Despite a cracking start to the year, this reporting season is going to be a maker or a breaker for many names and the broader market overall. A lot is weighing on corporate earnings now that the central banks have almost made their beds on inflation.

On the divvy front, it’ll be a quieter one. The banks don’t usually pop up in February and the energy names, the miners and Aussie resources names in general will be holding on to cash tighter than they did last year which was a lovely filip for many.

Worth watching on the return of capital front are the share buybacks. Companies positioned strongly might start announcing themselves in the best way possible – snapping up their undervalued fatty bits for redigestion.

Without further ado, enough from me and more of the cool, calm, precise, sexy, dynamic minds of the highly-paid professionals and where they’re putting our money this month.

 

Morgan Stanley

Is feeling positive about:

  1. Dicker Data (ASX:DDR),
  2. Premier Investments (ASX:PMI)
  3. Jumbo Interactive ASX:JIN)

Dicker Data has been distributing Aussie tech hardware, software middleware and more recently cloud services and has been a stalwart of our IT Sector for decades.

Morgan Stanley analysts have been pretty chipper when it comes to the company’s near-term prospects, noting DDR’s impressive exclusive partner-base of circa 6,000 resellers and its portfolio which encompasses a wide variety of Tier 1 global brands, including Cisco, Dell, Hewlett and Packard Enterprise, HP, Lenovo and Microsoft.

MS have retained an Overweight Rating for DDR, with a Price target of $13.00.

Right now the DDR stock is going for under $11.00, after trimming about 13% of it’s value in 2022.

Premier Investments (ASX:PMV) has had an enjoyable few months.

Perhaps among the most discretionary of almost all ASX consumer stocks, PMV has ridden the surprise Aussie retail tsunami all the way to the bank.

The owner of absolutely must-haves like the little books and things from Smiggles and the funny but also a little sexy PJ’s of Peter Alexander also attracted the attention of Morgan Stanley, where analysts upgraded their rating for Premier Investments to Overweight from Equal-weight

MS have pretty much made PMV their No. #1 draft pick in the emerging Aussie retail space, liking the cut of Premier’s global growth potential and its admirable balance sheet.

Morgan Stanley has a bit of a thing for the retailers with genuine potential for global expansion. PMV also comes with a few levers to cut and tighten margins and – critically – an easily identifiable history of surprising market expectations. PMV is hitting all those notes, just as economists are realising Australian’s don’t care about inflation and would rather just buy stuff now.

The icing on the cake for MS is a high level of insider ownership and a strong, reliable and handsome balance sheet.

At the same time, late last week, the brokers at MS downgraded KMD Brands (ASX:KMD) and Accent Group (ASX:AX1) to Equal-weight from Overweight, bad for them, but again, a good sign for conviction on PMV.

Morgan Stanley (just quickly) on Accent: MS has a few concerns around a surging share price, an increasing apparel exposure and margin headwinds, along with the economic backdrop, which remains waspish.

 

Morgans

Is upbeat on the Consumer Discretionary Sector.

Not in the same boat, but sailing across the same sector this month, Morgans are also enjoying the fair breeze blowing across the Aussie Discretionary Retail sector.

The brokers see the incoming corporate reports as largely positive after a bullish first half of selling stuff around the place.

The easy part here is that the level of success – which is last year’s horror show – is a very low bar, and one tht included general malaise, a pandemic and a bunch of lockdowns and shut up stores.

Morgans also flagged retail sales which are improving faster than market expectations due to our super tight Aussie jobs market and our households which are chockers with savings.

As a result, Morgans has said the market just might’ve been making too much of a fuss about the potential impact of interest rate rises on a cash-drunk consumer.

Morgans likes:

  1. Beacon Lighting (ASX:BLX)
  2. JB Hi-Fi ASX:JBH)
  3. Universal Store Holdings (ASX:UNI)

Analysts at Morgans  also lowered the Rating for AX1 to Hold from Add. That’s a question of value. Accent’s more than 50% share rally since last October.

 

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