3 stocks set to clean up

--  |   18/05/2020 Text size  Decrease  Increase   |  
email_fwd
<p><strong>Holly Black:</strong> Welcome to the Morningstar Series &ldquo;3 Stock Picks&rdquo;. I'm Holly Black with me is Rachel Winter, she's Investment Director at Killik &amp; Co. Hello.</p> <p><strong>Rachel Winter:</strong> Hi, Holly.</p> <p><strong>Black:</strong> So last time we saw you, we were kind of in the middle of this market meltdown. I think things have calmed down a little bit since then. So your job is to find us some stocks that might be worth buying, where would you like to start?</p> <p><strong>Winter:</strong> Absolutely. So at the moment, we're really trying to think about how the world could be different after this lockdown ends. And we're really trying to think of companies that could potentially benefit from this. And so last time we spoke, I think we talked about working from home, online deliveries, online payments, and this time, we're very much looking at hygiene. And so we think now and after the lockdown ends, we think there'll be a very much increased focus on hygiene and therefore we're looking at companies that could potentially benefit from this.</p> <p>And so the first one is a big US company called Ecolab. Not very much a household name it&rsquo;s a US$55 billion company. So they are supplying huge number of corporate businesses all around the world, and what they're doing, what their mission statement is, is providing clean water, safe food, and hygiene. And I think that's something that will be very much in demand after this lockdown ends. And I've actually just been looking at an update they put out for how they're dealing with the life after coronavirus. And they've multiplied the amount of sanitiser they're producing by five times. And they're also offering training on sanitisation. And I think both of those things will continue to be very much in demand over the next few years.</p> <p><strong>Black:</strong> Do you think this is one of those things where, we are washing our hands and singing happy birthday at the moment, but when things start to ease off, we'll quickly fall out of those good habits. I mean, still washing our hands for sure, but maybe not singing.</p> <p><strong>Winter:</strong> I don't think so. I think probably the levels of demand for sanitiser and things like that will decline slightly from where they are now, but I still think they&rsquo;ll remain much higher than they were pre-coronavirus. I think the fact that we've been in lockdown for so long we've got into the habits of using the sanitiser, cleaning our surfaces so much more often than we were before. I think there will be an increasing demand in the future, particularly for companies. I wouldn't be surprised to see new regulations that require companies or businesses to have some sort of sanitisation officer. And I think demand there for these sort of products and services will be higher definitely.</p> <p><strong>Black:</strong> Okay, and what is our second stock today?</p> <p><strong>Winter:</strong> So Ecolab looks very much at corporate businesses. The one that works with individuals is Reckitt Benckiser. So this is a big UK company that develops a lot of well known brands like that Dettol and Harpic, Cillit Bang. And again, we think that individuals will be increasingly focused on their own personal hygiene, and we think this will continue after this lockdown ends.</p> <p><strong>Black:</strong> Isn't there a limit to how much Dettol can be sold though, there's only so much I can go through in my own household before, probably reaching some kind of bleach safety limit.</p> <p><strong>Winter:</strong> That's true, but I think the amounts that people are using will still continue to be higher than what they were pre-coronavirus and I certainly know that in my household, I'm definitely cleaning my kitchen surfaces a lot more vigorously. And I'm probably being a lot more generous with the Dettol than I was before. And I think that's probably the case across the country. And so I think that's definitely a good thing for Reckitt Benckiser. Also, the company has recently got a new Chief Executive. The last five years have not been particularly good for Reckitt. They've made a couple of poor acquisitions. Now they've got this new Chief Executive he is very highly regarded. And he seems to be making some very sensible decisions about where to take the company. And so I think now it&rsquo;s quite a good time to buy in, while the share price is still quite low.</p> <p><strong>Black:</strong> I guess one of the benefits as well is with those strong brands, people do tend to gravitate towards those because they think they can trust it. What's our final stock?&nbsp;</p> <p><strong>Winter:</strong> Third one is a company called Thermo Fisher. So this is a US life sciences equipment maker. One of the reasons we like them right now is that they're very heavily involved in producing testing kits for coronavirus. So for example, they've just signed a deal with the UK to provide them with enough testing kits to do the 100,000 tests a day that we want to do. And so Thermo Fisher will I think, obviously do very well from this, but looking at longer term the company is also involved in making equipment for laboratories. And I think this is a less risky way to play the healthcare market than by buying into the companies that are actually trying to discover drugs. So, if we think at the moment loads of companies are trying to discover or develop a vaccine for Covid-19 whereas Thermo Fisher is simply supplying all of these companies with the equipment they need to conduct their development and their trials. So no matter what happens, no matter who discovers it, Thermo Fisher is the one that's winning.</p> <p><strong>Black:</strong> And is that another area where a sticky customer base comes into play, because if they can reliably deliver those kits or the equipment for it with something as serious as coronavirus. You don't want to suddenly try a new supplier.</p> <p><strong>Winter:</strong> Absolutely. And I think Thermo Fisher is a very trusted name, and it will do well because of that. And I think in terms of supplying laboratory equipment. It is again a very trusted supplier. And it's constantly upgrading the products that it's making. And so it has a very good relationship with its suppliers. They're spending a lot on their equipment they're buying from Thermo Fisher. Every two or three years, they're almost forced to upgrade to something much more expensive because the technology has improved so much and they want to have the latest equipment.</p> <p><strong>Black:</strong> Rachel, thank you so much for your time. For Morningstar I'm Holly Black.</p> <p>&nbsp;</p>

Video Archive...

