ASX Shares What's looking cheap on the ASX?

The deluge of dividends I received in January certainly helps assuage my concerns of falling share prices.

 

Anyone willing to catch the falling knife of BHP or Rio?

 

Negative....I've got more than enough materials for my liking with a small BHP holding (now sub 1.5% portfolio) and 4% position in SVW, add to that index weights in VAS/VHY/QOZ. Overall I am underweight materials and that will only become more so in the future.

 

Not directly.

Perhaps via an index.

 

Im guilty of topping up QRE today.

 

I was referring to part of a VAS type index. Not resources directly.

 

I am putting together 30 stock industrials portfolio of moaty businesses using modified equal weight methodology with some rules. About half way through building out the positions, this will be a very long term buy / hold portfolio with manual rebalancing and regular additional investments. The 2 stocks added today were QUB and NAB.

 

I have topped up small parcel for BHP at 15.95 today, was waiting for it to go below 15, last time it did that n zoomed to 17.50 during Xmas Santa rally, however this time it's going down

In it for long term, won't catch it again till at least 20% drop from here

 

I guess MLT is trading at a discount as dec NTA pre tax came at 4.50 and its trading at 4.40

Of course NTA changes everyday and published only monthly so I must be missing something

 

XJO end Dec 5300pts
XJO today 4900pts

Rough estimate, MLT current NTA around 415cps +/- 5cps

 

Yes for a long term income investor willing to hold direct stocks some very attractive opportunities are certainly emerging particularly in the larger cap Industrials. NAB for instance has been really smacked down.

The market could of course get a lot worse but steady accumulation of well chosen beaten down Industrials around these levels or below is highly likely to pay significant dividends (excuse the pun) in the long term. The yields are getting crazy particularly in relation to cash and fixed interest. And even if the dividends are slashed (unlikely) the income is still damn attractive. As for capital a well chosen diversified portfolio will sort itself out overtime with boring predictability.

Being a contrarian is the way I like to play it. International, mid cap is the way to go is what the headlines have been screaming to the masses. Avoid most Oz large caps and Asia, buy US etc is the word on the street. Well this is a signal for me to do the opposite. By the time the masses are being made aware of so called opportunities often the horse has already bolted. Time to pay attention to those areas out of favour. Oz large caps would seem to fit the bill! Doesn't mean to say capital value in particular may not tank further. But if you have faith in human enterprise and the long term future of Australia then certainly buying the market now at around 4800 - 4900 than when it was at around 6800 pre GFC would appear to be a much lower risk proposition!

 

Crazy that NAB is basically at the same price as it was in 1999.

 

Yep, that's true. NAB has had a shocker, but since 99 has paid out $28 in franked dividends per share. So, that tells a slightly different story. Overall TSR not fantastic though

 

yeh, the dividends are nice. but still, their stock performance when compared to CBA, Westpac and ANZ is shocking.

 

I agree very much with the contrarian idea. The only thing I don't like about the Australian market vs the investing internationally, is the incredible concentration of the Australian index.

With many LICs investing internationally being able to pay large fully franked dividends, I am becoming less and less attracted to the Australian index. I have been talking with my parents about this recently, who are retiring very soon with large balances but all in Australian shares. Even though the only two stocks which are keeping their portfolios well into the green, BKL and CSL, are both generating the majority of their earnings overseas. I would be happy if they had 10-20% overseas in some overseas LICs, just to spread their risk a bit more.

 

In answer to the question, I like VAS, QVE. GVF, WMK.

And FGX and FGG are interesting to me too

 

Yes that's right, and I think that's reflected in current yield and multiple. We don't invest in retrospect though (or try not to at least).

That's why i like equal weight (or close to) moaty industrials - on average the you are right enough. Rather than say making a binary call CBA vs NAB for example.

 

oh absolutely. i wasn't referring to NAB's future prospects, from all reports they seem to be righting the ship. I'm merely astonished at the lack of performance compared to their peers over the last 15yrs or so.

 

If you're a contrarian

The Australian Financial Review had this..

‘It’s going to be a disappointing year for sharemarket returns in 2016, according to Australian investors who predict a meagre 3 per cent growth for equities gains this new year.

‘A survey of nearly 10,000 Australians by Investment Trends found investors expect the share market to grow by less than 5 per cent this year, reflecting nervousness after a dismal year of returns in 2015.’

 

Hi Falcon,

How did you arrive at this NTA for MLT?

Regards,
TV