A trio of growth stocks |
-- |
13/07/2020
Text size 
| 
|
| Tweet |  |
<p><strong>Holly Black:</strong> Welcome to Morningstar's 3 Stock Picks. I'm Holly Black. With me is Rachel Winter. She is Investment Director at Killik & Co. Hello.</p>
<p><strong>Rachel Winter:</strong> Hi, Holly.</p>
<p><strong>Black:</strong> So, you're here for our monthly virtual catch-up with three stocks you're quite positive on at the moment. Where would you like to start?</p>
<p><strong>Winter:</strong> Let's start with Facebook, obviously, a leading global social networking platform, owner of Facebook, Instagram and WhatsApp. There are a couple of reasons why we like Facebook. One is the growth in online advertising. So, over the last few years, we've seen a huge movement in advertising spend away from traditional media and towards online platforms and we believe that the coronavirus has really accelerated that. And recently, we've got to a point where consumers are spending just as much time on their mobiles as they are watching TV. So, we think there's a huge potential there for more online advertising.</p>
<p>The reason we like Facebook right now is the announcement of this new Facebook Shops initiative. So, as of now, small businesses will be able to sell directly to their Facebook and Instagram followers via Facebook Shops. So, we think this will promote even more advertising from smaller businesses on the Facebook platforms.</p>
<p><strong>Black:</strong> But Facebook has had a couple of controversies, hasn't it? So, do you think there is a risk that people get bored of that brand and don't want to shop and socialise and have all of their data running through the same company?</p>
<p><strong>Winter:</strong> I don't think that's such a risk. I think there clearly is a movement away from the original Facebook platform but we're seeing Instagram picking up all of those followers. So, there is a transfer away from Facebook towards Instagram. So, I'm not particularly concerned about that. You did mention the controversy and that is a concern. I think there is perhaps some concern that Facebook could have done more to crack down on illegal or concerning content on its platform. But I think that concern is very much in the price. Looking at the valuation of Facebook, if we account for the big cash holdings that they have, the valuation on a price to earnings basis is about 20 times based on next year's expected earnings. And that I think is very low for a company that's growing its earnings over 20% per year.</p>
<p><strong>Black:</strong> Okay. What is stock number two?</p>
<p><strong>Winter:</strong> Stock two is Visa, so a very well-known card network. Visa is essentially operating a duopoly with MasterCard. So, those two companies really dominate global card networks. And I think because Visa is so established, it would be very difficult for another company to come in and do exactly what Visa does. So, that's definitely a positive. And the reason we like Visa is that we are seeing a continued growth in digital payments and we are seeing a continued movement away from cash. And we think that's going to accelerate again because of the coronavirus because people don't want to handle cash because it's seen as unhygienic. And I think here in the UK we are very used to having these digital payments, but there are still over 1 billion in the world who don't even have a bank account yet. So, there is still a very big opportunity for digital payments to grow even further.</p>
<p><strong>Black:</strong> And we have seen payments providers in the headlines recently with the Wirecard scandal. Do you think incidences like that actually consolidate Visa and MasterCard's position?</p>
<p><strong>Winter:</strong> I think what they do is actually quite different. So, Wirecard was payment processor. PayPal, for example, as well is a payment processor. What Visa and MasterCard do is operate the payment networks. So, the processors like PayPal would have to send a message through the card networks to the merchant bank and to the consumer's bank to make sure there's enough money there and to help that money move to the right place. So, what Visa and MasterCard are really doing is just operating the kind of electronic messaging system that enables that processing to take place. So, I don't think there's the same risk there as there is with the companies that are actually processing the payments.</p>
<p><strong>Black:</strong> Okay. And our final stock?</p>
<p><strong>Winter:</strong> Final stock is MSCI which is a big American financial services company. The reason we like them is that they are a leading provider of indexes. So, for example, if you want to use the MSCI World as your benchmark, you would have to pay MSCI for that data. And what we're seeing at the moment is that investors are increasingly keen to invest on a more global basis and that has increased demand for global indices, again, like the MSCI World. We're also seeing an increasing demand for passive or ETF investment strategies and again, that creates more demand for indices like the MSCI World. And finally, MSCI is a leading global provider of ESG research and ESG indices. And because of the increasing demand for this type of investing, we think MSCI will do well from this as well.</p>
<p><strong>Black:</strong> Why do companies have to MSCI for that data because it's fairly easily available you would have thought?</p>
<p><strong>Winter:</strong> It's easy to find online but you do have to pay in order to use that data yourself. So, if I'm a fund manager and I want to publish a fact sheet that goes out to my investors with MSCI's data on there, I would have to pay MSCI for that data.</p>
<p><strong>Black:</strong> Rachel, thank you so much for your time. For Morningstar, I'm Holly Black.</p>
Silver linings for investors amid the climate stalemate: COP26 debrief01/12/2021 Long-term investor sees opportunities where businesses are moving towards a zero-carbon future faster than governments.