Why you should ignore a fund's yield
04/08/2020  Investors may assume a fund's yield to determine how much income it will pay, but it's not always so simple, warns Morningstar analyst Rajesh Yadav.
What are the right bonds for retirees today?
03/08/2020  It depends on your expectations and timeframe. Look at bonds as being portfolio stabilisers—sources of cash flow you can draw on when your equities are down, says Christine Benz.
3 top picks in rail, roads and utilities
28/07/2020  When utility stocks plunged during the onset of the pandemic Lazard Asset Management's Warryn Robertson knew it was time to jump in.
Infrastructure stocks in the covid era
24/07/2020  Lazard Asset Management's Warryn Robertson looks at how the pandemic has affected toll roads and airports and what the future of travel holds.
ESG stocks shine in covid-19 crisis
23/07/2020  Morningstar analyst Tancrede Fulop singles out a few companies that have performed well and also led the way in looking after staff. 
Stock-picking: Have you got what it takes?
21/07/2020  New stock-pickers are prone to lose money. Are the lessons worth the price? We ask Morningstar's Christine Benz.
Why mining stocks aren't yield plays
20/07/2020  Elevated iron ore prices have lifted mining company earnings to eye-watering levels but this doesn't make them income stocks, says Morningstar's Mat Hodge.
Commodity stocks riding high, but for how long?
17/07/2020  Local miners should deliver stellar fiscal 2020 results but such outperformance is unlikely to last, says Morningstar’s Mat Hodge.
The rise and rise of Amazon
17/07/2020  --
Should your portfolio shift when the economy slumps?
16/07/2020  How to make some upgrades during this down time.
Will Airbnb IPO or what?
16/07/2020  Covid-19 has made the intended public offering impossible, says Morningstar's Andrew Willis.
3 Japanese stock picks
15/07/2020  JPMorgan's Nicholas Weindling talks opportunities in Japan and reveals the stock that has been his largest holding for almost a decade
Small cap stocks: 'Inevitably, we see it all end in tears'
15/07/2020  The asset class has a habit of outperforming but Morningstar's Ross MacMillan sees signs of a bubble.
A trio of growth stocks
13/07/2020  Rachel Winter of UK fund manager Killik & Co talks payments, social media and investing in her monthly stock pick round-up
3 reasons healthcare is showing fit performance
09/07/2020  And what we expect to see moving forward.
Same old story: growth beats value
07/07/2020  Large growth maintains its supremacy in the Morningstar Style Box during a volatile first half for mutual funds. 
Nikko's 3 top Asian picks
06/07/2020  Nikko Asset Management's Peter Monson looks for strong sustainable returns and he sees that in Asian stocks that span financial exchanges, computer game makers and condiments suppliers.
How appealing are Asian stocks?
02/07/2020  China’s ongoing recovery from COVID-19 presents solid investment opportunities, says Nikko Asset Management.
'Unemployment will be higher, activity lower'
01/07/2020  Aviva Investors' Mark Robertson on the 'second wave', the widening gap between the West and China, portfolio protection and how covid has accelerated the tech revolution.
Smartwatches and luxury watches battle for your wrist
29/06/2020  Does the rise in smartwatches show that data, not diamonds, are a girl's best friend?
3 top picks in water and waste
26/06/2020  They may be 'boring' says Fidelity's Bertrand Lecourt but these names offer solid and long-term returns by delivering essential services.
Tapping opportunities in water and waste
25/06/2020  The growing consumption of water and the increased production of waste make these sectors compelling investments, says Fidelity's Bertrand Lecourt.
