Analysts from Bell Potter recently released a report detailing their outlook and top ASX stock picks for 2020. The report includes detailed coverage of 8 sectors and the stocks tipped to outperform in the new year.
Below I have selected 1 stock from 5 different sectors that I'm putting on my watchlist for 2020.
Banks and Insurers
Bell Potter finds value in Macquarie Group Ltd (ASX: MQG) on the back of the company's ability to manage risk and adapt to changing market conditions. According to analysts, Macquarie's lower-risk, annuity style earnings and capital management flexibility make it a top sector pick.
Agriculture
Analysts note Elders Ltd (ASX: ELD) as one of their picks for the volatile and high risk agricultural sector. Elders is a leading supplier of fertiliser, chemicals and animal health products to regional and rural Australia.
Despite the company's share price falling drastically from its 2018 highs, analysts view Elders as offering seasonal leverage. The rationale behind this recommendation is that the dry weather and conditions that affected the Elders business model are expected to improve in the long term.
Technology
The technology sector has been re-rated over the last couple of years, however value can still be found in the sector. In order to find good value tech stocks, analysts have based their top pick on companies that have forward price-to-earnings ratios of less than 25 times earnings.
Citadel Group (ASX: CGL) is one of the companies recommended by Bell Potter for the tech sector. Despite having a tumultuous 2019, analysts think that Citadel has strong growth outlook as the company continues to strive for a higher percentage of repeatable revenue across a growing customer base.
Retail
The retail sector continues to be challenging as consumers are still cautious over discretionary spending. Analysts from Bell Potter prefer retailers that offer growth through the cycle and have leverage to take advantage of global expansion opportunities.
One retailer that fits this criteria is Lovisa Holdings Ltd (ASX: LOV), which is a specialist fashion jeweller. The company strategically targets the affordable jewellery segment and has entered a number of major new territories internationally, including the US, UK and France.
Travel and Tourism
Given the cyclical nature of the travel and tourism sector, Bell Potter have focused on companies with a diversified business model and exposure to global growth opportunities. Corporate Travel Management Ltd (ASX: CTD) is the analysts' pick for the sector.
Corporate Travel's business model offers superior service and cost savings to clients. Analysts believe that the company will continue to leverage its value proposition and increase both its domestic and international market share. Corporate Travel management has already provided guidance for a stronger second half in FY20.
Foolish takeaway
In my opinion, the ASX shares highlighted by Bell Potter analysts are of extremely high quality and the analysis is well balanced.
However, I think it would be irrational for investors to jump the gun and start buying all the stocks listed, particularly with sectors such as banking under pressure. Before diving in, you should do further research to determine whether these picks fit your investment strategy.