6 qualities of great index funds30/11/2021 To understand your fund, get to know its underlying index.
Lazard's 3 top picks for the energy transition29/11/2021 These companies are set to profit from the move to clean energy, says Lazard.
An uneven energy transition leaves room for coal and gas: COP26 debrief24/11/2021 The results of the COP26 climate summit suggest coal demand is likely to persist for longer than expected.
What rising inflation means for Australian investors17/11/2021 And how investors can protect their portfolios.
6 inflation-tough stocks for global investors08/11/2021 Morningstar thinks these moaty companies will remain resilient in the face of inflation and ongoing supply chain challenges.
Risk/reward equation still looks good at Westpac05/11/2021 Morningstar maintains fair value despite a fall in margins and slower progress on cost reductions.
These aren't the Bitcoin ETFs you're looking for19/10/2021 These new US-listed exchange-traded funds will invest in bitcoin futures, not bitcoin itself.
ESG funds don't underperform - but nor do they outperform15/10/2021 The ESG outperformance narrative is flawed, new research shows.
Building investment portfolios in a low interest rate environment06/10/2021 Investors may need to hold more growth assets over the coming years, says Morningstar's Jody Fitzgerald.
Covid impacts still being felt in real estate and tech: Reporting season roundup01/10/2021 And how G8 Education and Link Administration are positioned for long-term success.
Look to Credit Corp for a leading indicator of economic health: Reporting season roundup30/09/2021 What Reporting Season August 2021 told investors about the health of the financials sector.
Cause for optimism at a2 Milk and Invocare: Reporting season roundup28/09/2021 a2 milk is an opportunity to be greedy when others are fearful.
Post-covid normalisation is underway in healthcare: Reporting season roundup23/09/2021 Covid's winners and losers are returning to their prior trajectories.
One of the most underappreciated dangers of investing21/09/2021 Sequence-of-returns risk matters for both retirees and savers. Here's why.
REITs recover pandemic losses: Reporting season roundup20/09/2021 Analysts expect the sector to recover to pre-Covid trading levels once borders reopen.
Australian banks face margin pressure amid low rates: Reporting season roundup15/09/2021 Rising customer deposits and access to cheap funding helped Australia's banks stave off net interest margin pressure, but analysts see warning signs.
Greenwashing explained14/09/2021 Morningstar's Hortense Bioy on how to spot greenwashing and how to avoid it.
Earnings down as private money circles infrastructure: Reporting season roundup13/09/2021 Utilities and infrastructure names battle the impact of covid as private equity and pension funds circle.
Frenzy of mergers in energy: Reporting season roundup10/09/2021 Hydrocarbons poised for a comeback.
TPG tipped to recover as mobile competition eases: Reporting season roundup09/09/2021 Providers have lifted prices after years of a debilitating chase for subscribers at all costs , says Morningstar's Brian Han.
Short-sellers bet against ARK Innovation ETF08/09/2021 What shorting ETFs means for long-term investors.
Surging lumber prices were no match for Brambles: Reporting season roundup07/09/2021 Morningstar senior analyst Grant Slade says Brambles secular growth trend is intact despite nearterm headwinds. He discusses results from the building and construction materials sector.
Miners soar thanks to iron ore: Reporting season roundup03/09/2021 Miners bask in the glow of iron ore prices while bargains remain in coal.
BHP-Woodside merger is mutually beneficial23/08/2021 Post-merger Woodside would be well positioned to deliver on the value we've seen for a long time, say Morningstar analysts.