Dividends: ‘You have to be very active in stock selection’
23/06/2020  Yield can still be found among global healthcare, technology and consumer staples despite the dismal dividend outlook, says Janus Henderson’s Jane Shoemake.
Airlie went shopping during COVID sell-off
22/06/2020  COVID has given consumers the "fright of their lives" but this fund manager took the opportunity to scoop up bargain bluechips, says portfolio manager Matt Williams.
3 top picks: miner, insurer, fueler
19/06/2020  Mineral Resources, Medibank Private and Ampol are among Airlie Fund Management's preferred stocks, says portfolio manager Matt Williams.
Retail bonanza can’t last, warns Morningstar
16/06/2020  Investors shouldn’t project the pandemic-driven performance of JB HiFi and Harvey Norman too far into the future.
3 Aussie equities to watch
11/06/2020  Lazard Asset Management's Philipp Hofflin explains why mortgage processing, insurance and aluminium production are on his radar.
Are value stocks due for a comeback?
10/06/2020  Value investing has massively underperformed growth over the past decade. Christine Benz talks with Alex Bryan about the fundamental case for value.
3 top picks for a covid crisis
05/06/2020  Specialist consulting firms and chocolate bars. It's a disparate mix but Ned Bell of Bell Asset Management has good reason for seeing value in these sectors right now.
What the share market is missing
04/06/2020  Earnings results will be a rude awakening, says Ned Bell of Bell Asset Management, but there is nevertheless value among some global small- to mid-cap stocks.
The dividend balancing act
03/06/2020  Ensure your dividend-paying companies are more than attractive on the surface with these tips from Morningstar Canada's director of investment research, Ian Tam, CFA.
How dividend-paying stocks fit into retiree portfolios
01/06/2020  Christine Benz suggests retirees should take a balanced approach to these strategies.
Casino comeback and the uncertainty engulfing Seven West
29/05/2020  Most punters would prefer to lose money with their friends in a real casino than gambling online alone in their basement, says Brian Han.
The WFH reality-check for REITs
28/05/2020  Working from home means upheaval for office landlords but shopping mall owners are enjoying the end of hibernation, says Morningstar's Brian Han.
An undervalued, wide-moat name in healthcare
27/05/2020  Companies racing for a coronavirus cure have moved to lofty valuations. Morningstar analyst Alex Morozov is looking for lesser-known healthcare names.
5 investing mistakes to avoid
20/05/2020  Christine Benz discusses pitfalls investors encounter as they navigate volatility and recovery.
Ugly housing outlook won’t last
19/05/2020  Adelaide Brighton, Amcor and Bingo should ride out the housing construction slump with relative ease, says Morningstar’s Grant Slade. 
3 stocks set to clean up
18/05/2020  The biggest corporate hygiene company you never heard of; Dettol's parent company; and a lab supplier are tipped to benefit post-coronavirus.
Greencape's three top picks
13/05/2020  Property listings, software for financial planners and AI machine-learning: Jonathan Koh has scoured the globe for opportunities.
Where to hunt when guidance statements get torn up
12/05/2020  Greencape Capital entered the downturn with a cash reserve that has allowed it to snare some essential services companies at bargain prices, says Jonathan Koh.
Investing basics: the hardest decision in investing
08/05/2020  When and how should you get back into equity markets after panic selling?
Weighing up Australia’s banks
07/05/2020  Bad debts and expected capital raising from three of the big four cloud the outlook for Aussie banks, says Morningstar's Nathan Zaia.
Surprises from Berkshire's annual meeting
05/05/2020  Morningstar's Gregg Warren discusses the meeting's cautious tone, Berkshire's lack of buying during the downturn, and unloading the airlines.
Banks will see out corona crisis
04/05/2020  Loan defaults, shaky house prices and a dividend pause - it's ugly in the short term but Nathan Zaia has long-term faith in Australia's banks.
What the pandemic means for Berkshire Hathaway
30/04/2020  Gregg Warren shares his thoughts on its valuation and more.
Netflix steals the show but for how long?
29/04/2020  What happens when the lockdown ends? The streaming giant may need to get some serious growth in international markets to make up for investor expectations. 
Unique, but normal: riding out this market crisis
27/04/2020  The markets follow patterns. We discuss ways to find your way to the upside of the current environment.
3 defensive utility stocks
23/04/2020  These utility stocks aren't the cheapest but have solid balance sheets and decent yield potential.
What in the world happened to oil prices?
22/04/2020  Amid such a painful downturn and the ensuing demand shock, it's crucial to consider companies that are in sound financial health, says Dave Meats.
