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Top fund managers choose their favourite 11 shares for FY19

Peter Switzer from the Switzer Report enlisted a number of fund managers to choose who they think will be the top performers in FY19. Here are the choices:

WAM Capital Limited’s (ASX: WAM) Geoff Wilson chose Specialty Fashion Group Ltd (ASX: SFH)

The veteran stock picker is attracted to the low price/earnings ratio of 11.6 and the $15 million net cash after the sale of its other store brands. Mr Wilson said the remaining City Chic business could grow profit by 20%, whilst 30% of its revenue is from online sales.

Tony Featherstone chose BHP Billiton Limited (ASX: BHP)

He believes that BHP will reward shareholders with special dividends or buybacks. He also thinks that global growth will continue this year, leading to another year of strength for BHP.

CMC’s Michael McCarthy chose Ramsay Health Care Limited (ASX: RHC)

Although Ramsay is under pressure due to private health insurance affordability and sluggish growth in its main markets, Mr McCarthy thinks the multi-year low share price and lowest p/e ratio in six years makes this an interesting choice.

Julia Lee at Bell Direct chose Idp Education Ltd (ASX: IEL)

She believes that the lower Australian dollar, as well as a visa crackdown in the US, will mean the Australian education sector gets a boost, which includes Idp.

Aitken Investment Management’s Charlie Aitken chose CYBG PLC (ASX: CYB) and Tencent

Mr Aitken is expecting that the merger with Virgin Money could be transformational and lead to strong synergies for the combined business. Tencent is a Chinese internet giant that has a 58% market share of Chinese mobile eyeballs and could be a Facebook-like opportunity in the medium-term.

Peters MacGregor Capital Management’s Nathan Bell chose Discovery Communications

The operator of Discovery, Animal Plant, Oprah Winfrey Network and Eurosport merged with Scripps Networks Interactive in March. Scripps owns the Food Network among other things. He expects strong synergies from this merger.

Ellerston Capital’s Mary Manning chose Reliance Industries

This large Indian company is a leader in energy, petrochemicals, telecom and retail. It also wants to become the Tencent of India in time. India has the potential to be as big of a market for some businesses as China has been already for some consumer-facing shares.

FNArena’s founder Rudi Filapek-Vandyck chose Technology One Limited (ASX: TNE)

He expects a turnaround for this technology share which has been punished by the market recently, but double-digit growth could lead to a share price recovery.

Contango Asset Manager’s Shawn Burns chose Challenger Ltd (ASX: CGF)

Mr Burns is a fan of the ageing demographic tailwind for Challenger and he thinks the recent government change in the budget will help Challenger attract more funds over time.

Eley Griffiths’s Ben Griffiths chose Alliance Aviation Services Ltd (ASX: AQZ)

The business’ management is high quality according to Mr Griffiths and he expects the company will renew its existing work plus win more work.

Foolish takeaway

I think all of the above shares are quality picks and I wouldn’t be surprised to see them all outperform the ASX index or the global index. I’ve been a believer in Challenger’s long-term potential for quite a while. I also think the Speciality Fashion and Tencent are good shouts as market-beaters over the next two to three years.

To throw some more investment ideas into the mix, these top shares are all expected to generate good returns in FY19.

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Motley Fool contributor Tristan Harrison owns shares of Challenger Limited and Ramsay Health Care Limited. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia has recommended Ramsay Health Care Limited. 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.

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