Investors are getting serious about sustainability16/08/2021 But the sector lacks uniformity, says Morningstar's Christopher Franz.
Long term outlook for AGL is positive11/08/2021 Higher wholesale electricity prices bode well for AGL, according to Morningstar senior equities analyst Adrian Atkins.
How you can hedge your portfolio against inflation11/08/2021 Morningstar FundInvestor editor Russ Kinnel describes some direct and indirect hedges for inflation protection.
The iron ore party can't last: Morningstar10/08/2021 Copper and iron ore have benefited materially from China’s stimulus and the developed world recovery. But Morningstar analyst Mat Hodge see these benefit as transitory.
What the Afterpay acquisition means for investors: Morningstar Minute05/08/2021 We believe the transaction has a high chance of succeeding.
Cannabis' federal legal status is not a total buzzkill03/08/2021 The industry still has significant growth potential.
Stock of the week: Toyota03/08/2021 Is one of the biggest sponsors of the Olympics positioned for an all-electric future?
2 listed microcap names to consider23/07/2021 Morningstar's Lex Hall talks micro-cap stock picks with Carlos Gil, chief investment officer at Microequities Asset Management.
Big returns, big risks: Making money with microcaps22/07/2021 Mornngstar's Lex Hall catches up with Carlos Gil, chief investment officer at Microequities Asset Management.
3 small-caps with Dawn Kanelleas21/07/2021 The head of Australian small and mid-cap stocks at First Sentier Investors has her eye on ARB, Breville and IDP Education.
Forecast 2021–2022: A correction could be around the corner20/07/2021 The strong performances of global stock markets in 2020–21 are unlikely to be repeated in the coming year says Morningstar's Peter Warnes.
'Overvalued' warnings grow as ASX 200 hits new high12/07/2021 Morningstar equity analysts warn that equities remain overvalued despite Australia's strong economic recovery.
What to know about private equity08/07/2021 Private equity is an exciting area for investors, with lots of hotly-tipped stocks. But there are risks to be aware of, says Pitchbook analyst Dylan Cox.
Lazard's 3 top picks for the global covid recovery08/07/2021 Warryn Robertson is looking at French infrastructure, retail pharmacy and tax services.
Aussie banks $34bn surplus points to more shareholder dividends, buybacks06/07/2021 Australia's largest banks have excess capital because they cut dividends, were more conservative on lending, divested assets and raised equity last year. Morningstar's Nathan Zaia thinks most of it should be returned to shareholders.
Weighing up the PEXA IPO02/07/2021 PEXA burst onto the ASX this week in the biggest float since 2019. Morningstar's Gareth James gives his take on the company's future growth prospects.
Can the iron ore price keep rising?30/06/2021 Iron ore prices have been on a tear, boosting the profits of Australia's top miners. How did we get here and is the only way up? Lex Hall sits down with Morningstar's Mat Hodge.
2 new stocks to watch28/06/2021 Morningstar has recently initiated coverage of a food delivery app and a consumer finance product.
'Strongest earnings season I've ever seen'24/06/2021 Meeting the deluge of demand is the biggest task for US companies, says Bell Asset Management's Ned Bell.
Biotech beyond covid22/06/2021 Are there still opportunities in the biotech sector now the covid-19 vaccine roll out is underway? We ask International Biotechnology Trust manager Ailsa Craig
Alibaba is still deeply undervalued21/06/2021 Morningstar's director of Asia equity research is confident the e-commerce giant will bounce back.
Weighing up the Endeavour IPO18/06/2021 A wide moat and attractive dividend potential are among the key takeaways of Woolworth's decision to demerge from the liquor and hospitality group.
'Then we got hit with the equivalent of a war'15/06/2021 Lazard Asset Management's Warryn Robertson explains how companies in the Global Equity Franchise fund have adjusted to covid, and assesses the threat of rising inflation.
Understanding Magellan's active ETF strategy11/06/2021 Magellan's Craig Wright tells Emma Rapaport why it is leading the charge in the active ETF arena and how its global equity product works.
