Don’t be put off by the market meltdown. The factors that have supported the market rally over the past few months are largely intact even as US President Donald Trump’s brash policies have stirred the pot of volatility. But his witch’s brew of trade sanctions against China is unlikely to derail the positive outlook for equities for 2018 as corporate earnings growth forecast have not been revised down, inflation is still in check and global growth is humming along as expected. All this can quickly change if an all-out trade war breaks out, but looking at Trumps modus operandi of…
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Don’t be put off by the market meltdown. The factors that have supported the market rally over the past few months are largely intact even as US President Donald Trump’s brash policies have stirred the pot of volatility.
But his witch’s brew of trade sanctions against China is unlikely to derail the positive outlook for equities for 2018 as corporate earnings growth forecast have not been revised down, inflation is still in check and global growth is humming along as expected.
All this can quickly change if an all-out trade war breaks out, but looking at Trumps modus operandi of going hard at the start and compromising at the end (just like what he did with steel and aluminium tariffs), gives me some confidence that the trade spat can be resolved satisfactorily.
Also, China has gone out of its way to be diplomatic and its response to put tariffs on US$3 billion worth of US goods (compared to Trump’s US$50 billion tariff on Chinese imports) shows it is keen to avoid making a bad situation worse.
The “trade war discount” on our market should pass over the next few weeks but while our market remains depressed, investors should use this as a buying opportunity, particularly given that ASX companies are tipped to pay dividends worth close to $23 billion in March and April this year!
On this happy note, there are three stocks on the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) that are about to go ex-div that I think investors with a medium to longer-term investment horizon should be looking closely at.
The first is Webjet Limited (ASX: WEB) and today is the last day you can buy the stock to be entitled to its 8 cents a share fully-franked dividend.
The online travel agent has taken a beating with the rest of the market with its stock falling close to 8% over the past three days to $11.19 and I think it’s cheap given the stellar half year results it posted in February.
The second stock to watch is ARB Corporation Limited (ASX: ARB). Investors wanting to pick its fully-franked 17.5 cents a share dividend will need to buy the stock before next Thursday.
I am a fan of the four-wheel drive accessories company thanks to management’s track record, its pleasing interim results, a recovering mining sector (it sells products to vehicles used in mining) and the ongoing consumer trend towards four-wheel drive vehicles.
The third stock is apparel and stationery retailer Premier Investments Limited (ASX: PMV). This stock will pay a fully-franked 29 cents a share dividend and goes ex-div on April 30.
While some would shy away from retail or think the stock is fully priced after it surged on the back of its strong profit result, I think Premier Investments will outperform in 2018 on the back of its global expansion and strength in its Smiggles business.
You won’t find two craftier retailers than its chairman Solomon Lew and chief executive Mark McInnes.
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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia has recommended ARB Limited and Webjet Ltd. 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 Scott Phillips.