watch

Jupiter Mines (ASX:JMS)

Jupiter Mines (JMS.AX) is a South African manganese producer who owns 50% of the world class Tsipi mine.

“We anticipate improved earnings from sustainably stronger manganese prices over time. It’s likely that the manganese market will remain supply constrained for at least the next 12 months.

“The stock trades at a modest EBITDA multiple and we anticipate potential upside both from the strong earnings growth and multiple expansion as global manganese stocks reduce.”

WA1 Resources (ASX:WA1)

WA1 Resources (WA1.AX) is a junior miner who discovered the world class Luni niobium deposit in Western Australia; the first major niobium discovery in almost 50 years, Emanuel says.

“Niobium is a high value, critical metal that is very important for strategic applications including specialist steels and battery technology. It is listed as a top three most critical metal by all major Western jurisdictions including the US, UK and EU, due to its extreme scarcity.

“Luni represents the only major niobium deposit located in a Western nation, so represents an extremely valuable strategic asset. The maiden MRE expected to be released imminently with further information on metallurgical recoveries and steps to commercialisation to follow.”

Clarity Pharmaceuticals (ASX:CU6)

Clarity Pharmaceuticals is a clinical stage radiopharmaceutical company developing next-generation products to address the growing need for better diagnostics and treatments in oncology.

“The company has a number of novel products currently going through a range of clinical trials, each which could materially augment the value proposition in the case of success.

“We are expecting strong new flow from the company over the first half of FY25.”

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.