3 off-the-radar small caps10/06/2021 Callum Burns of ICE Investors explains his conviction in pharmaceutical distributor Ebos, PSC Insurance Group, and elite sports analytics provider Catapult.
Small cap gems and how to find them09/06/2021 Callum Burns explains how ICE Investors identifies companies with original products and sticky customer bases.
Stock of the Week: Salesforce.com08/06/2021 They’re building an empire.
3 oil stocks we still like07/06/2021 A year ago the oil price went negative. How have oil giants handled the past 12 months and what's the outlook from here? Morningstar analyst Allen Good explains.
Considering crypto? Here's what to think about04/06/2021 As the investment world goes crazy for crypto, Morningstar Investment Management's Dan Kemp explains what to consider before putting it in your portfolio
Why we like Wizz Air03/06/2021 The airline sector is set to recover as international travel resumes. Morningstar analysts think Wizz Air offer the best opportunity among low-cost carriers.
3 global infrastructure picks28/05/2021 4D Infrastructure's Sarah Shaw outlines the investment case for Spanish multinationals Cellnex, and Iberdrola, and the potential of Mexican airports.
Are crypto ETFs coming?28/05/2021 The SEC continues to sort out its regulatory concerns.
Stock of the Week: Apple27/05/2021 We’re raising our fair value as sales hit new highs—but investors need to put it in perspective, says Andrew Willis.
Opportunities in global infrastructure25/05/2021 Covid-19 has enhanced rather than impeded the future for global infrastructure, says Sarah Shaw of 4D Infrastructure.
Tribeca's eye for Domain24/05/2021 Tribeca's Jun Bei Liu also explains why she sees opportunity in sleep apnea specialist ResMed as well as Treasury Wine Estates.
Stocks for emerging markets19/05/2021 American Century Investment's Patricia Ribeiro sees growth in Chinese battery technology, biologics, and building materials in Latin America.
2 stocks for the rise of the robots18/05/2021 Robotics is a fast-growing area of tech, creating opportunities in medical, logistics and life sciences sectors and much more.
Square: Stock of the week18/05/2021 Square's Bitcoin purchase is more marketing than operations
Tesla: Stock of the week10/05/2021 If Elon Musk ends up delivering, we might need to raise our fair value to US$1500 a share.
Why Tribeca's so upbeat on stocks07/05/2021 Banks and resources are poised to deliver dividends, and Treasury Wine Estates and BNPL are worth a look, says Jun Bei Liu of Tribeca's Alpha Plus long/short fund.
Looking for value in emerging markets05/05/2021 Digital banking, ecommerce and 5G are among the key trends set for rapid growth, says Patricia Ribeiro of American Century Investments.
Cash slashed, Aussie equities up: Why Morningstar updates Model ETF portfolios04/05/2021 Analysts have made changes to the fixed interest, property, cash and equity allocations of Morningstar's Model ETF Portfolios to take advantage of the current market environment. They've also refreshed some of the funds in the portfolio.
Investing basics: Explaining the disconnect between the stock market and the economy30/04/2021 The stock market and the economy are not the same. Here's why.
Why deforestation matters for investors23/04/2021 EARTH DAY 2021: Why should investors care about deforestation and how can it can be taken into account within an investment portfolio?
The silent killer: How to prepare your portfolio for inflation21/04/2021 Do investors need to worry about inflation, and how do you prep your portfolio to protect you from it? Morningstar Investment Management's Dan Kemp explains.
ESG investing is about more than feeling good: Morningstar equity research20/04/2021 Values-based investing is ultimately up to the investor.
2 US wide-moat stocks to buy on a dip16/04/2021 Amazon.com and ServiceNow are looking increasingly attractive.
Fidelity's Kate Howitt names her 3 top stocks for 202115/04/2021 Investment tips from Australian equities fund manager Kate Howitt.
Back to basics: What is income investing?14/04/2021 What is income investing, why is it important and which investors should focus on it? Morningstar Investment Management's Dan Kemp has the answers.
Hunting for pockets of value in an overheated market: Morningstar13/04/2021 Morningstar equity strategist Gareth James discusses the great value rotation, why he believes the Australian share market is overvalued and where opportunities still lie for hungry investors.