'An apocalyptic asset': owning gold
21/04/2020  Gold can be a useful insurance policy for investment portfolios, says Morningstar analyst Kenneth Lamont, but it's not perfect
Energy crisis will be short-lived
20/04/2020  Will energy majors bounce back from the coronavirus-induced turmoil? You bet they will, says Mark Taylor and here are the names to watch.
What role do bonds play in an era of ultralow yields?
16/04/2020  Investors are right to be questioning bonds' role in their portfolios, but they still serve a useful purpose for many.
US tech sector now decently undervalued
14/04/2020  We examine how this sector handled the market turmoil and what to expect
Will energy stocks rise from the ashes?
09/04/2020  Investors' current concerns are justified, but vast long-term opportunities remain in this significantly undervalued sector.
Corona crisis threatens big four dividends
08/04/2020  The short-term may be scary but the major banks' long-term outlook will withstand the shock, says Morningstar's Nathan Zaia.
What to expect as the virus continues
08/04/2020  Christine Benz and Karen Andersen discuss Morningstar's latest views on stopping the spread of the virus as well as the economic implications.
In volatile markets, it's OK to chicken out
03/04/2020  Christine Benz explains why now isn't the time for grand gestures with your investments; instead, take a light touch to them.
Avoiding all eggs in the same basket
02/04/2020  Get the full effect of diversification by considering the correlation of your assets with these tips from Morningstar's Director of Investment Research, Ian Tam
Coronavirus: stock up on quality companies
01/04/2020  Retail and energy companies rank among Morningstar's sector picks, despite seeing some of the sharpest falls since coronavirus hit.
Is this 2008 all over again?
31/03/2020  Eric Jacobson explains why the banking system is not at the centre of the corona crisis, and in fact, is well positioned to be a tool to help solve it.
The critical reason to stay invested
30/03/2020  Why it's important to stay invested to capture critical months for your portfolio, with Morningstar's director of investment research, Ian Tam
How to avoid dividend cuts
27/03/2020  A wave of companies are expected to cut their dividends amid the coronavirus crisis. Morningstar's Dan Lefkovitz explains how to spot a firm that could its pay out.
Healthcare stocks still defensive, says Morningstar
26/03/2020  Respiratory specialist Fisher & Paykel Healthcare is among stocks now enticingly priced as the coronavirus hits markets and the Aussie dollar.
Cheap or nasty? Seven, Nine and Telstra
24/03/2020  A stock that’s heavily sold down isn’t always a screaming buy, as proven by this comparison of debt and other fundamentals among these well-loved companies.
Mining stocks offer price opportunity, dividend threat
20/03/2020  OZ Minerals, South32 and Iluka are among miners dipping into buy territory amid the coronavirus selloff but dividends are at risk, says Morningstar’s Mat Hodge.
Market, economic implications amid latest virus news
20/03/2020  Karen Andersen and Preston Caldwell give us their latest perspectives on healthcare and energy.
'The long-term bounceback will be strong'
17/03/2020  The coronavirus fallout is hurting but there should be a treatment by year end and the rebound will be strong, says Morningstar director of equities Johannes Faul. 
Taking control in time of corona
17/03/2020  In this timely Morningstar panel discussion, but Christine Benz and Andrew Lill provide  concrete tips on how curb your losses and put your money to use.
The importance of staying invested in volatile times
16/03/2020  Don't flee the market in a panic, but rather embrace the turmoil as an investment opportunity—you'll be better off in the long run.
‘A modest sell-off, not a panic’: Douglass on coronavirus fallout
14/03/2020  The Magellan co-founder insists now is not the time to ditch stocks for cash nor to buy bargains, and global businesses won’t turn their backs on China.
Avoid panic-selling: Douglass calls for calm
12/03/2020  Share market speculation is almost always a bad idea, and panic-selling stocks on coronavirus fears is an example of just that, warns Magellan boss.
Coronavirus and the market: our take
11/03/2020  We offer three takeaways and advice on staying true to your goals.
Hits and misses aplenty in first half 2020 - Part 2
10/03/2020  Consumer stock Breville and listed property firm Charter Hall were among the highest gainers after delivering results, while Mayne Pharma and Seven West saw the sharpest falls.
Hits and misses aplenty in first half 2020 - Part 1
09/03/2020  The interim reporting season served up a lesson in why investors shouldn't rely too heavily on company forecasts, says Morningstar's Peter Warnes
The best diversifiers for your equity portfolio
05/03/2020  Christine Benz discusses how to protect your portfolio from a stock-market sell-off.
Green bonds offer another side to ESG investing
05/03/2020  Investors are largely unaware of the role fixed income can play in expressing their views on social, environmental and governance issues.
