MENU

Morgans releases its “conviction buy” stocks for February

Credit: Pictures of Money

Investors are heading into the profit reporting season in a very good mood but don’t get too used to the carnival atmosphere as things are about to get a lot more interesting.

We are already starting to see more volatility in the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) as the spike in US government bond yields is reverberating around the world.

Morgans is also predicting that the “goldilocks” environment isn’t likely to continue given the number of geopolitical risks that are knocking on the doorstep.

However, the broker believes that solid returns are still up for grabs but warns that these shouldn’t come at the expense of investors taking on excessive amounts of risk.

To give your portfolio a performance edge over the market, Morgans has picked seven “high conviction” stocks that offer the best risk-adjusted returns (stocks that offer the most upside based on their risk profile) for the year.

The latest stock to be added to this list is Corporate Travel Management Ltd (ASX: CTD) as the travel management solutions company is expected to generate strong double-digit earnings per share (EPS) growth over the next few years.

“Even against a strengthening AUD vs USD, we still expect a strong 1H18 result on 21 February and believe CTD will resume making accretive acquisitions in 2018,” said Morgans.

“The highly fragmented nature of the global corporate travel market means there are significant market share opportunities for CTD to realise over time.”

The addressable size of the global corporate travel market is estimated to be US$1.4 trillion and it is forecast to grow at around US$40 billion a year.

Corporate Travel Management only has a less than 1% market share of the European and US markets, while its market share in Asia stands at a little over 1%.

This means the company has plenty of room to grow over the coming years and Morgans has a $23 price target on the stock.

Other stocks outside the S&P/ASX 100 (Index:^AXTO) (ASX:XTO) that are on the broker’s conviction list include automotive cooling solutions company PWR Holdings Ltd (ASX: PWH) and oil and gas company Senex Energy Ltd (ASX: SXY), which is no doubt benefiting from the stronger-for-longer oil price.

Blue-chips that are on Morgan’s conviction list include sleep disorder treatment device maker ResMed Inc. (CHESS) (ASX: RMD), banking giant Westpac Banking Corp (ASX: WBC), oil and gas major Oil Search Limited (ASX: OSH) and share registry services company Link Administration Holdings Ltd (ASX: LNK).

There are three other blue-chips that are also well placed to outperform this year, according to the experts at the Motley Fool.

Click on the link below to get your free report on these stocks and to find out why they are likely to rally through 2018, if not beyond.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Brendon Lau owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.