Vaccine rollout drives energy's rise12/04/2021 But the sector's current tailwinds are likely unsustainable, so investors should prioritise high-quality businesses with stable balance sheets, says Morningstar's Dave Meats.
Finding value with Kate Howitt08/04/2021 Kate Howitt oversees Fidelity’s Australian Opportunities fund. She discusses her investing approach, the outlook and where she sees value.
Investing for millennials07/04/2021 Goldman Sachs's Laura Destribats talks about the millennial investment trend, and why tech and experiences are so important to this generation.
What if I want to buy Bitcoin?06/04/2021 Remember that the returns on speculative assets like Bitcoin are high risk
EGG, SGF, ZBRA: Foraging for the unloved gems01/04/2021 Steve Johnson explains why Forager Funds Management has bought and held Enero, SG Fleet and Zebra Technologies and why they're poised for further growth.
Why the 'covid spending economy' will flourish30/03/2021 Forager's Steve Johnson explains why he's bullish on consumer spending, enterprise software companies, and why he has cashed in on big names like Uber.
Proteomics set for growth, says Kardinia29/03/2021 Kristiaan Rehder explains why the West Australian biotech is among the top performers in the Bennelong Kardinia Capital Absolute Return Fund.
Should you be worried about inflation?26/03/2021 And how to make inflation "personal."
Crypto what?25/03/2021 The how, what, and why of cryptocurrency.
The long and short of an absolute return fund24/03/2021 An absolute return fund aims to seek returns in all weather. Kristiaan Rehder from Bennelong Kardinia Capital explains how.
3 dividend-paying real estate stocks for your watchlist23/03/2021 Diversified portfolios, strong balance sheets and healthy payouts. Grant Berry singles out three big contributors to the SG Hiscock Property Income Fund.
AREITs in the time of covid22/03/2021 SG Hiscock's Grant Berry explains how real estate was affected by the pandemic, how property stocks coped, and the chase for income in an evolving retail landscape.
Have we reached peak video gaming?19/03/2021 Video gaming has soared under lockdown, can this sector keep growing post-covid? Morningstar analyst Neil Macker takes a look.
Myer: five stars and poised for the rebound18/03/2021 The retail giant's strong balance sheet will help it navigate the shift to online shopping and capitalise on the return to normal life, says Morningstar's Johannes Faul.
Deliveroo IPO: what you need to know10/03/2021 Ahead of Deliveroo's IPO, Morningstar analyst Ioannis Pontikis looks at the outlook for the business, its valuation and concerns about gig workers.
2 stocks for the e-learning boom08/03/2021 E-learning has become the norm for young students and university-goers across the world. Morningstar analyst Michael Field looks at whether the trend is here to stay.
February Reporting Season Wrap Up with Peter Warnes: Webinar04/03/2021 Special guest Peter Warnes, our head of equities research, joins the Morningstar Foundations of Investing Webinar series to give his unique take on February Reporting Season and answer subscriber questions.
One year after the market crash, through the ETF lens03/03/2021 The growth and adoption of exchange-traded funds has only accelerated as a result of the latest market crisis.
Brighter picture for big four banks01/03/2021 Morningstar's Nathan Zaia on the outlook for the banks, dividend payouts and the move by the Bank of Queensland to acquire ME Bank.
One year on: lessons learned from the 2020 bear market25/02/2021 The biggest takeaway from that period is not to panic when the market tumbles.
What if...I want to buy a gold ETF?23/02/2021 From ETFs backed by bullion to miners with more upside potential - here's how to get yourself some gold.
'Full return to normal in 2021'23/02/2021 If the US is to stage a recovery by mid-year, it will need the consumer services sector to fire, says Morningstar's head of economic research Preston Caldwell.
Google, Facebook versus Aussie news stocks19/02/2021 Morningstar's Brian Han weighs up News Corp's deal with Google and examines the effect of Facebook's decision to block content from Australian media outlets.
Global real estate as a store of value18/02/2021 Quay Global Investors' Chris Bedingfield explains how self-storage, data centres and industrial property can offer diversification and growth.
Spotting the 'covid winners'16/02/2021 Uniti Group and Nextdc are among the companies that SG Hiscock's Hamish Tadgell says have flourished during the pandemic.