Financial news wire Livewire Markets is reporting that Brisbane-based research house Morgans has named six "high conviction" stock picks it thinks investors should have on their shopping lists this June. Given their fundamental research, company access, and wide networks, brokers often tend to know what stocks may be likely to outperform.
So let's take a brief looks at Morgans' six picks for June.
ResMed Inc. (CHESS) (ASX: RMD) is a sleep treatment specialist with a market value around $13 billion that hit a record high of $9.82 yesterday. Morgans likes its overseas exposure, market-leading new products, and margin-lifting potential of its software-as-a-service Brightree acquisition. I have covered all these strengths of ResMed multiple times over the past 24 months and have to agree with Morgans that ResMed looks a solid long-term bet, although the share price is not as attractive as it has been at any point over the past year.
Westpac Banking Corp (ASX: WBC) is rated by Morgans thanks to its strong capital position and "relatively low risk" of a dividend cut according to Livewire. There's no doubt Westpac is a rock-solid business, but there are housing market and regulatory clouds gathering for the banks over the short term and I would wait for a cheaper price before buying Westpac shares given the potential for dividend cuts.
Bapcor Ltd (ASX: BAP) is the garage and automotive parts business growing like nuts thanks to a mixture of organic and acquisitive growth. At $5.33 Morgans likes the stock and so do I given its potential to deliver several years of strong earnings growth it looks a good bet for growth-oriented investors with a 3-5 year time horizon. But do note that investors should be ready to take on a little extra risk given its big valuation.
Speedcast International Ltd (ASX: SDA) is the satellite communications services provider Morgans reportedly likes due to its valuation and "double digit earnings growth prospects". I'm not familiar with the business, although the share price has lifted 84% over the past five years.
Orora Ltd (ASX: ORA) is the packaging business that Morgans likes thanks to its defensive nature and exposure to a weaker Australian dollar among other things. Global packaging businesses such as Orora and Amcor Limited (ASX: AMC) may have a strong few years ahead if predictions for an uptick in global growth come true. Moreover, Australia's economy is softening and investors would do well to get some overseas exposure into their share portfolios.
Oil Search Limited (ASX: OSH) is selected by Morgans thanks to the "game changer" potential of a new discovery at its flagship PNG LNG facility. Oil Search's PNG LNG facility is generally regarded by energy analysts as the most lucrative LNG facility around and this is also reportedly emphasised by Morgans. However, as a long-term investor I am not buyer of Oil Search shares, as LNG prices are linked to oil prices and I expect the rise of U.S. shale oil and renewable energy is set to send energy prices into a terminal bear market.