ETF investing for the new decade: 4 trends to watch
02/03/2020  In only a decade, the value of Australia's ETF market has risen by almost 2000 per cent.
The new medical device company to watch
28/02/2020  Spray-on skin maker Avita Medical has a chance of becoming the new standard in burns treatment, says Morningstar's Nicolette Quinn. 
Helping financial advisers help investors
27/02/2020  Financial advice can deliver value but we must do a better job of showing what that is and measuring it, says Morningstar chief executive Kunal Kapoor.
'ESG is about building a portfolio for outperformance'
26/02/2020  Morningstar CEO Kunal Kapoor explains the importance of ESG investing and why it's not simply a matter of avoiding guns, smokes and booze.
Volatility is here to stay - here's what to do
25/02/2020  Morningstar's director of personal finance Christine Benz explains how investors - young and old - should navigate how the coronavirus, the US election and frothy stock prices.
Why mining dividends are a flash in the pan
24/02/2020  A near-record dividend payout from BHP reflects high iron ore prices and miners flush with cash, but these conditions won’t continue long-term, says Morningstar’s Mat Hodge.
The case for emerging market debt
20/02/2020  Lazard Asset Management's Arif Joshi demystifies emerging market debt and explains why it can offer excess yields.
Telstra faces Vodafone-TPG tie-up
18/02/2020  Morningstar equity analyst Brian Han reckons the Vodafone-TPG is a 75pc chance of proceeding but says there's a risk of overestimating its effect on Telstra.
CBA result puts dividend fears to bed, NAB on track
14/02/2020  Despite a profit dip there are many positives for CBA, including growth in mortgages and deposits and a strong balance sheet, says Morningstar equity analyst Nathan Zaia.
Doubts over James Hardie's bullish outlook
14/02/2020  The building materials supplier's long-term North American market share forecast is too ambitious, says Grant Slade 
Could Coronavirus hit China's luxury boom?
12/02/2020  Morningstar analyst Jelena Sokolova looks at the potential impact of the coronavirus on the luxury goods sector.
4 healthcare stocks attractive on valuation and ESG risk
10/02/2020  Morningstar's Karen Andersen explains how environmental, social and governance issues affect Big Pharma and biotech companies.
Coal case: why Whitehaven is a Best Idea
07/02/2020  Lower costs, higher prices, and demand from Asia: key reasons why the miner's shares are going cheap, says Morningstar director of equity research Mathew Hodge.
Two of Morningstar's Best Ideas
04/02/2020  Morningstar's Adam Fleck explains how his team decides on which names to recommend and reveals a stock that is trading at a 30 per cent discount to its fair value estimate.
Behind Morningstar's Global Best Ideas list
03/02/2020  A margin of safety and high analyst conviction are just two of the criteria behind this monthly selection of stocks for your watchlist, says Morningstar's Adam Fleck.
Morningstar's tribute to Jack Bogle
29/01/2020  There has never been anyone who has given more to investors and taken less in return than Jack Bogle.
Kraft Heinz on the comeback trail
23/01/2020  As the faltering firm works toward a turnaround, patient investors should consider its undervalued shares.
3 foodie stock picks
21/01/2020  Sarasin's Jeneiv Shah looks at three stocks across the food chain, including one company trying to stop cows from burping.
Morningstar's predictions for 2020
16/01/2020  A contraction in housing starts; advances in electric vehicle technology; Trump re-election; a rate cut; and another tough year for banks - just some of what's expected.
3 European stock picks for 2020
14/01/2020  Unloved cable companies and property firms provide some of the best opportunities in Europe, says T. Rowe Price's Dean Tenerelli. 
Best of 2019: Why Iluka is bucking the mining company trend
09/01/2020  In May 2019, Morningstar's Mat Hodge explained why this rare earths company provides a different exposure to consumer materials, and has a clear path to revenue growth.
Best of 2019: how to pick stocks like Warren Buffett
08/01/2020  In this Best of 2019 video, Morningstar director of investor education Karen Wallace reveals how Warren Buffet benefited from sniffing out companies with competitive advantages.
Best of 2019: Coles, Woolies and shareholders face tough facts
07/01/2020  In 2019, we checked in with retail analyst Johannes Faul who explained how margin pressures affected supermarket giants Woolworths and Coles, and how the market reacted.
Best of 2019 videos: Warnes' downturn warning for investors
06/01/2020  In our look back at 2019, Morningstar head of equity research Peter Warnes identifies the performers of this earning season and issues a warning to investors of what action to take as uncertainty builds.